October 8, 2013

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Industry Outlook: Human Resources

October 8, 2013

If you’re putting your employees into those state exchanges that have been set up, as an employer, you are not the expert, by definition. And the second you start sending your employees to those exchanges, you are in essence saying, “I am no longer in the benefits game.”

POWLEY: Do you want your employees spending time and energy on the benefits concerns that they have to deal with, or do you want them to be focusing on the productivity of their job and delivering results within the organization? I want to make it easy for employees to have a consumer option. Until it’s simple and easy for someone to do that, it’s going to be a real challenge to adopt and to make that transformation.

LEE: The other big problem that I see is total loss of control. Many good employers have figured out how to develop a corporate culture of wellness, providing incentives to be more cost-effective in the use of the healthcare. So by being judged on your own group’s experience, you can impact that. You mentioned earlier that you’re launching these wellness programs now that you’re self-insured. That’s the kind of thing that people have done very successfully.

Now there’s no incentive to do that. You’re throwing our employees into this large pool that you have no control over, no influence whatsoever, and you’re going be at the mercy of costs from other employers and people in general that maybe aren’t paying attention to controlling these rising costs. And it will get out of control pretty quickly.

THOMAS: In addition to the federal and state exchanges, there are private exchanges popping up out there that employees can go directly to—and in full disclosure, Mercer has one, but I won’t talk about that one per se. But there’s a number of firms out there with private exchanges to allow the employers to maintain the control, bank into that same defined contribution type of mentality on benefits.   

It feels confusing because the opportunity is so wide open. Do I offer benefits at all? If I do, do I control it myself? Do I self-fund, fully insured, what network, et cetera. But now it’s, do I go into a state exchange or a federal exchange? Do I subsidize my employees at all? How much? Do I go into a private exchange.

And my competitors are all in the same boat, so I don’t know who’s going to do what. Who blinks first? Is it Wal-Mart or is it Verizon? One of them somewhere in some boardroom is going to say, “We’re done.” So then what?

Do the federal exchanges, state exchanges—do they have the capacity? I think we heard here not yet. They would be overwhelmed by the number of people coming in.

LEE: This is another one of the cruel ironies. As mentioned, the core concept was to get companies out of the business of dealing with insurance and focused on their core business. The conversations now about these decisions are overwhelmingly consuming the entire business. It’s clearly going the wrong direction if the intent is to get them out of that.

CRAGUN: I don’t know what it’s like in your organizations—how much time your staff actually interacts with employees on benefit questions—but at the state level, it’s a lot. A lot of our direct communication with our employees touches on benefit questions.

So you say, “I’m out of the business. There’s too many plans. I can’t deal with them all.” How are you going to fill that gap with that connection with your people? Initially, that’s going to be hard for everybody on both sides, this new relationship.

If you try to help them too much, what kind of liability are you taking on if you help them and they choose a bad plan? Or do you check totally out, and now you’ve lost that touch and your employees feel like they’re just a number? So you’ve got to balance that, too. That’s going to be painful.   

What’s happening with respect to E-Verify and what are the problems we’re seeing with immigration in the state of Utah?

TSAI: E-Verify has become mandatory in the state; we’re part of a handful of states that have made it mandatory. On the one hand, we’ve got about 120,000 undocumented people in the state. That’s equivalent to the population of Provo. They’re not leaving anytime soon, and it doesn’t look like the mandate of E-Verify has made them scatter. A lot of employers are using E-Verify, but I think it’s a facade to believe that has effectively screened out undocumented workers. Bottom line, they can still circumvent the system through identity theft. Employers are still stuck in more or less the same position that they have been in thus far.

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