Entries in Benefits & Premiums (28)


Workers Comp: Medical Benefits Slice of the Pie is now the biggest

by Clive Riddle, September 10, 2010

The National Academy of Social Insurance (NASI) has just released a 112 page report: Workers Compensation Benefits, Coverage and Costs 2008 which provides  comprehensive data on workers' compensation cash and medical payments for the nation and for each state, the District of Columbia, and federal programs.

This year, for this first time ever, the report finds that medical benefit claims exceed cash compensation payouts. Here is a summary data table provided by the NASI:

Figure 1: Workers' Compensation Spending, 2008


Type of Spending

Billions of Dollars

Percent  Change


Total benefits paid




  Medical payments




  Cash benefits




Employer costs




Amount per $100

of Covered Wages

Per $100 of Payroll

Dollar Change


Benefits paid




   Medical payments




   Cash payments to workers




Employer costs




Source: National Academy of Social Insurance, 2010.


Continual health care inflation, utilization and other medical cost escalators are blamed. John F. Burton, Jr., chair of the report panel tells us: The growth in medical spending may reflect both higher prices for medical care and greater use of services. The increase is the continuation of a long-term trend since 1980, but this is the first year that payments for medical care were more than half of all workers' compensation benefits."

However, one additional factor is probably in play. Given 2008 data would be the first year to reflect the great recession, intuitively one might assume the cash compensation slice of the pie was diminished by a shrunken work force.  So while health care costs are an easy target and typically a deserved scapegoat, the economy would seem an equal explanation for why the pie is being sliced up differently.


COBRA Costs: The Good News, Bad News and Good News

by Clive Riddle, August 27, 2010

The good news: earlier this summer, PricewaterhouseCoopers, in their Behind the Numbers Medical Cost Trends for 2011 report, had this to say about COBRA costs:  “COBRA costs are expected to return to more normal levels in 2011. COBRA subsidies passed by Congress in 2009 created a 1% upswing in the medical trend. Laid-off workers who continued their healthcare coverage typically incurred medical costs of two to four times higher than those of other workers. In 2010, the combination of higher unemployment and new government subsidies to pay for COBRA coverage led to a significant increase in COBRA coverage. A combination of declining unemployment and expiration of the COBRA subsidies is expected to lead to reduced enrollment in COBRA in 2011.”

The bad news: Aon Consulting has just released results from their 2010 Benefits Survey, which found average monthly COBRA premium costs increases from 2009 for the cheaper HMO policies took an extra annual $360 for single coverage and $960 for family coverage from the unemployed and others who opted for COBRA coverage. Here’s a table we compiled from the Aon survey results:

COBRA Monthly Premiums



% Increase

Total Increase






Employee Only





Employee +1





Employee + Children





Employee + Family










Employee Only





Employee +1





Employee + Children





Employee + Family





"The increased frequency and duration of COBRA use is creating a significant strain on the program, leading to higher costs. Those who are unemployed, and facing uncertainty about employment prospects and future COBRA availability, are utilizing the program more than we've traditionally seen to treat a variety of conditions prior to potentially losing coverage. This coupled with the high unemployment rate, is placing the COBRA program in a unique and unprecedented position."" John Zern, Aon Consulting’s executive vice president and Health & Benefits Practice director tells us.

The good news: the COBRA premium increased from 2009 to 2010 on a percentage basis were in line with non-COBRA premium increases, even though the population would be considered to be much higher risk.


How Brokers See the Recession’s Impact on Employee Benefits

by Clive Riddle, June 4, 2010

Survey data on employee benefit trends and implications surrounding such drivers as the recession typically focus on data from large employers.  Large employers, of course, represent the clientele of the major benefit consulting firms that produce the majority of such studies.

Thus it is interesting to consider perspectives from the broker population, which typically represent smaller and mid-size employers. Colonial Life conducted broker surveys at two large national broker conferences during March and April, regarding the economy’s effects on benefits.

Here’s the results provided by Colonial Life, which indicate expansion of voluntary benefits, increasing employee contributions, and adding HSAs/HRAs are the top strategies:

  • Added voluntary benefits options – 59%
  • Increased employee contributions – 48%
  • Added benefits options – 35%
  • Added a health savings account – 29%
  • Switched carriers – 28%
  • Reduced benefits options – 27%
  • Added a high-deductible health plan option with an health reimbursement account – 26%
  • Increased employer contributions – 10%
  • No change – 9%

In this environment, 80% of the brokers surveyed said voluntary benefits are very important to the overall benefits package they offer business owners. It thus could be beneficial for various stakeholders to do their homework on what existing and emerging products are being offered through the voluntary benefits market, and consider their implications.


The Center for Health Value Innovation on Value Based Design

by Clive Riddle, May 27, 2010

This week, Cyndy Nayer, M.A., President, CEO and co-founder of the Center for Health Value Innovation and Michael S. Jacobs R. Ph., Principal and National Clinical Practice Leader, Buck Consultants, LLC  (also a board member at the Center) spoke in the HealthcareWebSummit event Leveraging Health: Current Impact of Value Based Design.

What’s going on with Value Based Design initiatives right now? Glad you asked. While some other elements of health reform have stolen the spotlight during the past few months, VBD continues to move forward as a key solution to its core stakeholders. 

The Center for Health Value Innovation is an educational organization that serves as an information exchange for value-based designs. The Center’s members include health plans, employers, unions, government, pharmaceutical organizations and other stakeholders that represent over 40 million lives. The Center recently published a new book, Leveraging Health, which shares findings from their recent interviews and surveys that identify more than 100 levers that influence consumer and patient behaviors in Value-Based Design, and15 categorized macro-levers.

Definitions of Value Based Design have evolved over time. The Center has this to say about defining VBD: “It’s important to note that value-based designs (VBD) are much more than waived or reduced co-pays for chronic care, particularly medications.  A value-based design uses evidence-based clinical impact merged with financial impact (Health + Economics) to guide the behaviors of populations in managing their health.  VBD can influence choice of care provider, appropriate and persistent treatment, and early risk/prevention/wellness.  All of these have been documented to show a meaningful impact in health status, productivity (safety, disability, unscheduled absences, and more), quality and financial cost trend.”

Nayer and Jacobs expanded on this definition during their presentation, stating:

  • VBD is an engagement tool that engages the employee (consumer) and the employer (plan sponsor) and the provider (clinician)
  • VBD focuses on outcomes:  better performance
  • VBD is driven by data that drives the suite of performance tuners: levers
  • VBD is sustainable and applicable at the small-large employer and at the community level
  • VBD builds the Health-Wealth-Performance Portfolio
  • VBD uses Data to invest in incentives (Design) and services (Delivery) that change behavior for improved health, quality, performance and financial trend (Dividend.)       

They note that EAP and behavioral health are important components of VBD, given that behavioral change is the key to sustaining value. They further advocate that if value is to be built on outcomes, than purchasing must be aligned. Nayer and Jacobs stat that Outcomes-Based Contracting must align incentives between the contracting parties.

After VBD emerged as a mainstream concept and solution, the Great Recession intervened, and Nayer and Jacobs point out the effect of the economy on health behaviors, placing employee/patient compliance, adherence and persistence at risk.

Here’s some of the Center’s survey results they shared, which are incorporated into their book, Leveraging Health. Over 100 companies responded to their survey, representing over 1 million lives:

87% Use incentives (levers) in prevention and wellness, 60% Use levers for chronic care management, and 26% Use levers for guidance to appropriate care delivery

Given that VBD programs provide various forms of incentives, including applicable waivers of cost sharing, an obvious concern in a down economy would be that employers would feel pressure to pull back in these areas to in the name of achieving short term savings. However the survey indicated 79 % of the employers with VBD in place two or more years made no VBD changes in 2009 and 56% did not plan to make changes in 2010.

Of the 44% who did anticipate changes in 2010: 64% of them plan to pass more of the cost of brand drugs to the employee; 16% plan mandatory enrollment in disease management programs; and 16% plan to pass more of the cost of generic drugs to the employee.

Additional survey results:

  • 63 % waive employee cost sharing for yearly screening exam
  • 40 % provide insurance premium incentive for completion of a Health Risk Assessment (HRA)
  • 54 % cover depression under care management program
  • 70 % reduce/waive co-pay for utilizing the lowest cost appropriate site of care (e.g., urgent care, convenient care, onsite services, medical travel)
  • 58 % provide incentives for the use of EAP programs
  • 35 % provide incentives for financial counseling
  • 20% reduced applicable prevention screen cost for age/gender appropriate groups
  • 18% provided an insurance premium incentive for completion of a biometric screen
  • 13% reduced OOP costs for setting and/or achieving health promotion goals
  • 13% provided insurance premium incentive for complying with recommended prevention exam
  • 12% adjust their condition-based formulary (all tiers lowered for specified conditions)
  • 12% link co-pay/coinsurance waivers to mandatory condition management

Employers also indicated these as their top challenges to deploying their VBD programs (more than one answer allowed):

  • 53% - Increasing engagement with employees: slow to use the new benefits
  • 45% - Enrolling employees in disease management programs
  • 42% - Keeping the momentum going
  • 34% - Obtaining and integrating data
  • 34% - Lack of communication with physicians/pharmacists/clinicians
  • 34% - Communicating benefits with the covered lives
  • 32% - Segmenting and interpreting data
  • 18% - Communicating success with the covered lives
  • 13% - C-Suite support

Hewitt Says We’re More Engaged in Selecting Our Benefits

by Clive Riddle, April 2, 2010

Hewitt Associates this week released data indicating that employees in 2009 were more engaged in selected their health benefits than in previous years. That being said, Hewitt concluded their choices weren’t all that different than before, they were just more involved in the process.

Here’s some of what Hewitt had to report on the matter: “Hewitt's analysis of 6 million U.S. workers, for whom Hewitt managed benefits enrollment in the fall of 2009, revealed the highest number of active enrollees since Hewitt began tracking the data in 2003. Nearly half (45 percent) of employees actively chose their benefits for 2010 instead of passively defaulting into the same coverage or no coverage at all. This is up significantly from the 2009 open enrollment period, where just 39 percent of employees actively enrolled. Despite employees taking a more active role in selecting their benefits, Hewitt's data shows very few workers enrolled in different health insurance plans.”

So what plans are employees enrolling in? Here’s a data table Hewitt shared indicating enrollment by plan type for the past three years (note that the survey involves large employers):

Enrollment by Plan Type

Open Enrollment Year





























So what does Hewitt make of all this? Sara Taylor, Hewitt’s Health and Welfare Strategy Leader tells us: "Employee inertia continues to play a large role in enrollment decisions—it's encouraging to see that people are more engaged in assessing their benefits, but that doesn't mean they are necessarily making different choices. If employers want workers to make different elections, they might need to adopt a more aggressive approach—whether it's changing or reducing plan options or offering plans with widely differing price points."