Category Archives: Employee Benefits

Are Employers Ready to Move from the Back Bench in U.S. Healthcare?

Posted on by • Posted in Cost Management, Cost Transparency, Employee Benefits, Employer-Based Health Insurance, Employer-Sponsored Commercial Health Insurance, Employers, Health Insurance Self Funded, Healthcare Reform, High Drug Prices, High Premiums, High Prices, High Risk Employees, Medicaid, Medicare, Medicare Advantage, Out of Pocket Expenses • Leave a comment
Are Employers Ready to Move from the Back Bench in U.S. Healthcare?

This year, 316 million Americans (92.3% of the population) have health insurance: 61 million are covered by Medicare, 79 million by Medicaid/CHIP and 164 million through employment-based coverage. By 2032, the Congressional Budget Office predicts Medicare coverage will increase 18%, Medicaid and CHIP by 0% and employer-based coverage will increase 3.0% to 169 million. For some in the industry, that justifies seating Medicare on the front row for attention. And, for many, it justifies leaving employers on the back bench since the working age population use hospitals, physicians and prescription meds less than seniors.  

Last week, the Business Group on Health released its 2025 forecast for employer health costs based on responses from 125 primarily large employers surveyed in June: Highlights:

  • “Since 2022, the projected increase in health care trend, before plan design changes, rose from 6% in 2022, 7.2% in 2024 to almost 8% for 2025. Even after plan design changes, actual health care costs continued to grow at a rate exceeding pre-pandemic increases. These increases point toward a more than 50% increase in health care cost since 2017. Moreover, this health care inflation is expected to persist and, in light of the already high burden of medical costs on the plan and employees, employers are preparing to absorb much of the increase as they have done in recent years.”.
  • Per BGH, the estimated total cost of care per employee in 2024 is $18,639, up $1,438 from 2023. The estimated out-of-pocket cost for employees in 2024 is $1,825 (9.8%), compared to $1,831 (10.6%) in 2023.

The prior week, global benefits firm Aon released its 2025 assessment based on data from 950 employers:

  • “The average cost of employer-sponsored health care coverage in the U.S. is expected to increase 9.0% surpassing $16,000 per employee in 2025–higher than the 6.4% increase to health care budgets that employers experienced from 2023 to 2024 after cost savings strategies. “
  • On average, the total health-plan cost for employers increased 5.8% to $14,823 per employee from 2023 to 2024: employer costs increased 6.4% to 80.7% of total while employee premiums increased 3.4% increase–both higher than averages from the prior five years, when employer budgets grew an average of 4.4% per year and employees averaged 1.2% per year.
  • Employee contributions in 2024 were $4,858 for health care coverage, of which $2,867 is paid in the form of premiums from pay checks and $1,991 is paid through plan design features such as deductibles, co-pays and co-insurance.
  • The rate of health care cost increases varies by industry: technology and communications industry have the highest average employer cost increase at 7.4%, while the public sector has the highest average employee cost increase at 6.7%. The health care industry has the lowest average change in employee contributions, with no material change from 2023: +5.8%

And in July, PWC’s Health Research Institute released its forecast based on interviews with 20 health plan actuaries. Highlights:

  • “PwC’s Health Research Institute (HRI) is projecting an 8% year-on-year medical cost trend in 2025 for the Group market and 7.5% for the Individual market. This near-record trend is driven by inflationary pressure, prescription drug spending and behavioral health utilization. The same inflationary pressure the healthcare industry has felt since 2022 is expected to persist into 2025, as providers look for margin growth and work to recoup rising operating expenses through health plan contracts. The costs of GLP-1 drugs are on a rising trajectory that impacts overall medical costs. Innovation in prescription drugs for chronic conditions and increasing use of behavioral health services are reaching a tipping point that will likely drive further cost inflation.”

Despite different methodologies, all three analyses conclude that employer health costs next year will increase 8-9%– well-above the Congressional Budget Office’ 2025 projected inflation rate (2.2%), GDP growth (2.4% and wage growth (2.0%).  And it’s the largest one-year increase since 2017 coming at a delicate time for employers worried already about interest rates, workforce availability and the political landscape.

For employers, the playbook has been relatively straightforward: control health costs through benefits designs that drive smarter purchases and eliminate unnecessary services. Narrow networks, price transparency, on-site/near-site primary care, restrictive formularies, value-based design, risk-sharing contracts with insurers and more have become staples for employers. 

But this playbook is not working for employers: the intrinsic economics of supply-driven demand and its regulated protections mitigate otherwise effective ways to lower their costs while improving care for their employees and families.

My take:

Last week, I reviewed the healthcare advocacy platforms for the leading trade groups that represent employers in DC and statehouses to see what they’re saying about their take on the healthcare industry and how they’re leaning on employee health benefits. My review included the U.S. Chamber of Commerce, National Federal of Independent Businesses, Business Roundtable, National Alliance of Purchaser Coalitions, Purchaser Business Group on Health, American Benefits Council, Self-Insurance Institute of America and the National Association of Manufacturers.

What I found was amazing unanimity around 6 themes:

  • Providing health benefits to employees is important to employers. Protecting their tax exemptions, opposing government mandates, and advocating against disruptive regulations that constrain employer-employee relationships are key.
  • Healthcare affordability is an issue to employers and to their employees, All see increasing insurance premiums, benefits design changes, surprise bills, opaque pricing, and employee out-of-pocket cost obligations as problems.
  • All believe their members unwillingly subsidize the system paying 1.6-2.5 times more than what Medicare pays for the same services. They think the majority of profits made by drug companies, hospitals, physicians, device makers and insurers are the direct result of their overpayments and price gauging.
  • All think the system is wasteful, inefficient and self-serving. Profits in healthcare are protected by regulatory protections that disable competition and consumer choices.
  • All think fee-for-service incentives should be replaced by value-based purchasing.
  • And all are worried about the obesity epidemic (123 million Americans) and its costs-especially the high-priced drugs used in its treatment. It’s the near and present danger on every employer’s list of concerns.

This consensus among employers and their advocates is a force to be reckoned. It is not the same voice as health insurers: their complicity in the system’s issues of affordability and accountability is recognized by employers. Nor is it a voice of revolution: transformational changes employers seek are fixes to a private system involving incentives, price transparency, competition, consumerism and more.

Employers have been seated on healthcare’s back bench since the birth of the Medicare and Medicaid programs in 1965. Congress argues about Medicare and Medicaid funding and its use. Hospitals complain about Medicare underpayments while marking up what’s charged employers to make up the difference. Drug companies use a complicated scheme of patents, approvals and distribution schemes to price their products at will presuming employers will go along. Employers watched but from the back row.

As a new administration is seated in the White House next year regardless of the winner, what’s certain is healthcare will get more attention, and alongside the role played by employers. Inequities based on income, age and location in the current employer-sponsored system will be exposed. The epidemic of obesity and un-attended demand for mental health will be addressed early on. Concepts of competition, consumer choice, value and price transparency will be re-defined and refreshed. And employers will be on the front row to make sure they are.

For employers, it’s crunch time: managing through the pandemic presented unusual challenges but the biggest is ahead. Of the 18 benefits accounted as part of total compensation, employee health insurance coverage is one of the 3 most expensive (along with paid leave and Social Security) and is the fastest growing cost for employers.  Little wonder, employers are moving from the back bench to the front row.

Return-to-Office Mandates: Layoffs in Sheep’s Clothing

Posted on by • Posted in Employee Benefits, Employee Flexibility, Employee Hiring Freeze, Employee Layoffs, Employee Mandate, Employee Resentment, Employee Retention, Employee Satisfaction, Employee Work-Life Balance, Return to Office (RTO) Mandates, Talent Management • Leave a comment

https://www.reworked.co/employee-experience/return-to-office-mandates-layoffs-in-sheeps-clothing/

Companies demand employees come into the office for many legitimate reasons. But in some cases, it appears to be a tactic to force employees out.

Companies, large and small, are asking employees to return to the office at least a few days a week. But in some cases, these return-to-office (RTO) policies appear to be a passive-aggressive approach to eliminate roles, rather than doing layoffs.

Case in point: AT&T recently said it would require thousands of managers from across the country to work in person at just nine locations. One manager referred to the move as “a layoff wolf in return-to-office sheep’s clothing.”  

Dell stated employees who chose to work fully remotely won’t be eligible for promotion. Google plans to factor an employee’s in-person attendance into their performance evaluation. 

While there are several reasons companies could be using RTO to avoid actively laying people off, Maurice Cayer, lecturer and coordinator of the master of science human resources program at the University of New Haven, said it could backfire.

“It’s a blunt instrument,” he said of the tactic. 

A Disconnect Between Employers and Employees 

Research from the University of Pittsburgh found companies use RTO mandates at times for “power grabbing and blaming employees for poor performance,” yet the results harm employee satisfaction and fail to improve performance. 

Still, 90% of organizations plan to implement RTO policies this year, and 80% will track in-office attendance, such as via badge swipes and desk sensors. 

Most employees prefer remote or hybrid work. Nearly 50% said they would quit their jobs if their employer mandated a full-time RTO policy, according to the Integrated Benefits Institute.  

Employees’ feelings about in-office work are clear. So why are companies choosing to enforce such an unpopular — and ineffective — tactic? 

One reason is that some organizations, especially tech companies, overstaffed as they rebounded from the pandemic and now have too many employees, Cayer said. The introduction of new technology, like artificial intelligence, also might be behind a reduction in staff. 

Others may be using RTO as a test. The mandate in those cases screens employees to determine “who’s the most committed to the organization” and open to a more traditional work model, said Colleen Flaherty Manchester, a professor in the Work and Organizations department at the University of Minnesota. 

The tactic highlights the disconnect between employers’ perceptions of flexible work and employees’ desires to work remotely for personal or productivity reasons, she said. 

Requiring employees to return to work in person may have some advantages, such as improved communication and more opportunities for mentorship, but organizations typically haven’t experienced extensive productivity issues with remote work, said Carrie Urrutia, a labor and employment attorney at Eastman & Smith in Toledo, Ohio. 

“Many companies simply want things to revert to the way they were before COVID,” she said. 

The Consequences of Using RTO to Trim Staff 

Companies risk losing their best people with RTO policies, said Cayer. 

“Organizations are placing bets, and they’re willing to live with the consequences of losing some highly desirable people in the process,” he explained. “But, maybe they’ll make up for it by having people who are engaged at work.” 

Quietly laying off workers under the RTO guise could anger employees and damage an organization’s reputation, which might impact future hiring and meeting business goals, Urrutia added. 

Yet the approach is attractive to companies. “It could be a less-costly way to achieve a goal of reducing the workforce without a formal reduction in force,” said Urrutia.

Employees who quit as a result of RTO mandates wouldn’t be eligible for unemployment compensation and typically wouldn’t receive a severance package as opposed to those who were laid off, she explained. “Generally speaking, employees who voluntarily resign are not entitled to those benefits.”

However companies would be better served implementing hiring freezes or enabling more flexibility, she argued. Urrutia said organizations should examine their current remote or hybird work arrangements and assess what’s working for them and employees. If RTO is mandated, they should clearly articulate the business reasons why it’s necessary and why remote work isn’t working. 

“Aim to find a sweet spot that achieves the manager’s goals of in-person connection for innovation and group productivity, yet also meets some of the needs of employees,” Manchester said. 

Are Quiet Layoffs Legal? 

As a rule, employees don’t have a legal right to work from home, so employers are free to require in-person work as a condition of employment, Urrutia said. Workers therefore typically don’t have legal recourse if they feel a RTO mandate is designed to make them quit.

One exception is if an employee had a contract that specifically stipulated they’re allowed to work remotely, Urrutia explained. Another is unionized employees, where RTO could be a subject of collective bargaining.  

Organizations also must ensure their RTO decisions aren’t discriminatory or unfairly impact groups protected under the Civil Rights Act, Cayer said. The law prohibits employment discrimination based on race, color, sex, national origin, age, disability and medical history. 

Employers are also required to provide reasonable accommodation under the Americans with Disabilities Act or Pregnant Workers Fairness Act, and that might include allowing remote work, Urrutia added. 

“Employees who work from home are not a protected classification, but many employees who work from home are in protected classifications,” she said. 

Still, employees could file a lawsuit if they feel they RTO policies unfairly led them to quit, Cayer added. Organizations can choose to protest the suit. “A lot of times that leads into some settlement,” he said.

Keeping employers in the health benefits business   

Posted on by • Posted in Employee Benefits, Employee Health Insurance Stipend, Employer-Based Health Insurance, Employer-Sponsored Commercial Health Insurance, Employers, Health Insurance Industry, Health System, Hospital, Hospital Industry, Individual Coverage Health Reimbursement Arrangement (ICHRA), Mutually Beneficial Partnerships • Leave a comment

https://mailchi.mp/09f9563acfcf/gist-weekly-february-2-2024?e=d1e747d2d8

“What if 10 percent, or even five percent, of the employers in our market decide to stop providing health benefits?” a Chief Strategy Officer (CSO) at a midsized health system in the Southeast recently asked.

“Their health insurance costs have been growing like crazy for 20 years. Some of these companies could easily decide to just give their employees some amount of tax-advantaged dollars and let them do their own thing.” An emerging option for employers is the relatively new individual coverage Health Reimbursement Arrangement (ICHRA), which allows employers to give tax-deductible contributions to employees to use for healthcare, including purchasing health insurance on an exchange. 

According to the CSO, “What happens is this: We’ll go from getting 250 percent of Medicare for beneficiaries in a commercial group plan to getting 125 percent for beneficiaries in a market plan. I don’t know any provider with the margins to withstand that kind of shift without significant pain—certainly not us.” 
 


The conversation shifted to a discussion about treating employers like true customers that pay generously for healthcare services, which involves increasing engagement with them and better understanding their specific problems with their employees’ healthcare. What complaints are they hearing about their employee’s difficulties with things like making timely appointments or finding after-hours care?

Provider organizations can help keep employers in the health insurance market by regularly checking in with them about their healthcare challenges, meaningfully focusing on mitigating their pain points, and exploring new kinds of mutually beneficial partnerships. 

They should also carefully monitor the employer market in their region and create financial assessments of the potential impact of employers shifting employees to health insurance stipend arrangements. 

How America skimps on healthcare

Posted on by • Posted in ACA, Cost Management, Cost Reduction, Cost Shifting, Delayed Care, Denial, Denial Rates, Employee Benefits, Health Insurance Coverage Adequacy, Health Insurance Denial, High Deductible Health Plans, Labor Spend Management, Medicaid, Medical Loss Ratio (MLR), Medicare, Prior Authorization, Shrinkflation, Utilization Trends • Leave a comment

https://www.linkedin.com/pulse/how-america-skimps-healthcare-robert-pearl-m-d–p1qnc/

Not long ago, I opened a new box of cereal and found a lot fewer flakes than usual. The plastic bag inside was barely three-quarters full.

This wasn’t a manufacturing error. It was an example of shrinkflation.

Following years of escalating prices (to offset higher supply-chain and labor costs), packaged-goods producers began facing customer resistance. So, rather than keep raising prices, big brands started giving Americans fewer ounces of just about everything—from cereal to ice cream to flame-grilled hamburgers—hoping no one would notice.

This kind of covert skimping doesn’t just happen at the grocery store or the drive-thru lane. It’s been present in American healthcare for more than a decade.

What Happened To Healthcare Prices?  

With the passage of the Medicare and Medicaid Act in 1965, healthcare costs began consuming ever-higher percentages of the nation’s gross domestic product.

In 1970, medical spending took up just 6.9% of the U.S. GDP. That number jumped to 8.9% in 1980, 12.1% in 1990, 13.3% in 2000 and 17.2% in 2010.  

This trajectory is normal for industrialized nations. Most countries follow a similar pattern: (1) productivity rises, (2) the total value of goods and services increases, (3) citizens demand better care, newer drugs, and more access to doctors and hospitals, (4) people pay more and more for healthcare.  

But does more expensive care equate to better care and longer life expectancy? It did in the United States from 1970 to 2010. Longevity leapt nearly a decade as healthcare costs rose (as a percentage of GDP).

Then American Healthcare Hit A Ceiling

Beginning in 2010, something unexpected happened. Both of these upward trendlines—healthcare inflation and longevity—flattened.

Spending on medical care still consumes roughly 17% of the U.S. GPD—the same as 2010. Meanwhile, U.S. life expectancy in 2020 (using pre-pandemic data) was 77.3 years—about the same as in 2010 when the number was 78.7 years.

How did these plateaus occur?

Skimping On U.S. Healthcare

With the passage of the Affordable Care Act of 2010, healthcare policy experts hoped expansions in health insurance coverage would lead to better clinical outcomes, resulting in fewer heart attacks, strokes and cancers. Their assumption was that fewer life-threatening medical problems would bring down medical costs.

That’s not what happened. Although the rate of healthcare inflation did, indeed, slow to match GDP growth, the cost decreases weren’t from higher-quality medical care, drug breakthroughs or a healthier citizenry. Instead, it was driven by skimping.

And as a result of skimping, the United States fell far behind its global peers in measures of life expectancy, maternal mortality, infant morality, and deaths from avoidable or treatable conditions.

To illustrate this, here are three ways that skimping reduces medical costs but worsens public health:

1. High-Deductible Health Insurance

In the 20th century, traditional health insurance included two out-of-pocket expenses. Patients paid a modest upfront fee at the point of care (in a doctor’s office or hospital) and then a portion of the medical bill afterward, usually totaling a few hundred dollars.

Both those numbers began skyrocketing around 2010 when employers adopted high-deductible insurance plans to offset the rising cost of insurance premiums (the amount an insurance company charges for coverage). With this new model, workers pay a sizable sum from their own pockets—up to $7,050 for single coverage and $14,100 for families—before any health benefits kick in.

Insurers and businesses argue that high-deductible plans force employees to have more “skin in the game,” incentivizing them to make wiser healthcare choices.

But instead of promoting smarter decisions, these plans have made care so expensive that many patients avoid getting the medical assistance they need. Nearly half of Americans have taken on debt due to medical bills. And 15% of people with employer-sponsored health coverage (23 million people) have seen their health get worse because they’ve delayed or skipped needed care due to costs.

And when it comes to Medicaid, the government-run health program for individuals living in poverty, doctors and hospitals are paid dramatically lower rates than with private insurance.

As a result, even though the nation’s 90 million Medicaid enrollees have health insurance, they find it difficult to access care because an increasing number of physicians won’t accept them as patients.

2. Cost Shifting

Unlike with private insurers, the U.S. government unilaterally sets prices when paying for healthcare. And in doing so, it transfers the financial burden to employers and uninsured patients, which leads to skimping.

To understand how this happens, remember that hospitals pay the same amount for doctors, nurses and medicines, regardless of how much they are paid (by insurers) to care for a patient. If the dollars reimbursed for some patients don’t cover the costs, then other patients are charged more to make up the difference.

Two decades ago, Congress enacted legislation to curb federal spending on healthcare. This led Medicare to drastically reduce how much it pays for inpatient services. Consequently, private insurers and uninsured patients now pay double and sometimes triple Medicare rates for hospital services, according to a Kaiser Family Foundation report.

These higher prices generate heftier out-of-pocket expenses for privately insured individuals and massive bills for the uninsured, forcing millions of Americans to forgo necessary tests and treatments.

3. Delaying, Denying Care

Insurers act as the bridge between those who pay for healthcare (businesses and the government) and those who provide it (doctors and hospitals). To sell coverage, they must design a plan that (a) payers can afford and (b) providers of care will accept.

When healthcare costs surge, insurers must either increase premiums proportionately, which payers find unacceptable, or find ways to lower medical costs. Increasingly, insurers are choosing the latter. And their most common approach to cost reduction is skimping through prior authorization.

Originally promoted as a tool to prevent misuse (or overuse) of medical services and drugs, prior authorization has become an obstacle to delivering excellent medical care. Insurers know that busy doctors will hesitate to recommend costly tests or treatments likely to be challenged. And even when they do, patients weary of the wait will abandon treatment nearly one-third of the time.

This dynamic creates a vicious cycle: costs go down one year, but medical problems worsen the next year, requiring even more skimping the third year.

The Real Cost Of Healthcare Skimping

Federal actuaries project that healthcare expenses will rise another $3 trillion over the next eight years, consuming nearly 20% of the U.S. GDP by 2031.

But given the challenges of ongoing inflation and rapidly rising national debt, it’s more plausible that healthcare’s share of the GDP will remain at around 17%.

This outcome won’t be due to medical advancements or innovative technologies, but rather the result of greater skimping.

For example, consider that Medicare decreased payments to doctors 2% this year with another 3.3% cut proposed for 2024. And this year, more than 10 million low-income Americans have lost Medicaid coverage as states continue rolling back eligibility following the pandemic. And insurers are increasingly using AI to automate denials for payment. 

Currently, the competitive job market has business leaders leery of cutting employee health benefits. But as the economy shifts, employees should anticipate paying even more for their healthcare.

The truth is that our healthcare system is grossly inefficient and financially unsustainable. Until someone or something disrupts that system, replacing it with a more effective alternative, we will see more and more skimping as our nation struggles to restrain medical costs.

And that will be dangerous for America’s health.

Kaiser Permanente healthcare workers initiate record strike

Posted on by • Posted in Employee Benefits, Employee Compensation, Employee Expectations, Employee Raise, Health System, Hospital, Hospital Industry, Kaiser Permanente, Labor Spend Management, Labor Strike, Labor Union, Operating Expenses, Operating Margin • Leave a comment

https://mailchi.mp/9fd97f114e7a/the-weekly-gist-october-6-2023?e=d1e747d2d8

On Wednesday, 75K Kaiser Permanente (KP) healthcare workers in five states and Washington, DC walked off the job as part of the largest healthcare strike in US history.

The striking workers are a diverse group, based mostly in California, that includes support staff, X-ray technicians, medical assistants, and pharmacy workers. They will continue their work stoppage until Saturday morning, though union leadership is threatening an even larger strike in November if a new contract agreement is not reached by then.

Their employment contract expired on September 30th, and while negotiations have progressed on issues like shift-payment differentials and employee training investments, union leaders and KP executives remain at odds over key wage increase demands, with the unions asking for a $25 national minimum wage, and KP proposing $21.

The company has sought to minimize disruptions to patient care during the strike, bringing in temporary labor to keep critical infrastructure open, but has told its members to expect some non-urgent procedures to be rescheduled, some clinic and pharmacy operating hours to be reduced, and call center wait times to be lengthy. 

The Gist: Kaiser Permanente has enjoyed solid relations with its unions for decades, making this strike a significant break from precedent, fueled by post-pandemic burnout and staffing shortages. 

While KP is keeping all essential services open, care disruptions are inevitable with around one third of its total workforce on strike. 

The stakes of these labor negotiations extend far beyond just KP and its employees, as union success could inspire other unionized healthcare workers to adopt similar tactics and demands. (Case in point: Employees at eleven Tenet Healthcare facilities in California represented by SEIU-UHW, one of the unions representing striking KP workers, just voted to authorize their own strike.)

While happening alongside high-profile strikes in other industries, labor unrest is a troubling trend for health systems, whose margins remain well below historical levels amid persistently high labor and supply expenses.

How 23 health systems’ labor costs are trending

Posted on by • Posted in Employee Benefits, Health System, Hospital, Hospital Industry, Inflation, Labor Spend Management, Operating Expenses, Recruiting, Retention • Leave a comment
https://www.beckershospitalreview.com/finance/how-23-health-systems-labor-costs-are-trending.html?origin=CFOE&utm_source=CFOE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

The hospital workforce is critical to the care process and is most often the largest expense on a hospital or health system’s balance sheet. Even before the pandemic, labor expenses — which include costs associated with recruitment and retention, employee benefits and incentives — accounted for more than 50 percent of hospitals’ total expenses, according to the American Hospital Association. 

As a result, a slight increase in labor costs can have a tremendous effect on a hospital or health system’s total expenses and operating margins. Hospitals across the country are focused on managing the premium cost of labor, while recruiting and retaining talent remains a priority, and the cost of supplies and drugs also increases due to inflation. 

Here’s how 23 health systems’ labor costs are tracking based on the results of their most recent financial documents. 

Note: This is not an exhaustive list. Most of the following health systems’ labor costs are for the three months ending 30, with others for the six months ending June 30 and the 12 months ending June 30 — the most recent periods for which financial data is available. The year-over-year percentage increase/decrease is also included. 

1. HCA Healthcare Nashville, Tenn.)
Q2 salaries and benefits: $7.3 billion (+7.1 percent YOY)

2. Tenet Healthcare (Dallas)
Q2 salaries, wages and benefits: $2.3 billion (+7.5 percent YOY)

3. Community Health Systems (Franklin, Tenn.)
Q2 salaries and benefits: $1.3 billion (+3.2 percent YOY)

4. Universal Health Services (King of Prussia, Pa.)
Q2 salaries, wages and benefits: $1.8 billion (+4.7 percent YOY)

5. Mayo Clinic (Rochester, Minn.)Q2 salaries and benefits: $2.4 billion (+5.9 percent YOY)

6. SSM Health (St. Louis)
Q2 salaries and benefits: $1.1 billion. (+14.1 percent YOY)

7. Cleveland Clinic 
Q2 salaries, wages and benefits: $2.1 billion (+8.9 percent YOY) 

8. McLaren Health Care (Grand Blanc, Mich.)
Q2 salaries, wages, employee benefits and payroll taxes: $1.3 billion (+0.5 percent) 

9. Sutter Health (Sacramento, Calif.)
Q2 salaries and employee benefits: $1.7 billion (6.7 percent YOY)

10. IU Health (Indianapolis)
Q2 salaries, wages and benefits: $1.1 billion (-1.6 percent YOY)

11. Mass General Brigham (Boston)
Q2 employee compensation and benefits: $2.4 billion (+4.2 percent YOY)

12. ProMedica (Toledo, Ohio)Q2 salaries, wages and employee benefits: $388.8 million (-2.5 percent YOY)

13. Orlando (Fla.) Health
Q2 salaries and benefits: $734.4 million (+17.9 percent YOY)

14. MultiCare Health (Tacoma, Wash)
Salaries, wages and employee benefits: $1.5 billion (+14.4 percent YOY)
*For the six months ended June 30

15. Banner Health (Phoenix)Salaries, benefits and contract labor: $3 billion (+4.7 percent YOY)
*For the six months ended June 30

16. UPMC (Pittsburgh)
Salaries, professional fees and benefits: $4.8 billion (+6.7 percent YOY)
*For the six months ended June 30

17. Northwell Health (New Hyde Park, N.Y.)
Salaries and employee benefits: $5.3 billion (+10.6 percent YOY)
*For the six months ended June 30

18. Providence (Renton, Wash.)
Salaries and benefits: $7.5 billion (+4.9 percent YOY)
*For the six months ended June 30

19. Sanford Health (Sioux Falls, S.D.) 
Salaries and benefits: $1.8 billion (+2.6 percent YOY)
*For the six months ended June 30

20. Intermountain Health (Salt Lake City) 
Employee compensation and benefits: $3.4 billion (+27.9 percent YOY)   
*For the six months ended June 30

21. CommonSpirit Health (Chicago)
Salaries and benefits: $18.3 billion (+0.7 percent YOY)
*For the 12 months ended June 30
**Merged with Broomfield, Colo. -based SCL Health in April 2022

22. Ascension (St. Louis)
Salaries, wages and employee benefits: $14.3 billion (-1.3 percent YOY)
*For the 12 months ended June 30

23. Mercy Health (Chesterfield, Mo.)
Salaries and benefits: $4.6 billion (+5.3 percent)
*For the 12 months ended June 30

New Jersey hospital to suspend healthcare benefits from striking nurses

Posted on by • Posted in Collective Bargaining, Employee Benefits, Health System, Labor Strike, Labor Union, Labor Union Grievance, Mediation, Quality of Care, Recruiting, Retention, Talent Acquisition Strategy, Talent Management • Leave a comment
https://www.beckershospitalreview.com/hr/new-jersey-hospital-to-suspend-healthcare-benefits-from-striking-nurses.html?origin=BHRE&utm_source=BHRE&utm_medium=email&utm_content=newsletter&oly_enc_id=2893H2397267F7G

Robert Wood Johnson University Hospital in New Brunswick, N.J., said it plans to temporarily cut off healthcare benefits for striking union workers, effective Sept. 1.

Hospital spokesperson Wendy Gottsegen described the move as unfortunate.

“We have said all along that no one benefits from a strike — least of all our nurses. We hope the union considers the impact a prolonged strike is having on our nurses and their families,” Ms. Gottsegen said in an Aug. 28 news release shared with Becker’s. “As of Sept. 1, RWJUH nurses must pay for their health benefits through COBRA. This hardship, in addition to the loss of wages throughout the strike, is very unfortunate and has been openly communicated to the union and the striking nurses since prior to the walkout on Aug. 4.”

The ongoing strike involves the United Steelworkers Local 4-200, which represents about 1,700 nurses at the facility.

Union members voted to authorize a strike in July. The union and hospital have been negotiating a new agreement for months, with the last bargaining session occurring Aug. 16.

During negotiations, the union has said it seeks a contract that provides safe staffing standards, living wages and quality, affordable healthcare.

Local 4-200 President Judy Danella, RN, said in a previous union release, “Our members remain deeply committed to our patients. However, we must address urgent concerns, like staffing. We need enough nurses on each shift, on each floor, so we can devote more time to each patient and keep ourselves safe on the job.”

Several nurses told TAPinto New Brunswick last week that they began preparing for the current situation ahead of the strike, taking overtime shifts and saving as much money as possible. Others told the publication they are taking part-time jobs or temporary employment elsewhere in the nursing field or adjacent roles.

“I think it’s important that you [remember] you might not get the job you want to do at that moment, but people have to do what they have to do to get it done,” Jessica Newcomb, RN, told TAPinto New Brunswick.

Meanwhile, the hospital has contracted with an agency to hire replacement nurses during the strike. 

“As always, our top priority is to our patients. RWJUH is open, fully operational and completely staffed, and we remain steadfast in our commitment to deliver the highest quality and always-safe patient care,” Ms. Gottsegen said.

As of Aug. 28, no further dates for negotiations were scheduled by mediators.

More large employers and unions turn to Medicare Advantage to offer retiree health benefits

Posted on by • Posted in Employee Benefits, Employee Retirement, Medicare, Medicare Advantage • Leave a comment

https://www.fiercehealthcare.com/payers/kff-more-large-employers-and-unions-turn-medicare-advantage-offer-retiree-health-benefits

More and more employer and union-sponsored retiree health plans are offering Medicare-eligible coverage through Medicare Advantage (MA), a new analysis finds. 

The analysis from the Kaiser Family Foundation, released Thursday, comes as MA is expected to surpass traditional Medicare in total enrollment for 2023 and more insurers enter the lucrative market. Employers and unions are turning to MA in a bid to control retiree healthcare costs. 

“For some large employers, the shift to Medicare Advantage appears to be a strategy to maintain benefits for their retirees, without terminating coverage or adopting other changes that more directly shift costs onto retirees,” the analysis said. “However, the shift to Medicare Advantage has implications for retirees that extend beyond supplemental benefits.”

Kaiser relied on data from its 2022 employer health benefits survey of large private and nonfederal public employers. It showed that half of the large employers with 200 or more workers are offering health benefits to retirees through an MA contract, nearly double the 26% doing the same in 2017. Another 44% that offer MA coverage to retirees don’t give them another choice in coverage. 

Among the companies with 2,000 or more employers, 60% offered benefits through an MA plan. The top reason such companies turn to MA is to combat higher costs, with 42% citing it as a reason compared with 14% for flexibility for enrollees. 

Unlike traditional Medicare, MA relies on provider networks and cost management tools to cut down on costs. Kaiser warned that this shift toward MA has some unintended consequences for retirees. 

“This approach has potential to restrict retirees’ access to doctors and hospitals, depending on the plan’s provider network, and subject retirees to cost management tools, such as prior authorization, that may limit access to Medicare-covered services,” the analysis said. 

Kaiser cited a recent move by New York City to move its city worker retirees to an MA plan, a decision that is on hold after the insurers Elevance Health and Empire Blue Cross Blue Shield dropped out, according to a published report on The City news site. 

The MA market has grown in popularity among seniors in recent years. The program has also received heightened scrutiny surrounding overpayments to plans based on inaccurate risk scores and aggressive marketing tactics by agents and brokers.

The Coming Insurance Storm

Posted on by • Posted in Employee Benefits, Employee Compensation, Employee Retention, Employee Staffing, Employee Staffing Shortage, Health Insurance Premiums, Health System, High Deductible Health Plans, High Drug Prices, High Premiums, High Prices, Hospital, Hospital Industry, Labor Spend Management, Operating Expense Reduction, Operating Expenses, Operating Margin • Leave a comment
https://www.axios.com/newsletters/axios-am-ad8f781b-1bff-4821-a922-d6f634d19cc2.html?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosam&stream=top

Employers face a brutal increase in health-insurance premiums for 2023, Axios’ Arielle Dreher writes from a Kaiser Family Foundation report out this morning.

  • Why it matters: Premiums stayed relatively flat this year, even as wages and inflation surged. That reprieve was because many 2022 premiums were finalized last fall, before inflation took off.

“Employers are already concerned about what they pay for health premiums,” KFF president and CEO Drew Altman said.

  • “[B]ut this could be the calm before the storm … Given the tight labor market and rising wages, it will be tough for employers to shift costs onto workers when costs spike.”

🧠 What’s happening: Nearly 159 million Americans get health coverage through work — and coverage costs and benefits have become a critical factor in a tight labor market.

🔎 Between the lines: In the tight labor market, some employers absorbed rising costs of coverage instead of passing them on to workers.

  • An October survey of 1,200 small businesses found that nearly half had raised prices to offset rising costs of health care.

🧮 By the numbers: It cost an average of $22,463 to cover a family through employer-sponsored health insurance in 2022, KFF found.

  • Workers contributed an average of $6,106.

Read the report

CFOs need to prep for healthcare’s lagging inflation

Posted on by • Posted in Affordability, CFO, Employee Benefits, Health Insurance Premiums, Health Insurance Self Funded, Inflation, Retention, Talent Imperative, Talent Management • Leave a comment
https://www.cfodive.com/news/cfos-need-prep-healthcare-lagging-inflation/632366/?utm_source=Sailthru&utm_medium=email&utm_campaign=Issue:%202022-09-23%20CFO%20Dive%20%5Bissue:44744%5D&utm_term=CFO%20Dive

Healthcare costs are expected to jump 6.0% next year. CFOs must prepare accordingly, advises WTW’s Tim Stawicki.

CFOs need to be prepared for a “higher tail” of medical inflation — even if general inflation eases in the near future, Tim Stawicki, chief actuary, North America health & benefits of Willis Towers Watson (WTW) told CFO Dive.

With the Consumer Price Index (CPI)  rising to 8.5% in July and the recent rise in the core Producer Price Index (PPI), the Federal Reserve will probably look to hike interest rates even farther. 

“CFOS need to be prepared for the case that if general inflation eases, there may be two or three more years where they need to think about how they are managing the costs of health care plans,” he said in an interview. 

Inflation, which can more immediately impact consumer prices, works somewhat differently when it comes to costs of medical care. “Employers are paying healthcare costs based on contracts that their insurer has with providers, which are multiple years in length. So if a deal with the hospital or contract does not come up until 2023, then that provider has the opportunity to renegotiate higher prices for three years,” said Stawicki. 

The recent Best Practices in Healthcare Survey by WTW consisting of 455 U.S. employers found that employers project their healthcare costs will jump 6.0% next year compared with an average 5.0% increase expected by the end of this year.

Further, employers see little relief in sight — seven in 10 (71%) expect moderate to significant increases in costs over the next three years. Additionally, over half of respondents (54%) expect their costs will be over budget this year.

Balancing talent retention and healthcare costs

Talent retention has also remained an entrenched challenge for CFOs over recent months and continues to be top of mind. 

Given inflationary pressures and a potential looming recession, employers are having trouble finding the workers they need to run their businesses. A rise in healthcare benefit costs will make this all the more challenging, said Stawicki. “Employers are looking around and saying ‘I need to find talent to help me run my business and I can’t do that if I have an ineffective program in healthcare benefits,’” he said. 

There is a direct link between business outcomes and in particular employee productivity and employees’ ability to manage their health and financial environment, according to WTW’s Global Benefits Attitude Survey. “Losing the ability to offer programs and benefits that meet employee needs is impacting business,” said Stawicki.

It comes down to finding the balance between cost management in an environment where talent is hard to come by, he said. In order for CFOs to be successful in financing benefit programs they need to look at finding ways to partner with their counterparts in human resources, said Stawicki. 

Sixty-seven percent of employers said that managing company costs was a top priority in the company’s August Best Practices in Healthcare Survey, versus the 42% who said that achieving affordability for employees was a top priority. In the near future, CFOs need to establish a relationship with HR counterparts that can facilitate “ways to manage company costs without shifting it to employees,” said Stawicki. 

Ultimately, company costs remain paramount for employers but running a successful business will also require keeping employee affordability top of mind.