|
UltraLink - FOCUS...on benefits
January 2006
Pitney Bowes Re-designs Their Benefits Based on Value Not Just Cost
Pitney Bowes is part of a small but growing group of employers that have begun a revolution in the way that they design their benefit plans - realizing greater value for the company as well as for the employees. The re-engineering of their benefit plans moves away for the traditional view of benefits as just an administrative function to a new one - as a way to improve a company's competitive performance. They are achieving this by realizing maximum value from the money spent on health benefits by focusing the attention on an employee's health and well-being, a strategic move that most companies have been missing.
Why should the health of a company's employees be important to a business?
- Most employees value the health benefits offering as much as they do their wage
- There is an enormous impact of health on job performance that can now be measured
Pitney Bowes uses predictive modeling in their approach to benefit design. One of the ways that they identified to help lower their overall costs were to lower co-pays for drugs used to treat diabetes, asthma, depression, and cardiovascular disease. They realized overall health care cost savings by both lower utilization of medical services and actual drug cost savings because of more appropriate use and better compliance.
Their success has led Pitney Bowes to develop a partnership with a non-profit group, Institute for Health and Productivity Management (IHPM), where they have a shared vision of maximizing the value of health for employers and their workers. This joint effort will be called the Initiative for Value-Based Health Benefits. The productivity model they have put forth views workers as assets and the health of those employees as an investment in better corporate performance, not an administrative expense unrelated to their business.
This type of benefit "re-design" has been the missing link in the logical chain of events in the benefit program offering of most companies. Research and development projects conducted through the Initiative for Value-Based Health Benefits will validate the Pitney Bowes predictive model in different populations and will ultimately help other employers implement it in their own settings.
Source: Employee Benefits News, January 2006
Employee Health Affects the Bottom-line - CFOs are Paying Attention
According to a survey conducted by the Integrated Benefits Institute (IBI) six in 10 CFOs do not believe that they can continually shift health costs to third parties or employees. CFOs understand that employee health drives medical costs and that employees suffering from ill health are either absent more often or aren't focusing on their jobs when they are working - a phenomena referred to as presenteeism. Benefit managers should make improvements to their benefit programs based on that understanding.
The research, which will be available in 2006, provides an opportunity for benefit managers to start a discussion with their CFO's about moving from a focus on just controlling health benefits costs to focusing on the value of employee health. One element that will help CFO's re-direct their focus is data - measuring the impact of both absenteeism and presenteeism thereby uncovering the absence-related costs such as money spent on overtime or paying for additional staff to replace sick workers.
These costs are unique to each company so corporate responses will vary. For example, former health officer for Union Pacific Railroad, Dr. Dennis E Richling said he linked productivity to gross ton miles of freight per employee. Benefit managers can seek the help of CFOs to develop a framework for evaluating costs and linking employee health to productivity.
These findings were based on a survey of 343 financial executives at companies with significant numbers of white-collar workers.
Source: Business Insurance, December 12, 2005
Employees at Ford to Shoulder More of Their Benefits Costs
Ford Motor Co. is making big changes to their health benefits offerings for non-union white collared retirees and salaried employees, and members of the United Auto Workers (UAW) union, for both retirees and current hourly employees.
The plan moving forward:
- White collared retirees will have to take on all health benefit cost increases starting in 2007
- Salaried employees will see their deductibles rising to as much as 33% and their monthly premiums increasing on an average of 30%
- UAW retirees will pay higher premiums and co-payments - to an annual maximum of $752 for co-pays
- Active UAW workers will forgo certain pay raises and be required to spend more on prescription drugs, both generic and name-brand
This move comes as Ford is expected to see it's health care spending rise 13% from a year ago to $3.5 billion this year. (They provide benefits to 550,000 employees, retirees and dependents.) While Ford declined to state how much it will save with the salaried employee benefits cuts, it is estimated that they will save approximately $650 million annually from the UAW member cuts.
In addition, they are also attempting to limit the number of dependents it covers by charging $121 a month for health and dental coverage for spouses who have coverage options elsewhere and employees' step-children will be ineligible for health-care coverage if another parent is legally responsible to cover the cost.
Mark Fields, Chief of North America Operations, sent an email to employees December 15th, notifying employees of this change. He stated in the email "Achieving the goals detailed in the plan is absolutely critical to our future and will require tough decisions, including addressing the rising costs of health care, which we've heard so much about."
Source: Wall Street Journal, December 15, 2005 and December 23, 2005
Poll Shows Support for Varied Health Care Costs Based on Health & Wellness
According to a health-care poll conducted by Wall Street Journal Online/Harris Interactive, most U.S. adults support employer-provided financial incentives as part of their health benefits in exchange for living a healthy lifestyle. They would also support benefit cost differences for those who compromise their health by being overweight, do not exercise regularly, don't wear seat belts or if they smoke or drink heavily. 2,007 adults participated in this survey between December 12 and 14, 2005. According to the poll, while many support these health and wellness incentives, women, seniors and those with higher education and incomes appear to be the biggest supporters of these programs. On the other hand men are more likely than women to support differences in insurance payments.
The majority of people favor different levels of insurance premiums, co-payments or deductibles for:
- 63% - smokers
- 57% - drink heavily
- 62% - don't wear their seatbelts
On the other hand, despite evidence that shows obesity and lack of exercise leading to health complications and high medical costs many say they would oppose a difference in insurance costs for:
- 45% - overweight people
- 47% - those who don't exercise regularly
In addition, many support added health initiatives as part of the overall benefits packages offered to them:
- 71% - stop smoking programs
- 70% - support counseling for alcohol, drug and gambling addictions
- 67% - safe driving programs
- 66% - managing chronic health conditions
The results show answers according to age, gender, region, education, and salary. For full poll results go to Wall Street Journal Online.
Source: Wall Street Journal Online, December 21, 2005 and Red Orbit News, January 6, 2006
| 
