Are Employee Benefits Forever?
HR and benefit leaders gather in Las Vegas to explore their options as they chart a future course in healthcare and benefits.
By Andrew McIlvaine and David Shadovitz
Approximately 700 attendees jammed into a ballroom at Las Vegas' gleaming Aria Hotel and Resort to hear Dr. Ron Leopold deliver a spirited opening keynote -- titled "Are Employee Benefits Forever?" -- at the inaugural Health & Benefits Leadership Conference on Monday.
"This is a point in time where everything feels shaken up," said Leopold, national practice leader for health and productivity at Wells Fargo Insurance Services, headquartered in Fargo, N.D. "We are witnessing things that were unimaginable only five years ago, thanks to healthcare reform and technology."
One of those once-unimaginable things is the serious debate taking place within the employer community over whether to continue offering healthcare benefits in the wake of the Affordable Care Act, which will potentially impose major new burdens on companies and could drive up costs significantly, he said.
"Do we want to get out -- to 'pay' rather than 'play'?" said Leopold. The temptation may be fierce, but ultimately, he said, most employers will choose to keep playing, albeit "on a different playing field."
"Why do we offer benefits in the first place?" he asked. "We offer them because we need our people. It comes down to the value equation -- offering benefits equals attraction, retention and productivity."
The cost trend for healthcare benefits has risen steeply, he noted: According to data from the Kaiser Family Foundation, health-insurance premiums rose by 172 percent between 1999 and 2012, compared to concurrent increases in inflation and worker earnings of only 38 percent and 47 percent, respectively.
Factors behind the soaring cost of care include "paying providers for doing more rather than for being more efficient," a wave of consolidation among hospitals that has enabled them to charge higher prices, the longstanding tax breaks for providing health insurance and the relatively low prices charged to patients for seeking care and the fact that "we're getting older, fatter and sicker," said Leopold.
Leopold does not see the ACA helping matters much, predicting that it will "squeeze health plans into a smaller box." It will bring more people into health plans, but with only finite resources to pay for their care, the result will be "more cost-shifting and risk-shifting onto employees," he said, possibly resulting in "increased morbidity and lower productivity."
Employers are taking matters into their own hands as a result, said Leopold, going well beyond tinkering with healthcare plan design to embrace innovations such as accountable-care organizations, so-called "medical homes" and on-site clinics.
Exiting the health-benefits arena would be a perilous move for employers, said Leopold. "Health and productivity are simply too interrelated -- even if employers get out of the healthcare-benefits business, they'll never get out of the productivity business," he said.
"As long as people depend on business and business depends on people, benefits are here to stay," said Leopold.
Leopold's rousing speech was followed with a presentation by Comcast's Andy Rosa, the telecommunications giant's senior director of health and welfare benefits, who explained how the company cut its healthcare costs by 7 percent from 2009 to 2011 by introducing a combination of high-tech tools and "high-touch" services, including "personal health assistants" to serve as employees' guides and advocates through the often-confusing maze of benefit plans, co-pays, deductibles and treatment options.
In redesigning how it delivered benefits to its 120,000 employees, said Rosa, "we decided to throw away the old model and instead try and imagine what the process looks like from the end-user's point of view."
From that viewpoint, the status quo was unacceptable, he said. "You've really got to think -- how could a company survive if it delivered such a bad customer experience to its actual customers, something so complicated, hard to use and that went up in price every year?" he asked.
Philadelphia-headquartered Comcast partnered with Plymouth Meeting, Pa.-based Accolade in 2009 to build a better benefits experience for its employees. It created a one-stop shop for all benefits-related questions, even requiring employees to call their Accolade personal health assistant -- not their health-insurance carrier -- if they lose their insurance ID card, said Rosa. The PHA can then ask them other questions -- why, for example, they haven't refilled their prescription for the last three months, he said.
The key was understanding that when employees and their families need medical care, it can be a fraught, anxious time, said Rosa, and giving them a trusted advisor to turn to who "knows them," who understands the employee's medical history and the particulars of the health plan he or she is enrolled in, can lead to better outcomes.
The personal health assistants, along with sophisticated enrollment tools from Jellyvision to help employees select plans that best meet their needs, led to a 7-percent reduction in healthcare costs among a pilot group of about 25,000 Comcast employees, said Rosa. The savings came from reductions in in-patient stays and hospital readmissions, with the Accolade PHAs talking to employees before and after they went into the hospital to ensure they got the right treatment and that they complied with treatment regimens, he said.
"We bent the cost trend," said Rosa.
Later in the day, during a panel titled "Creating the Next Generation of Benefits Leaders: Enhancing Your Impact by Developing Your Team," a panel of benefit leaders and consultants explored, among other things, what they look for in their own talent.
Passion is at the top of Nate Randall's list.
Randall, benefits manager for high-profile up-start Tesla Motors in Palo Alto, Calif., said he seeks people who are "passionate about their jobs" and are "passionate about benefits and healthcare." If that's not the case, he explained, they should be doing something else.
Randall added that passion is something that's easy to get at in the interviewing process. (The panel was moderated by Dona Rhodes Joseph, CEO of Rhodes-Joseph & Tobiason Advisors in Stamford, Conn.)
Today's benefits professionals no longer have the luxury of staying under the radar, said Randall. "It used to be that the CEO would only contact you when something went wrong," he explained. "So the skill set you needed was basically to avoid internal problems. But now, with healthcare reform and the high cost of healthcare, you have to be ready to answer tough questions from your CFO [and CEO]. And that means recruiting very different people than you did in the past."
To that end, analytical capabilities have grown in importance, said panelist Brian Baker, west region leader of Aon Hewitt's talent practice in San Francisco.
"Big data and the ability to turn that into decisions and actions represent an area where I think benefit professionals have led the way in HR," Baker explained.
At Las Vegas-headquartered MGM Resorts International, benefits is a very high-profile role, noted panelist Cindy Moehring, MGM Resorts' executive director of benefits.
"Benefits has clearly changed," she said. "It's not just about providing a health plan or a benefits plan to employees. It [represents] something that actually impacts lives."
Moehring also noted that MGM's benefits group has brought more of its work in-house. "We don't use outside actuaries, but use our own expertise to do this," she explained.
That's also the case for benefits-marketing roles. "When you have your own creative people in a room, you tend to get better results," said Moehring, adding that it also happens to be a more cost-effective approach.
Editor's note: Additional coverage of the conference is available on HRE's The Leader Board.