We Are Almost Perfect Consumers, Except For…

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August 31, 2014


consumers

We Americans are amazingly sophisticated consumers. So much so that fully 70% of our $18 trillion economy is consumer spending. We love to compare the prices and specifications of everything from toasters to cars to homes and we use the internet for most all of it. Beyond the net, chances are there is an app on our smartphones that allows us to check the best prices and quality for gasoline, hotel rooms or the best burger in the area and then where we can go park to find it.

We’re almost perfect as consumers, except for healthcare. When it comes to the $2.3 trillion we spend each year on healthcare we usually have no idea what something will cost before we consume it. Those of us with insurance hand over our magic card and hope whatever we’re doing is covered with a minimal co-pay out of our own pockets.

How did we end up in this spot? How did we end up not really seeking or caring much about health care costs on our way to consuming health care services?

I know people who will drive across town to save 2c a gallon on gasoline but wouldn’t question the cost of medical procedure. Amazingly, its mostly human nature, as someone else has been making our decisions and as long as that goes on, the paternalism of the present system effectively delays any hope of instilling real consumerism in our health care services system.

Let’s take one example here – colonoscopies. The word alone instills fear and pain, not to mention a certain degree of degrading personal feeling given what goes on here. Setting all that aside, the New York Times had a brilliant article in 2013 about how the cost of the procedure ranged from $750 up to $8,500, depending on where the procedure was done. Does that sound right? What’s worse about the disparity in price is the fact that it is exactly that type of information that is usually denied us as we enter the mythological system of healthcare where its professionals don’t like to talk about cost and outcomes, almost as though they were lawyers talking about advertising for car crash defenses.

What does it take for us to become consumers in this arena? First, we need to end the system of how we get our health insurance that has existed since World War II. Yes, blame it on the Axis but we have employers picking benefits for employees entirely as a result of the federal wage and price controls that were in place in World War II. Employers could not raise wages, so the clever way around that was to add benefits – health insurance! The employer picked the carrier and plan and its contents and, like any good “father” operating in a paternalistic system, “gave” us the insurance.

Fast forward to today and 70% of employees don’t understand their own benefits. No wonder. The employee doesn’t pick the benefits they receive but are asked to pay for a portion of a decision made by the employer.

How do we fix that? Simple actually. The old system was called “defined benefits,” where the employer literally defined the benefits of the employee. The new system is called “defined contribution,” where the employer budgets how much to spend on employee benefits and then the employees select what they want to buy in a company or association marketplace. When the employee runs out of employer subsidy then the employee begins to spend his/her own money out of payroll deduction.

The important transition here is the one where the employee is put in charge of picking the benefits the employee wants, and all with the help of a benefits expert to make sure everything gets covered properly – but the employee decides.

After we put employers in charge of budgets, and then employees in charge of buying benefits, the system itself needs transparency that does not exist today.

As with the NYT article on colonoscopies, our healthcare system needs to become transparent with regard to costs and outcomes so that we, acting as true consumers, can see competition and make choices between desired prices and outcomes. For all of the alleged wonder of the Affordable Care Act and its 2,700 pages of law and 26,000 pages of regulations – it does not begin to touch on issues of real transparency of the entire system.

Where government is failing, the private sector comes to the rescue. We strongly believe in the evolution of private association-based marketplaces as a source of real competition among carriers, benefits and plans to be chosen by employees [http://gbacapg.com/pheib/index.php] Further, there are developments in healthcare insurance delivery that may portend a glimmer of hope for the near future in other areas.

Just two weeks ago a new company opened in California called Collective Health. The idea behind the self-insured option that could well be in our gbacAPG marketplaces in a few months, is that while self-insurance is not new the key elements of healthcare transparency and competition that we could be armed with, and negotiated rates for rapid payments, are new. This company is just starting to enroll companies in its new system and could be in all 50 states next year. I am interested in developing a version of this program in the East, and have spoken with Collective Health about what they’re doing.

If we want to drive down the cost curve on health care costs, that leads to driving down the curve on health insurance costs, we first need to become participants in a system that demands we act like consumers. That starts with choosing our own benefits and understanding how to use them properly.

More than three years ago we decided to make the commitment to fundamentally change our agency and our approach to benefits and our clients. The ACA and medical loss ratios was going to drive these changes in part, and in part we needed to introduce a greater thread of consumerism into our client’s thinking and that of their employees. When our broker associations went to Congress to try to get MLRs changed under the ACA in 2012 but failed to get the law changed, we knew it was only a matter of time when our transition away from commissions and toward consultative-based fees was headed in the right direction.
We became a national reseller of the bswift platform after having vetted more than 8 others. We prefer bswift for its degree of flexibility of configuration for clients, its tremendous depth of connections [now more than 4,800] with carriers, and the relatively inexpensive connection for client’s use. With some training, every broker can learn how to use this powerful tool effectively with clients. More here…

http://www.bswift.com/

Let’s put employees in charge of making their benefits choices. Let’s have benefits professionals working for and paid by employees and employers. Make no mistake about it, who you work for depends on who is paying you.

Then we are going to need collaboration among the health care system, from providers like hospitals, clinics, pharmacies, doctors and others to work with benefits professionals and insurers to peel back the layers of the onion and infuse transparency into our health care system.

We have a magnificent economic system that has raised more billions of people out of poverty through competition and consumer choice, innovation and profit than any other system in human history. The basic underpinnings of that system need to be introduced into healthcare so that we can all play our rightful role as true consumers and begin driving costs, availability of services, and outcomes.

That begins with what we can do today. With our employers giving up the World War II defined benefits system and setting their budgets in a defined contribution system and allowing employees to choose their benefits in a great marketplace.

Gene Guilford is a partner at the gbac Association Practice Group, a non-profit corporation services and advisory company focusing on solving the most challenging problems of today’s trade associations and chambers of commerce. Gene is a 28-year trade association CEO and former Reagan Administration political appointee as Chief of Staff at the General Counsel’s office at the US Department of Energy.

Posted in Association Health Insurance and Employee Benefit Marketplaces, GBAC APG News, Health Insurance Reform, Uncategorized | Leave a comment

The Strategic Planning Skill That Is Most Important But Most Overlooked

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August 10, 2014

help_see

There are many skills and abilities that go into becoming successful, some we focus on during strategic planning. Many here talk of tools, metrics and other mechanical devices as though we can wed technology and humans and have the result be human and we cannot. The one invaluable personal characteristic of people involved in this very human of interactions is to have empathy.
empathy

[em-puh-thee]

noun

the intellectual identification with or vicarious experiencing of the feelings, thoughts, or attitudes of another.
Being able to place oneself in the place of another and to understand another person’s desires, fears and motivations is a critical skill in helping a group of people express their individuality in a way that is productive to the free expression of opinion but not destructive to the thoughts others that are just as valid.

How many times do we encounter a team member, board member or other colleague where the person seems to have no desire or interest to care about the other members of the team? The board member, or member of the group, who believes their opinion is the only opinion that counts? The person for who any sense of curiosity about the world or others is absent, as the person reflects a certainty about matters that reflects an absence for any need to question anything as they already have the answers.

Unfortunately, we see this every day. It is common among people in general and, therefore, common on boards and among staff and volunteers.

This attitude, the absence of empathy, hurts the progress of the group and potentially harms the ability ot the group to retain its members or even staff. Like that one kid in grade school that thought s/he was the smartest kid in the class and even may have been, but no one enjoys having that flaunted in front of them or reminded of it constantly.
If you have a group seeking the internal compass of their organization but the group has members that think they not only know the direction but also believe they own the compass, there is an exercise that can be run. I begin strategic planning work with about a week of interviews with key staff and volunteer leaders to get a sense of the composition of the attitudes of the group and where they are. If I discover the empathy quotient being in some need of repair, here is what to try.

This exercise is done in teams of two. There is one listener and one talker at a time. You encourage each listener to pay very close attention to what each talker is saying, and be prepared to openly state his/her belief of what the talker was saying and why the talker was saying it. This is not only a chance for the listener to hear what was said and repeat it, but to interpret what was said and reflect an understanding of it.

The talker will be expected to discuss with the listener a difficult experience s/he had with something either personal or professional. This is a story told about an experience that was difficult to deal with, caused some personal or professional pain, difficulty or challenge, and resulted in something being learned. The talker is opening up to the listener and we find whether the listener is actually capable of hearing, and understanding the difficulty being related to them. The listener is expected to ask the talker questions when the talker is finished – to encourage curiosity. If the talker related a sadness, does the listener understand the sadness and why it was sad? If the talker sustained some pain does the listener understand the pain and feel it?

Human beings are wired to be social creatures. What gets in the way of our being empathetic is, more often than not, experiences in our lives that caused some pain that resulted in our building barriers and silos around us that prevent us from being open to the feelings and beliefs of others. This frame of reference, the exercise of empathy, is designed to identify where that can exist in a group and help to break down the barriers that prevent some from being able to place themselves in the position of others and truly appreciate where they are, what they say and why they say it.

If one is incapable of understanding the thoughts of others and appreciating those thoughts for what they mean and appreciating the people from which they come, one will have a very difficult time becoming successful in strategic planning and working with a group toward a common goal.”

In the hands of one that sees those traits and works to ameliorate their effects, this can serve as a good beginning to a strategic planning exercise that is run by human beings, given shape and form by human beings, and implemented by human beings that hold each other accountable for their decisions.This sets the stage for a group of people with the right frame of mind to come together to express themselves freely and actually hear and appreciate what others are saying.

This very human of exercises, therefore, comes with all of the challenges and frailties of human beings and those are not overcome by technology.

They can and should be managed by other human beings with a degree of empathy that speaks to caring about others.

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If Someone Wants to Quote Your Health Insurance – Politely Tell Them That Era Is Over

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August 6, 2014
never_done

Businessmen and women are used to insurance brokers bringing them an annual renewal, with “quotes” for costs, and these exercises are always filled with anxiety because the businessmen and women never know what is coming and cannot plan ahead.

Sound familiar? Of course it does. It’s what you, your parents and every business has been doing since World War II.

Businessmen and women like certainty. Predictability. Don’t you want that in your benefits planning too? Of course you do. The trouble is, no one delivers that to you so you keep doing the same thing, year in and year out, on the painful treadmill of uncertainty and higher costs.

Until now.

We start by asking you what your budget for benefits was last year, and then what your budget for benefits will be for the coming year. That’s right – let’s start with what YOU want to spend for benefits, what you can afford. You control the cost. You decide what you will spend.”

After you’ve set your budget, then we work with you to divide that budget up among your employees. How much will you allocate for single employees, employees with families, senior managers and so on.

Then we work with you to decide what benefits you would like to make available to your employees.

Then we meet with your employees and help them understand that their employer is no longer going to pick one set of benefits that is supposed to fit them all – and that they, armed with the budget their employer has allocated to them, will now be able to pick the benefits they want to buy based on what they think is best for them.

Where do they pick the benefits and do their enrollment? In a private, association marketplace. It is where their trade association has made available all of the benefits, carriers and plans their member employers can choose from to make available to their individual company employees. All with the help of a 21st century professional benefits advisor.

No employer has to choose what other employers choose. Each employer can pick different benefits – different carriers – and different plans. The employer picks benefits, carriers and plans to offer and sets his or her own budget. The employee picks which benefits, carrier and plan is best for them.

Employers have certainty and control of cost. Employees have choice and control of benefit selections.

So, the next time a broker wants to “quote” your business, politely tell them that era is over.

Thanks to your association marketplace and working with a new type of professional benefits advisor, you are in control of the cost of your benefits program.

 

Posted in Association Health Insurance and Employee Benefit Marketplaces, Association Human Resources, GBAC APG News, Health Insurance Reform, Uncategorized | Leave a comment

What Happened Yesterday in Federal Courts on the ACA? Depends Upon Who You Ask

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July 23, 2014

scotus

Yesterday was either an earth shattering day in federal court for the Affordable Care Act, or it was a day that didn’t mean much at all. Which of these two visions gets the most attention depends upon who you ask.

What happened? Two separate federal courts were asked in separate cases to rule on a matter central to the Patient Protection and Affordable Care Act’s use of taxpayer subsidies in either health insurance exchanges created and run by the federal government or state-created federal health insurance exchanges. What is the difference? Under the ACA, the distinction between the two is very significant. Here is why.

Section 1311 of the Affordable Care Act establishes where a health insurance exchange is created by a state, and how taxpayer subsidies flow to those who qualify for subsidies within those state-created exchanges by language that specifically says, “established by a state.” Today, 14 states have created Section 1311 exchanges.

Section 1321 of the Affordable Care Act establishes where the federal government may establish a health insurance exchange in the absence of a state having done so, but with no language enabling the use of taxpayer subsidies to go to those who qualify for subsidies under 1311, if they attempt to buy coverage in the federally-sponsored exchange. Today, 36 states use the federal exchange under Section 1321 as they did not create a state exchange under Section 1311.

Those bringing these cases, the first being in the U.S. Court of Appeals for the District of Columbia in the Halbig v. Burwell case, assert that the ACA does not allow for any taxpayer subsidies to flow to those who might otherwise qualify for subsidies if the coverage is purchased in a federally-constituted exchange. The plain meaning of the language of the statute at section 1321 appeared to swayed the court, who issued a 2-1 decision agreeing with the plaintiffs that no subsidies could exist in federally-constituted exchanges. Some viewed this as a mortal blow struck at the ACA.

Then, later in the same day but in the Fourth Circuit Court of Appeals in Virginia ruling in a similar case, upheld taxpayer subsidies in federal exchanges by a vote of 3-0.

Two federal courts on the same day ruled entirely differently on the same question under the ACA. What happens next?

The Obama Administration is highly likely to ask the full U.S. Court of Appeals for the District of Columbia to rule on this issue – so instead of the 3 judges that heard the first case, in a re-hearing the court would have all 11 justices hearing the case and issuing a ruling. The D.C. Circuit has 11 judges on it, 7 Democratic appointees and 4 Republicans. One might believe that in the full court the original outcome may be overturned and then coincide with the 4th Circuit decision and the law ultimately upheld – allowing for subsidies in federal exchanges. That’s just the next likely step.

After that, if it were to happen, the plaintiffs in the Burwell case will almost certainly petition a negative outcome to the U.S. Supreme Court – where these issues are more than likely to end up sometime during the court’s 2015 session.

At the end of the day what changed? Nothing. Subsidies continue to flow through federal exchanges and until the Supreme Court rules on the question, perhaps next year if the case reaches there, nothing changes.

Posted in Association Health Insurance and Employee Benefit Marketplaces, Association Human Resources, GBAC APG News, Health Insurance Reform, Legislative and Regulatory Affairs, Uncategorized | Leave a comment

How Do You Assess Whether Your Association Is Properly Insured? Lessons From Which to Learn

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July 29, 2014

DO_InsuranceRecently an association executive asked us a question about general rules, tools or guidelines about insuring an association, arising out of a recent quote where the magnitude of cost to the association for an insurance package had increased substantially.

Truth be known, every association is different. Each has different operations, services, communications and interaction with its membership, the public, the media and government. All of those differences pose different risks to be taken into account in fashioning not only the right policies to match the risks, but the right professional advice to mitigate the risks and still operate effectively. This means that there isn’t any one particular size solution that fits everyone – as everyone is different. The key is working with someone who gets to understand what you and your association does, how it works, in great detail, and then consults with you about your risks and how to best mitigate them.

This is not the space for “cookie-cutter” solutions, or for cutting corners.

I’ll give you one example. For years we bought D&O coverage because that’s what everyone said we needed to have and, they were partially right. Years after becoming an association executive I came to learn about “liability associated with the provision of professional services.”

As a general matter, D&O policies do not provide coverage for liability associated with the provision of professional services. Thus, where a bank officer is liable for acts as a banker rather than an officer of the bank, a D&O policy with a professional liability exclusion would not provide coverage. Similarly, where a doctor is the president of a professional corporation, the D&O policy would only protect him or her against liability from acts as president of the corporation, and would not provide coverage for professional malpractice claims. The line between professional services and acts outside the scope of this exclusion can be a fine one. Courts often draw a distinction between those acts that require special training or are at the heart of the profession and those acts that are administrative in nature. See e.g. Harad v. Aetna Cas. and Sur. Co., 839 F.2d 979 (3d Cir. 1988).

These issues are among the most hotly contested in the courts, with debates raging between the exclusions for professional liability rendering the policies effectively useless to a strict construction where the exclusions stand to the detriment of the policy holder. One example of this debate was published recently about a court case arising in Rhode Island and a law firm sued for alleged false advertising [ http://www.dandodiary.com/2014/04/articles/d-o-insurance/do-policys-professional-services-exclusion-does-not-preclude-law-firms-coverage-for-false-advertising-claim/]

If there is one thing worse the arguing with an insurance company about whether your coverage applies to your actual work, it’s having to litigate the same thing in court.

For years, one of my tasks was answering regulatory compliance questions for my members, as did other members of our staff[s]. As this was a part of our professional services, and as our D&O coverage excluded coverage for issues arising from these acts, what I needed in addition to D&O was errors and omissions coverage or other professional liability coverage beyond D&O.

A long line of brokers should have picked up on this, but did not. Early on I wasn’t sufficiently informed to know what to explore and those whose professional advice I was relying on didn’t take the time to learn about what our association[s] were doing day to day. This is about learning and listening, then acting prudently. It’s not just about cost – it is about carefully measuring risks and then meeting the risks with sound risk management. The time to do a comprehensive review of your risks and how to best mitigate them isn’t after a subpoena has been served, but now.

Born of years of experience, that is what we do here for trade associations – giving them the opportunity to learn from our mistakes.


Posted in Association Property & Casualty Insurance, GBAC APG News, Uncategorized | Leave a comment

Why Do Your Members Buy Benefits That Employees Don’t Like?

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July 23, 2014

thumbsdown

85% of employees believe that their current benefits are not adequate to take care of their families, this according to a recently released Aflac survey reported in Employee Benefit Advisor on July 16th. Said another way, only 14% of employees believe that their benefits meet their family’s needs extremely well.

In the same Aflac survey, 80% of employees said that a well-communicated benefits package would make them less likely to leave their jobs – though they also said that is not what they had at this time.

57% of employees would consider taking a new job with lower pay, but better benefits.

Employers are spending hundreds of billions of dollars on providing employees with benefits and an astonishingly high proportion of those employees are dissatisfied with those benefits and find them inadequate.

Why? Because the employer is deciding what benefits to offer in the World War II-era “defined benefits” model – the employer picks what will be available for benefits and all of the employees live with that choice. Employers will need a new approach.

We cannot solve our problems with the same thinking we used when we created them.”

If employers want to have both happier, more satisfied employees and employees who both understand and appreciate their benefits – there is a different approach and that is called “defined contribution.” Defined contribution is where the employer decides what his or her budget for benefits will be, and then divides up that budget among his or her employees and allows the employees to decide what benefits to purchase.

The transition from defined benefits to defined contribution is why private, association marketplaces are gaining in popularity, as it is in the association marketplace where employees go to make their benefit choices with the help of a professional benefits advisor.

41% of employees who admit they’re likely to look for a new job in the near future say that having a better benefits package would keep them in their current jobs.

The most effective way of improving an employee benefit package is to put the employee in charge of what benefits the employee can buy! The employer doesn’t spend any more on benefits in the defined contribution model – the only difference is that thr employer allows the employee to decide what to buy.

It is time to change the approach to providing employee benefits and that is why we have private, association-based health insurance and employee benefits marketplaces.

Here is Aflac’s 2014 Workforces Report

Posted in Association Health Insurance and Employee Benefit Marketplaces, Association Human Resources, GBAC APG News, Health Insurance Reform, Uncategorized | Leave a comment

Making Your Association Safe for Change

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July 18, 2014
ant_water

History tells us, or at least the story has it, that Henry Ford was once asked if his prospective customers were asked anything about the Model T before it went into production. Ford’s supposed response went something like,

…if I had asked my customers what they wanted they would have said a faster horse.”

One hundred and six years later, the fact that he brought the single greatest change to personal transportation since the horse, meant that change was something Ford was not only comfortable with but anxious to bring to the world. Few of us are so courageous.

Why?

Part of the answer is rooted in the Law of Diffusion of Innovation. The graphic below illustrates how a given population of people is generally distributed across a spread of tolerance for change – any change. It is weighed with observations of human psychology and our propensity to be comfortable with change and how we are influenced to change, and by whom.

Starting from left to right – those on the left, the “Innovators,” are the natural leaders who enjoy being out in front of everything and everyone. These are the ultimate risk takers. Next are the “Early Adopters,” who enjoy being among the first to try something new and are influenced by the actions of the Innovators – but want the Innovators to go first. The line between Early Adopter and the “Early Majority” is called, “the tipping point,” which is the point where once crossed into the Early Majority we will see success in the innovation being brought to the population. Once the Early Majority has adopted the innovation the “Late Majority” comes along – with the “Laggards” bringing up the rear. As Simon Sinek once said, Laggards are the people who only use push button phones because they can no longer buy rotary dial phones.

Making our associations “safe” for change, given that all change is usually hard, means that we find those populations within our membership most often found to be innovators – and then early adopters of change. This creates the environment within which change is possible. This also establishes the strategy one employs in considering change. First, one would never start with Laggards – or work from right to left on this graphic. One begins with getting the Innovators on board, and then from that point having the Innovators influence the Early Adopters in your group.

Everyone has encountered someone in their professional lives who is resistant to change. Resisting change is a normal human reaction arising from a number of factors ranging from fear of failure to a perceived lack of capacity to learn or do something new.Fear is a powerful emotion that is a primitive reaction designed to preserve our lives by preventing us from doing things that might cause us harm. Fear also can prevent us from doing things that benefit us most.

We need to make change safe, and resisting change uncomfortable.

Our role is to make our associations safe for change by creating the environment within which change is not feared, nor is fear of failure allowed to exist.”

Making professional life accommodate failure as a natural part of human endeavor, not as an objective of outcome but a recognition of its reality, is an essential part of leadership. It is also among the most valuable learning experiences. The country was not built by those who were averse to risk – but by those who saw risk as a necessary part of conquering frontiers of geography, science, transportation, medicine and virtually everything else we enjoy today in our daily lives. Incentivizing the desirability of rational risk taking and allowing people to grow from within that environment is what enables change and growth to flourish.

Our project on private health insurance marketplaces is instructive in this discussion. Since World War II, employers have borne the burden of providing health insurance and other benefits to their employees. This developed solely out of the federal government’s wage and price controls during the war. Employers couldn’t pay higher wages to keep or attract employees – so they started adding desirable benefits. And there it began.

After 70 years of this system we have employers who can barely afford to provide benefits and 75% of employees who don’t really understand what their benefits are or how they work. In a system that represents $2.4 trillion a year of the economy, we are not in a good place.

  • First, we need to change the system where an employer chooses the benefits that everyone lives with – that’s called “defined benefits.” The modern version is called “defined contribution,” where the employer decides how much money to give each employee for benefits and then the employee decides what to buy;
  • Second, we need to forget carriers, policies and plan comparisons by employers. Employers need to decide what their budget will be to pay for benefits. That’s right, no more sweating out renewals – the employer controls what the employer wants to spend on benefits and then decides how to divide up that budget among his/her employees;
  • Third, after the employer has a budget and has decided how to divide it up, we educate employees about the bold new world of no longer having decisions made for them – now they get to decide for themselves what they want to buy for benefits. What a liberating experience!
  • Fourth, the employees go to a private association marketplace where they make their benefit choices with the help of professional benefit planning advice. These marketplaces help turn employees into consumers for the first time. The importance of making your own choices, learning the value of what you chose, and how your own benefits work cannot be overstated.

Imagine going to hundreds of employers who, for 70 years, have done something a certain way – painful or not – and trying to convince them that everything they know and have been doing needs to end and they all need to learn something totally new? Then there are the employer’s insurance brokers – who are in just as much need of changing their business model as the employers.

If we ever have a chance to get some degree of control over health insurance costs we need to inject real market-based competition and create consumers of us all. The 1/7th of the economy that is health care is the only segment of the economy that almost totally lacks transparency of price of services and outcomes. We compare everything from buying a toaster oven to a house and mostly online and wouldn’t buy anything without price, service and performance comparisons – except for health care.

This is not a commentary on the Affordable Care Act, and only focuses on the fact that health insurance costs have risen rapidly, and annually, every year since the early 90s for many reasons and associations have tried to find solutions. One such solution that works is a private, association-based marketplace that creates both competition and consumers where neither had existed before. Without government.

  • employers control costs by setting their own budgets
  • employers divide up their budgets among their employees
  • employees make their own choices for what they want to buy for themselves and their families
  • employers have stability and employees control their own lives

We need to make this endeavor safe for change as this is as unknown as virtually everything else we deal with in our daily lives. That’s exactly what we are trying to do – make this extraordinary change in the lives of businessmen and women and their employees – safe.

If you want something you’ve never had, you’ll need to do something you’ve never done.

It’s time for change. Associations are leading – the Innovators.

 

Posted in GBAC APG News, Uncategorized | Leave a comment

What Happened Yesterday in Federal Courts on the ACA? Depends Upon Who You Ask

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July 23, 2014


scotusYesterday was either an earth shattering day in federal court for the Affordable Care Act, or it was a day that didn’t mean much at all. Which of these two visions gets the most attention depends upon who you ask.

What happened? Two separate federal courts were asked in separate cases to rule on a matter central to the Patient Protection and Affordable Care Act’s use of taxpayer subsidies in either health insurance exchanges created and run by the federal government or state-created federal health insurance exchanges. What is the difference? Under the ACA, the distinction between the two is very significant. Here is why.

Section 1311 of the Affordable Care Act establishes where a health insurance exchange is created by a state, and how taxpayer subsidies flow to those who qualify for subsidies within those state-created exchanges by language that specifically says, “established by a state.” Today, 14 states have created Section 1311 exchanges.

Section 1321 of the Affordable Care Act establishes where the federal government may establish a health insurance exchange in the absence of a state having done so, but with no language enabling the use of taxpayer subsidies to go to those who qualify for subsidies under 1311, if they attempt to buy coverage in the federally-sponsored exchange. Today, 36 states use the federal exchange under Section 1321 as they did not create a state exchange under Section 1311.

Those bringing these cases, the first being in the U.S. Court of Appeals for the District of Columbia in the Halbig v. Burwell case, assert that the ACA does not allow for any taxpayer subsidies to flow to those who might otherwise qualify for subsidies if the coverage is purchased in a federally-constituted exchange. The plain meaning of the language of the statute at section 1321 appeared to sway the court, who issued a 2-1 decision agreeing with the plaintiffs that no subsidies could exist in federally-constituted exchanges. Some viewed this as a mortal blow struck at the ACA.

Then, later in the same day but in the Fourth Circuit Court of Appeals in Virginia ruling in a similar case, upheld taxpayer subsidies in federal exchanges by a vote of 3-0.

Two federal courts on the same day ruled entirely differently on the same question under the ACA.  What happens next?

The Obama Administration is highly likely to ask the full U.S. Court of Appeals for the District of Columbia to rule on this issue – so instead of the 3 judges that heard the first case, in a re-hearing the court would have all 11 justices hearing the case and issuing a ruling. The D.C. Circuit has 11 judges on it, 7 Democratic appointees and 4 Republicans. One might believe that in the full court the original outcome may be overturned and then coincide with the 4th Circuit decision and the law ultimately upheld – allowing for subsidies in federal exchanges. That’s just the next likely step.

After that, if it were to happen, the plaintiffs in the Burwell case will almost certainly petition a negative outcome to the U.S. Supreme Court – where these issues are more than likely to end up sometime during the court’s 2015 session.

At the end of the day what changed? Nothing. Subsidies continue to flow through federal exchanges and until the Supreme Court rules on the question, perhaps next year if the case reaches there, nothing changes.

Posted in Association Health Insurance and Employee Benefit Marketplaces, Health Insurance Reform | Leave a comment

Why Does An Association Need a Crisis Communications Plan?

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July 10, 2014


assncrisisAt some point, and it happens in all associations at one time or another, the leadership will receive a phone call from the media about something that has either just happened or is about to happen – asking for leadership’s comment.

You sense a giant wave coming at you, as in the picture here with the wave about to break – over you.

As the leadership is listening to the member of the media ask the question about the incident, beads of sweat begin to form as we wonder why we answered the phone that day instead of taking a long lunch – as the incident and the media questions about the incident, will not be pleasant.

The response to the phone call, and everything the association does in the first fifteen minutes after the phone call, will determine how well the association and its members manage the crisis that just landed on their collective doorsteps.

If this sounds ominous, it is. In more than two decades of dealing with crises in the energy industry ranging from 100 year cold snaps to price spikes to government investigations to bad energy policy ideas to members going out of business suddenly, there was never a shortage of opportunities to practice the skills of managing a crisis. Part of how to deal with these crises can be taught and part can only be truly learned and appreciated by being in the middle of one with someone who knows how to handle the combination of unreasonable demands and too little time.

The part where we can learn comes from, as with most things in life, planning. Every association needs a crisis communications plan that has been thoroughly thought out and that every member of leadership knows by heart – and is prepared to engage at a moment’s notice because that is exactly when it will be needed.

What’s in the crisis communications plan? As with any strategic planning, this is an exercise involving paid and volunteer leaders and everyone needs to align their commitments and thinking in constructing and deploying the plan for it to work.

  1. Who is on the crisis communications team? The paid leadership and certain volunteer leaders who are committed to being available 24/7;
  2. Define what a crisis is and when the crisis communications plan is invoked;
  3. Establishing the goals of the crisis communications plan. Our story needs to be out first, fully and truthfully, so that our side of what has happened or is about to happen gets to the media quickly and accurately. Discourage people from thinking bad news will go away – it never does. Make sure your message[s] are stated simply and are easy to communicate;
  4. Understand that the media is not the enemy. The media is how you will accurately and truthfully communicate your story in a credible, accessible way in order to make sure your association and its member’s views are properly represented.
  5. Have instant access to the information you absolutely have to have in order to keep all of your constituencies informed and keep yourself ahead of the story. Good information and lots of it keeps you at the center of the story and relied upon for what is unfolding;
  6. The fight for truth is the first order of business and that is the touchstone against which all other elements of the plan are tested and measured. The team needs the whole story and so do your members and the media – and the team needs to speak the truth with a single voice;
  7. Prepare and drill – then drill and prepare. Finding out whether your crisis communications plan works or not when an actual crisis hits is a bad idea. Test the plan and its operational elements by suddenly and without notice springing a test on your group and see how they all work together;
  8. Management after the first wave. The crisis is never a one-off and you’re done. Most will involve follow-up and potentially hours and days of challenges as the crisis plays itself out. The end result of the crisis will be determined, to some extent, by how well it is managed from its onset in the first 15 minutes through to its conclusion.
  9. Get outstanding, seasoned help. Never represent yourself in a crisis – make sure that there is a knowledgeable, seasoned, battle-tested professional by your side with the perspective to see what those in the midst of the crisis might miss.

This plan gets written down. It is kept simple and easy to understand with everyone’s contact information. It is drilled and practiced. You’ll thank me for the association equivalent of passing a kidney stone the day you get your first crisis media call.

We were interviewing PR agencies once with our volunteer committee and were wracking our brains trying to come up with how we would conduct our interviews – then it struck us. We don’t need to be creative – that’s what we need them to be – so let’s come up with a hypothetical and let each candidate have 10 minutes to come up with how he or she would handle it.

That’s what we did.

We interviewed five candidates. Each of the five was given a hypothetical […that was actually something we had really had to deal with…] and then each individually were taken to a small conference room for 10 minutes to consider how to help us. Upon their return, each was graded on how well they did.

  • a member who has a broad customer base with significant financial commitments suddenly goes out of business and the local media gets wind of it and call you for comment on the impact on consumers. Shortly after that, government officials get wind of the same thing and they start calling. Then other members call. Then legislators speak about the need to regulate in the area and you are asked what you think of that, given the consumer impact.
  • there is a 100 year cold snap that follows a 30 year historic warm period. The unexpected change in weather has caught your industry with slack inventory and prices begin to spike on the weather and expected demand. As prices rise the media wants to know how high can prices go – government wants to know why prices are rising – media asks what’s going on – consumers call wanting answers.

Most crises you cannot see coming. The only thing that you and your group can do well is to have planned for its arrival and know how to handle it when it arrives.

It is coming.

Posted in GBAC APG News, Legislative and Regulatory Affairs, Uncategorized | Leave a comment

Why Do Your Members Buy Benefits That Employees Don’t Like?

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July 18, 2014


thumbsdown85% of employees believe that their current benefits are not adequate to take care of their families, this according to a recently released Aflac survey reported in Employee Benefit Advisor on July 16th. Said another way, only 14% of employees believe that their benefits meet their family’s needs extremely well.

In the same Aflac survey, 80% of employees said that a well-communicated benefits package would make them less likely to leave their jobs – though they also said that is not what they had at this time.

57% of employees would consider taking a new job with lower pay, but better benefits.

Employers are spending hundreds of billions of dollars on providing employees with benefits and an astonishingly high proportion of those employees are dissatisfied with those benefits and find them inadequate.

Why? Because the employer is deciding what benefits to offer in the World War II-era “defined benefits” model – the employer picks what will be available for benefits and all of the employees live with that choice. Employers will need a new approach.

We cannot solve our problems with the same thinking we used when we created them.”

If employers want to have both happier, more satisfied employees and employees who both understand and appreciate their benefits – there is a different approach and that is called “defined contribution.” Defined contribution is where the employer decides what his or her budget for benefits will be, and then divides up that budget among his or her employees and allows the employees to decide what benefits to purchase.

The transition from defined benefits to defined contribution is why private, association marketplaces are gaining in popularity, as it is in the association marketplace where employees go to make their benefit choices with the help of a professional benefits advisor.

41% of employees who admit they’re likely to look for a new job in the near future say that having a better benefits package would keep them in their current jobs.

The most effective way of improving an employee benefit package is to put the employee in charge of what benefits the employee can buy! The employer doesn’t spend any more on benefits in the defined contribution model – the only difference is that the employer allows the employee to decide what to buy.

It is time to change the approach to providing employee benefits and that is why we have private, association-based health insurance and employee benefits marketplaces.

Here is Aflac’s 2014 Workforces Report

Posted in Association Health Insurance and Employee Benefit Marketplaces, Association Human Resources, Health Insurance Reform | Leave a comment