Benefits Quarterly

by Cori E. Uccello
Proposals to expand access to public health insurance plans are being put forward to provide a way to supplement efforts to strengthen insurance markets under the Affordable Care Act (ACA) or to replace the ACA marketplaces and/or other health insurance programs altogether. This article briefly outlines four general approaches aiming to achieve such goals: establishing a government-facilitated plan in the ACA marketplaces, creating a Medicaid buy-in, creating a Medicare buy-in, and extending Medicare eligibility to more or to all. The article highlights the key design elements that would need to be specified for each approach to be fully evaluated and implemented. How these details are decided would affect the viability of the plan and the impacts it would have on coverage availability and affordability—not only of the public plan but also of other coverage sources.

by Paul Fronstin, Ph.D.
The employment-based health benefits system arose not from any deliberate national health care policy, but rather from a voluntary, market-driven response by employers to government regulations regarding wages and taxation during World War II. In the absence of more government involvement in health care, employer activism has increased through various types of coalitions. What we do not know is whether employers would trade off more government involvement in health care for less of their own involvement if given the opportunity, especially in a weak economic environment. Thoughtful consideration of policy proposals should not only evaluate their effectiveness in addressing their impact on health care costs, quality and coverage. Policy makers should also consider the impact on the voluntary, market-driven employment-based system.

by James L. McGee, CEBS
There is widespread and bipartisan agreement that our current health care system is broken. Agreement on a single solution or even approach is far more difficult. This article describes how the author’s career experience as a benefits professional has shaped his support for one solution and proposes a framework for evaluating policy proposals. That solution is a Medicare-for-all single payer system. It presents evidence that the current employment-based system does not, and perhaps cannot, meet the triple aim of health system performance described by the Institute for Healthcare Improvement: to improve the patient experience of care, to improve the health of the population and to reduce the per capita cost of health care. The article will discuss efforts to reduce the per capita cost of health care. It concludes with a discussion of interim steps to realizing Medicare for all, consistent with the author’s framework for evaluating such policy proposals.

by Randall K. Abbott
The purchasing process for employer-sponsored medical benefits has always been complex, but new market dynamics and financial arrangements are adding new layers of complexity. Failure to recognize these new factors can result in significant miscalculations of both overall costs as well as potential savings. This discussion examines— for a larger employer assessing either an incumbent service provider or marketplace alternatives—what remains the same, what remains but is increasingly problematic and what are new considerations. Each employer is different and will approach the purchasing initiative with different needs and priorities, but employers should consider what’s important to them and how processes should change to achieve maximum value during the search-and-selection effort.

by Kenn Tacchino
Most 401(k) plans contain the option for plan participants to borrow from their vested retirement assets. This article discusses the pros and cons of allowing plan loans, as well as employer considerations when designing loan provisions and repayment features. The author then discusses potential employer decisions surrounding hardship loans, other in-service rules tied to age and service, and rollovers. Finally, he provides a checklist of 30 questions that may be helpful for plan sponsors and their advisors to consider when trying to determine the best way to allow in-service access for employees.

by Gordon L. Clark
Defined contribution (DC) pensions have supplanted defined benefit pensions in many Organisation for Economic Co-operation and Development (OECD) countries, with significant implications for the retirement welfare of plan participants. New models of management have come to market, promising customized solutions for the retirement aspirations of different kinds of participants within and without conventional DC plans. These developments are charted recognizing the coexistence of different models of management and the increasing sophistication of pension providers. The rudiments underpinning the latest model of management are explained, and the conditions under which this model may be successful are noted. As DC systems come to maturity around the world, significant challenges remain in making good on pension adequacy. Here, industry innovation and best practice are balanced against a significant role for public policy.

by Neil Lloyd
Retirement plans have had some recent successes in participation rates, contribution rates and investment performance due to innovations in autoenrollment, autoescalation and default investment choices. Of these three developments, the use of target-date funds (TDFs) has notably been the most visible, given their use of onesize, simple glide paths that generally appeal to most participants. However, some practitioners are raising questions about whether TDFs could be disrupted through better personalization. How real is the disruptive threat to the TDF vaunted status from personalization? This article examines the question from a number of angles: the structural limitations of TDFs, the growing consumer demand for personalized products and services that “know them,” and foundational notions of trust and intrusiveness.

by L. J. (Mac) McCarthy and Edward M. Pudlowski
Employers and other purchasers of large group health plans have a myriad of choices when it comes to proposed innovative solutions or disrupters designed to improve care and reduce the cost to the member participant and the plan. Coincidental with the expansion of these health care disrupters and failed promises of value from some of these entities over the years, large group health plan purchasers are demanding a greater level of support for the value propositions, including analyses that are specific to their populations and claim utilization profile. This article focuses on best practice approaches to establish actuarial credibility for the stated value propositions of health care disrupters, taking into account the design of the specific solution and available data, including the purchasers’ actual population and claim experience history. Achieving a successful partnership with a third-party solution provider does require the dedication to understand the unique characteristics of a health plan and development of study methodologies that align with the solution and the available data.

by Jack M. Towarnicky, CEBS
Less than 17% of 401(k) plans incorporated automatic features, according to a 2005 Plan Sponsor Council of America survey. Many deployed automatic enrollment only for new hires with a 2% deferral default rate, cash equivalent investments and without automatic escalation. Today, 60% of plans have one or more automatic features. However, only a handful have migrated to a “full auto” design. This article describes one plan’s transition—from a passive strategy of “access while employed” to a full auto design that includes behavioral economics/choice architecture designed to maximize enrollment, contributions, employer match, savvy investment allocation and asset retention.

by Tami Simon
Millions of Americans provide unpaid caregiving to their parents, siblings, children and others. A large percentage of those caregivers are employed full-time. According to a 2019 report by Harvard Business School, more than 80% of employees with caregiving responsibilities admitted that caregiving affects their productivity at work. This article provides insight on how caregiving affects the workplace and offers practical solutions for employers to consider. A thoughtful and well-designed unpaid caregiver benefit program that is properly administered and communicated will strengthen an employer’s connection with its workforce. This will lead to improved productivity, engagement and retention.

by Jeff Wells, M.D.
Worksite health centers have been around for decades; however, in recent years this concept has seen growing popularity among companies looking to employer-sponsored primary care as a solution for reducing their health care costs and improving employee health and retention. As the market opportunity has expanded, so has the number of vendors and business models. And with the proliferation of available choices, employers are facing increasing complexity when choosing a partner. So how do employers know if their investment is, in fact, reducing their health care costs and improving employee health? This article presents research demonstrating the impact of engagement with employersponsored primary care services on employee health and employer health care costs. The analysis uses data from three companies of varied size and industry whose medical plan members engaged with OurHealth’s on-site and near-site primary care clinic services and presents results on utilization of services, health improvements and employers’ cost of care.

by Rocke Blair, CEBS and Peggy West, CEBS
Plan sponsors can take a once-overlooked “lazy” or sleepy asset known as employee benefits and transform it into a strategic lever for workforce and organizational optimization. This article identifies health care cost challenges and describes how and why employers should find prescriptive solutions that minimize the negative impact these challenges can have on the long-term sustainability and viability of their companies. The authors identify a contemporary measurement approach that is a leading edge to population health management through its evaluation of noncompensationrelated employee expenses. They contend that continuous improvement via data and analytics fosters business excellence, but they also encourage plan sponsors to not rely on vendors for this information.