Monthly Archives: January 2018

SOTU Healthcare Speed-Read

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In State of the Union address last night, President Trump did mention a couple things about health care (not much new).

Key SOTU quotes:

  • “We repealed the core of disastrous Obamacare — the individual mandate is now gone.” (Fact check: The mandate is not gone yet; it disappears next year.)
  • “We must get much tougher on drug dealers and pushers if we are going to succeed in stopping this scourge. My administration is committed to fighting the drug epidemic and helping get treatment for those in need.”
  • “Patients with terminal conditions should have access to experimental treatments that could potentially save their lives … It is time for the Congress to give these wonderful Americans the ‘right to try.'”
  • “One of my greatest priorities is to reduce the price of prescription drugs. In many other countries, these drugs cost far less than what we pay in the United States. That is why I have directed my administration to make fixing the injustice of high drug prices one of our top priorities for the year. And prices will come down substantially.”

Yes, but: Standard caveats apply on drug prices — those other countries pay less, in many cases, because of government-imposed price controls that Republicans staunchly oppose implementing here.

Notable: There was no push, even rhetorically, to repeal the rest of the Affordable Care Act.

The erosion of worker compensation

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https://www.axios.com/the-erosion-of-worker-compensation-1516915779-5de48fc9-bfe8-4577-88e0-4e9b46591af3.html

Corporate profits have dramatically outpaced wages and health benefits since the turn of the century, leaving workers on the hook for more of their health care costs even as their purchasing power falls, according to a review of federal data.

Key quote: “If I were a middle-class American, I’d be outraged,” said Regina Herzlinger, a professor at Harvard Business School. “I’d demand much greater transparency about how much I’m getting in health insurance and wages.”

Data: Bureau of Economic Analysis; Chart: Chris Canipe / Axios

The bottom line: American workers have not seen their wages grow in tandem with the success of their employers.

Meanwhile, health spending has been growing faster than the broader economy. Health benefits consequently are getting more expensive for employers to offer, and companies are responding by making employees shoulder more of their own health care costs — either through higher premiums or higher out-of-pocket costs, like deductibles and copays.

What it means: Health care is eating up a bigger share of paychecks that already don’t go as far as they used to.

  • “Plans are getting less generous because (employers) are paying more in absolute dollars,” said Michael Chernew, a health economist at Harvard Medical School.
  • “Your health benefit being 10% of your compensation isn’t as meaningful today as it was 15 years ago because spending on health care has grown more quickly,” added Erin Trish, a health policy professor at the University of Southern California.
  • “If a hospital visit is expensive, someone — either the employer or the worker — is going to pick up that cost,” said Matt Fiedler, a fellow at the Brookings Institution.

Yes, but: Economists say reducing the generosity of employer health plans is not necessarily a bad thing, because generous plans might encourage people to use more health care services than they need.

Plus, “the idea that an employer should be deciding what kind of health care benefits an employee gets is kind of crazy,” said Dean Baker, an economist at the Center for Economic and Policy Research. But, Baker adds, there has to be a viable health care alternative for workers.

What to watch: Whether employee compensation increases more quickly, especially as companies predict even bigger profits under the GOP tax plan.

  • There is no evidence the temporary, one-off bonuses announced by many companies, and attributed to the Republican tax cut bill, will drastically change the stagnant trajectory of worker compensation.

The details: The data are from the U.S. Bureau of Economic Analysis. The growth of three economic indicators — corporate profits, wages, and money employers spent on health insurance for their employees — were compared with overall economic growth over the past 16 years. Health coverage and wages were singled out because workers often value those compensation items most when they take a job.

The analysis showed:

  • Corporate profits were 4.7% of the U.S. economy in 2000 and climbed to 9.1% by 2016.
  • Employer health coverage mostly stayed flat, going from 3.2% of GDP in 2000 to 3.7% in 2016.
  • Salaries and wages decreased quite a bit. They represented almost 47% of the economy in 2000 and dropped to 43.4% in 2016.

Poll: Majority want Trump to focus on health care in State of the Union

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http://thehill.com/policy/healthcare/371219-majority-of-voters-want-trump-to-focus-on-health-care-in-state-of-the-union

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Most voters think President Trump‘s first State of the Union address should focus on improving the health-care system, according to a new Morning Consult–Politico poll.

According to the poll, 82 percent of voters say it’s important for Trump to address improving the health-care system in the speech, followed closely by the 81 percent who said it’s important for him to talk about the economy and creating jobs.

Providing direction and leadership and reducing poverty in the U.S. came in third, while fighting terrorism followed.The poll surveyed 1,994 registered voters from Jan. 18 to 20 and has a margin of error of 2 percentage points.

It’s unlikely Trump will put a large focus on health care during his speech Tuesday evening.

Congress failed to repeal and replace ObamaCare multiple times last year, though lawmakers did repeal the law’s unpopular individual mandate that most people have insurance or pay a fine.

Trump will likely pressure Congress on immigration as it works to find a deal on the Deferred Action for Childhood Arrivals program.

Trump is also going to focus on laying out an trillion-dollar infrastructure plan and the recently passed tax-reform bill.

10 ways compensation committees can best guide executive pay and performance

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https://www.beckershospitalreview.com/compensation-issues/10-ways-compensation-committees-can-best-guide-executive-pay-and-performance.html

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As CEO incentive pay packages bring attention to transparency issues in executive compensation, a group of directors and chief risk officers from The Directors and Chief Risk Officers Group published a set of guiding principles for compensation committees around the governance of risk related to pay and performance.

The report aims to give a company’s board of directors and board-level compensation committees guidelines for the governance of risks linked to an organization’s compensation culture.

Here are 10 guidelines for compensation committees to best guide executive pay and performance, according to the report.

1. Compensation committees must fulfill both direct and indirect pay governance responsibilities to define the best compensation culture for the company. Under direct governance responsibilities, CEOs must establish and continually review company-wide compensation philosophy. To fulfill indirect pay governance responsibilities, a company’s executives must ensure adequate resources and processes are in place for the organization’s incentive plans.

2. Committees should emphasize incentive pay for corporate performance when designing and communicating the company’s compensation philosophy. Incentive pay for an individual’s performance must be carefully applied when it is appropriate to fulfilling the individual’s role.

3. A CEO’s total compensation should be driven by how they impact the long-term interests of the company, which includes how effectively the organization takes risk.

4. A company should minimize use of external benchmarking, or the comparison of its statistical data with other organizations in the same industry, for executive pay. Instead, companies should work to incorporate internally-focused pay evaluation for executive pay.

5. Incentive-based compensation should always be considered to be “at risk,” subject to deferral periods and influenced by the company’s long-term performance.

6. Compensation committees must continually use discretion in determining an executive’s final incentive pay package. In this way, committees must make rules for determining these pay packages subject to discretionary override when the compensation culture of the organization appears to be violated.

7. When considering performance reviews and compensation design for an organization’s CEO and individuals in the succession plan, the compensation committee must provide complete transparency to the entire board. This includes the board’s approval of full details of the CEO’s performance and any final awards given to the executive.

8. Compensation committees should obtain public certification that ensures their processes of governing pay risk and compensation philosophy are “fit for purpose,” which entails executing a statement that verifies a company has performed due diligence on its pay governance processes.

9. The members of a company’s compensation committee should have diverse backgrounds and experience, expertise in risk, finance, and management and should cross-populate the company’s risk and audit committees.

10. To ensure proper compensation risk governance, companies must incorporate collaboration, feedback and review among board committee’s and the firm’s social network to maintain a properly established compensation culture.