I had an epiphany while researching a recent article on so-called “medical captive” insurance to help level the playing field for mid-market employers who pledge a more aggressive stance on containing their employee health care costs. It got me thinking that President-elect Donald Trump and his advisers should become better acquainted with this issue before tinkering with the employer-provided health insurance system. And it reminded me of the time President Barak Obama signed the landmark Affordable Care Act, aka Obamacare, into law without any Republican support. The part that troubles me about both situations is that poor decisions were made, or continue to be made, in a vacuum with little or no thought given to unintended consequences or the impact on various stakeholders. Let me explain further: My main source for the story suggested that these specialized arrangements are designed to wrest control from “managed care intermediaries that hold employee health data hostage” in fully insured group plans. His list of chief offenders includes so-called BUCA plans (i.e., Blue Cross Blue Shield, UnitedHealthcare, Cigna and Aetna). He also noted that health insurance carriers withhold detailed claims information from the employers to whom they provide group insurance often under the guise of concern about violating the Health Insurance Portability and Accountability Act and won’t even share it in aggregate form. Employers that are fed up with rising insurance costs for their employees and family members have increasingly decided to ditch the annual increases from insurance carriers and self-fund the benefits with the help of stop-loss insurance, third-party administrators, consultants and other specialists. In some cases, they also turn to insurers for “administrative service only” contracts. The trend is finally trickling down market to smaller businesses that are the backbone of the U.S. economy. The fact that none of the BUCAs or trade group that reps health insurance carriers, nor a leading health care analytics firm, would even comment for the story I wrote was very telling. It’s almost as if they simply decided not to defend an indefensible practice, or in the case of that analytics company, upset any of the insurers that hire their analysts. It also reflects a critical moment in time for employers and their advisers about the current state of fully insured group health insurance relative to self insurance and alternative risk transfer arrangements such as medical captives. The cost savings of the captive scheme I wrote about was pegged at 20% on average, which provides a double-digit advantage over traditional fixed cost health insurance for like-minded employers that band together to leverage their purchasing power and secure direct contracts with health care providers. It certainly has the attention of industry leaders. I quoted the head of a key business coalition on health care issues who said “employers have a fiduciary responsibility to manage their plans effectively, and they can’t be handcuffed in doing so without appropriate and transparent access to the data.” Another source of mine made a humorous analogy by suggesting sports fans have more information about their fantasy football team than business owners have about the health and welfare of their employee population. Health insurance is complex enough to understand and manage, and it doesn’t need to be further complicated by industry power brokers that are too busy looking after their own interests to do right by their customers. Without hearing their side of the story, my only conclusion is that the nation’s leading health insurance carriers are placing their profits ahead of people.In fact, a former insurance broker who now heads a company that provides HR departments with inexpensive resources told me that “carriers don’t want to share usage data because it causes them to lose their profitable groups.” Ironically, this is the same group that politically left-leaning critics described as benefiting from a wet kiss in the form of Obamacare, which gave them an opportunity to insure 46 million new customers rather than submit to deeper regulatory scrutiny about their business practices and pricing. Competition would take care of those concerns, at least in theory, and we all know how well that has worked out with several major insurers bailing out of federal and state-run health insurance exchanges amid steep costs for carriers and consumers alike. What’s unfortunate is that lives actually hang in the balance over their collective decision not to be forthcoming about sharing meaningful health claims information. As someone who has written extensively over the past four years about the power and merits of self-insurance, I can only hope that more employers take this path in hopes of doing a better job at managing costs than health insurers that continue to operate without enough transparency.
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There’s a clear business imperative to robust executive compensation and severance benefits, but it can collide with public outrage and turn off customers when leaders are accused of compromising positions or caught in corporate scandals. It’s also an opportunity for HR and PR departments alike to engage in damage control and revisit corporate policies. As for benefit brokers and advisers, they can help craft a strategy that anticipates and addresses these issues.
Two such examples from over the summer come to mind. The first involved sexual harassment allegations against former Fox News CEO Roger Ailes whose exit package totaled $40 million, the unpaid balance on his contract. As one of the most feared and admired figures in cable TV news, he was accused of bawdy patterns involving multiple female on-air personalities and Machiavellian plots to silence opponents. The second involved two C-Suiters from Wells Fargo following a probe of the retail bank’s phony accounts scandal. CEO John Stumpf was grilled at a congressional hearing by Sen. Elizabeth Warren (D-Mass.), who suggested he resign or at least forego his pay. His initial response was defiant, but after mounting pressure from lawmakers and shareholders to be held accountable for allowing high-pressure sales tactics on his watch, the bank’s board took swift action. The chief exec was forced to forfeit much of his 2016 salary, which included a bonus and $41 million in stock (coincidentally just north of Ailes’ severance). News of his stunning concession was accompanied by an announcement that Carrie Tolstedt, who ran the division where these accounts were created, immediately left Wells Fargo ahead of a scheduled retirement at the end of this year. She also was pressured into giving up a bonus and severance, as well as forfeit all $19 million worth of her unvested stock awards and not exercise $34 million in stock options during the investigation. Despite these eye-popping givebacks, about $43.3 million in stock Tolstedt owns outright from her career at Wells Fargo will line her nest egg, which could nearly double if she’s allowed to keep options valued today at an estimated $77 million. On the heels of these developments comes a class action lawsuit by former employees and vilified whistleblowers who felt victimized by an unhealthy corporate culture of greed and unethical practices. As for Ailes, who hasn’t admitted to sexual harassment or stood trial over those charges, there’s no indication that he’ll decline a generous severance from one of the most infamous golden handshakes in recent corporate history. Anita Hill, who 25 years ago accused then-Supreme Court nominee Clarence Thomas of sexual harassment, suggested in one report that the co-founder of Fox News “injured the company in a way that would keep him from being entitled to a severance pay.” Whatever ends up happening next with these two high-profile scandals, the fact remains that they serve as teachable moments for those in the industry whose role involves recognizing and rewarding executives. Is it time to make a morals clause a standard part of executive exit packages across Corporate America? It’s a question some might want to ponder. However generous benefits and comp practices are at various organizations, it seems at least the public – if not the boardroom – would hope they’re tied only to a job well done. I don’t want to sound like Chicken Little, but the sky is falling on retirements in the U.S. And unless the average consumer becomes much more prudent about spending and saving their income, along with meaningful public policy reforms and innovative financial products or services, our current notion of life after work will never be the same. Put another way: Retirement will be unattainable for most Americans and considered an anomaly or blip on history’s radar.
There are a number of reasons why that could turn out to be the case. Let’s start with some sobering numbers. As I wrote in a 2009 blog: “Most experts on the retirement-planning topic suggest that workers will need to salt away more than $1 million in order to live comfortably after they quite working, which these days could last as long as 30 years considering advances in medical science that have extended the average lifespan. About 25% of those dollars will be spent on health care bills, which have been rising faster than the rate of inflation for many years.” As many as 68% of millennials who are eligible to participate in a 401(k) plan don’t, according to a recent T. Rowe Price survey that suggested these young workers should be saving about 10% of their annual income for retirement. But here’s the rub: Many of them are drowning in debt. The average graduate holds about $28,950 in student loan debt, according to the Project on Student Debt. Americans now owe more than $1 trillion in outstanding student loans based on various federal government estimates. From an anecdotal perspective, we all know people or friends of friends who are paying off more than $100,000 they had to borrow for a college degree. Can you imagine entrants to the workforce thinking about retirement when they need to work off a mountain of debt? Student loan refinancing programs are being called the new 401(k). Another factor to consider is the sharp rise of robotics, which could render a number of jobs obsolete in the years ahead. Couple that with work continuing to be outsourced abroad in a global economy mired in unfair trade practices and it’s a perfect storm for social chaos. Finally, for those American who are fortunate enough to actually retiree, University of Michigan researchers have found that fewer of them are “very satisfied” with life after work and a growing number are “not at all satisfied.” Apparently, the higher someone’s net worth the higher their retirement satisfaction, which also plummets with poor health. No surprise there. But I also believe that ageism will be another factor that delays or eliminates retirement right alongside inadequate income streams. In addition, there always will be a growing share of Americans whose identities are tied to their work, and therefore, they will voluntarily decide that retirement just isn’t for them. Whatever the case may be, it will be interesting to see how these trends play out. I remember the thrill of listening to the radio as a child on snowy days in New England to hear if my school would be closed. Today, my 5 and 6 year olds learned of their very first school closing, but it had nothing to do with the weather. The cause: an email that the Los Angeles Unified School District superintendent considered a “credible threat” of violence by someone claiming to be a jihadist.
So this is now the new normal for my children? Force-fed a history lesson about the rise of a movement so incomprehensible and malevolent that school is no longer a safe haven? The massive closure of more than 900 schools run by the nation’s second-largest school district with more than 700,000 students came less than two weeks after 14 people were gunned down in nearby San Bernardino. Everyone in L.A. and surrounding communities have been on edge since that horrific and shocking incident, which became the deadliest terrorist attack on U.S. soil since 9/11. I even know someone who knew one of the victims. It’s terrifying to live this way. When I first learned of the school closures, I was unnerved. My kids were happy. They had no clue what was happening. But then as I absorbed all the news reports pouring in over the next few hours suggesting it may have been a hoax, I had a somewhat of a different reaction. Are we taking questionable threats far too seriously? Are we way too over-protective? Have we lost our common sense and ability to reason things out? There were three sticking points that made me scratch my head and ask these questions. To wit: Allah was spelled with a lower-case ‘a,’ there were no Koranic verses or references to the life of Muhammad and there was a pornographic term used to reference a male body part. Experts say this simply isn’t the work of a devout Muslim or extremist. I realize this was a tough call and that school officials, law enforcement and the intelligence community would have been excoriated if schools remained open and something terrible happened. But New York City officials received pretty much the same e-mail threat, which was dismissed by the mayor as “so generic, so outlandish” that it didn’t warrant school closings. How could there be such a substantially different reaction from New York to Los Angeles? I wonder if the L.A. schools would have been closed if the terror in San Bernardino never took place. It’s hard to say, but this much is true: We may have reached a tipping point in the ongoing War on Terror where such threats will always be a daily occurrence. That’s not the kind of world I envisioned for my kids. All we can do now is hope that there’s enough decency and humanity in the world to end this war without having to look over our shoulders for the remainder of our days. An HR manager walks into her nephew’s birthday party… and ends up suing the child for hugging her just a bit too enthusiastically.
Sounds like a one-liner or a skit on Saturday Night Live, but it’s no joke. What amazes me is that this infamous 54-year-old New Yorker named Jennifer Connell, whose $127,000 court case against her 12-year old nephew was just dismissed by a Connecticut jury, works as a human resources manager. Trying to live in the shadow of such a laughable lawsuit – and, thankfully, proper outcome – must surely undermine any credibility she has with employees or executives with whom she has any contact. To work in HR, it sure helps if you’re a people person. But how could an aunt who sues her nephew over such frivolous circumstances, claiming the then-8-year-old broke her wrist and caused years of physical pain, possibly be a people person? I’m sorry Ms. Connell, but accidents happen – especially around children. It’s akin to the public ever being able to trust disgraced TV anchorman Brian Williams who admitting fabricating stories about his life and how it intersected with news events. How could anyone ever take instructions from, or have any meaningful interaction with, this woman and keep a straight face? I can only imagine how challenging it must be for people who know about this litigation. As a parent, I cannot imagine anyone ever taking one of my two young children to court over a loving embrace. A stranger? Maybe. But certainly not a friend or family member. That just crosses the line. It’s like the mafia code of honor – only, a child is involved. As a journalist who has been covering the HR industry for 27 years, I can’t stop scratching my head about the callous disregard of humanity, which is the operative word in Ms. Connell’s chosen profession. HR is about helping, not hindering, people. I can only imagine what it must be like for her to gather with family members at Thanksgiving or other holidays – if she invited in the first place. It’s not surprising at all that her case was dismissed in just 25 minutes. What I don’t understand is how such a ridiculous complaint ever got to court in the first place. If you’re that desperate for the money, then at least attempt to settle out of court! It also makes me question what sort of employer-provided health insurance she received. The irony of an HR manager having inadequate coverage to deal with unexpected medical bills is inescapable. Whatever the case, let this be a warning to other HR managers: don’t sue a family member who’s a minor. It might just kill your career! About 25 years ago, I interviewed the co-founder and president of Subway in a story published by Employee Benefit News. The story was about his restaurant chain’s efforts to recognize, reward and motivate its employees – a precursor to what Starbucks has done with baristas or similar campaigns in the service sector. I was particularly struck by how humble and down to earth Fred DeLuca was, and we briefly chatted off the record about southern Connecticut, the birthplace of his sandwich empire and yours truly.
Fast forward to 2015 – the 50th year of operation for Subway, whose more than 44,000 franchises are now scattered across 110 countries. DeLuca’s net worth is $2.5 billion, but he’s battling leukemia and recently handed the reins of the company over to his sister while he focuses on medical treatments. Perhaps the most jarring news of all for this ailing business mogul is the public relations nightmare that Subway must now manage following shocking and disturbing revelations about its longtime pitchman, Jared Fogle. His pedophilia admission was made as part of a plea bargain to reduce what could have been a very stiff prison sentence. The Huffington Post noted that a carefully worded statement by the company “left open the possibility” that people involved with the restaurant chain had expressed concern before the story broke. This is where the current state of affairs starts to get tricky. Subway has denied any prior knowledge of these crimes and said it’s still investigating the matter. But the damage is done and outrage is mounting. One could argue that this PR problem also may turn into a human resources challenge with wide-ranging implications for employee and franchisee morale, loyalty, recruitment, retention and beyond. I can only image what sort of meetings have taken place behind closed doors to allay concern or outrage among employees and franchisees, particularly among those who are easily offended by moral breaches. I can’t help but notice the potential for irony, given the topic of my story about Subway more than two decades ago. Jillian Barberi, the co-host of a local afternoon talk-radio show I was listening to the other day in Los Angeles while running errands, suggested with fury in her voice that if it’s proven that Subway’s management team knew about Fogle’s activities before the public did that she would never eat there again. Suddenly a narrow story about one individual’s depravity mushroomed into a much larger outcry about business ethics – or lack thereof. Barberi lamented that it would be difficult to boycott Subway for essentially two reasons. One is that she considered it a healthy alternative to greasy fast-food chains for her children and went there on a regular basis, while a second is that it’s not nearly as convenient to find competitors given how fast Subway has grown over the years. I certainly can relate to her thinking, having been a somewhat regular patron of Subway and preferring ready-made sandwiches over burgers and fries for my two young children. Some people may believe it’s not worth giving up a good product or service because of a scandal involving disturbing or poor judgments made by a few individuals. Others like Barberi, who ironically was a shill for NutriSystem, are so deeply offended by the notion that a large corporation would cover up such heinous criminal activity that they’re willing to sever those ties forever. Either way, I think the Subway scandal provides some interesting food for thought (pardon the pun) surrounding the larger issues of business ethics and personal choice. It sort of reminds me of a spirited conversation I witnessed around the same time I interviewed Subway’s chief executive. My former brother in-law asked a dear friend of our family, a Holocaust survivor, why he drives Mercedes Benz automobiles after all the unspeakable crimes the Nazis committed. His reply was simple and soft-spoken: “Because they make good cars.” All this talk about how “anchor babies” and “illegal aliens” are pejorative terms reminds me of an even bigger problem, which is that political correctness seems to be getting worse and the movement is clearly unhinged.
I don’t care what your political affiliation or ethnic background is; any whining about this language being offensive strikes me as ridiculous. These words are legal terms with no offense intended. The only real problem is that they were borne of legalese or government jargon, which is confusing and cumbersome for the average citizen. One PC alternative would be to say “babies born to undocumented immigrants.” That would take care of both terms. I think this description is perfectly fine, but as a writer and U.S. citizen, I just don’t like the Thought Police trying to manage our word choices. Let’s get real. This is the United States of America where freedom of expression is so vital to our daily lives that the founding fathers had the foresight to list it first among amendments to the nation’s constitution. What’s great about speaking your mind is that you don’t have to fear walking on eggshells. You also don’t need to be concerned about telling an off-color joke. But in the 21st century, you can’t even do that. Kelly Osbourne, the outspoken daughter of pop-culture icons Sharon and Ozzy Osbourne, who also are known for their loose lips, recently was hammered for jesting on an episode of “The View” that if Donald Trump’s immigration plan were implemented, then there wouldn’t be anyone left to clean his toilets. One of her co-hosts, Rosie Perez, couldn’t help but point out how offensive her joke was within seconds of it rolling off Kelly’s tongue. Then Kelly had to backtrack and say it wasn’t intended in that way. The real crimes here are that the joke wasn’t all that funny and it’s almost shocking that “The View” is still on the air after a revolving door of co-hosts who tend to get booted, ironically enough, for usually making politically incorrect observations. Whoopi Goldberg and Joy Behar had their own brush with PC infamy on “The View” in 2010 when they stormed off the set in response to something guest Bill O’Reilly from the Fox News Network talked about the role of Muslims in the 9/11 attacks. Their spirited confrontation would foreshadow a raging debate over the next five years about President Barack Obama’s refusal to use the “Islamic extremist” label when describing perpetrators in the frightening war on terrorism. When viewed in their totality, I think there’s a fine line between all these words being used as factual descriptions and disapproving judgments. Sure, many people may find them offensive, and they’re entitled to those feelings or beliefs. But let’s stop castigating and banishing people for their words, as offensive as some may find them, and instead focus on their actions or inactions. Let’s also start joking and laughing again without worrying about losing friends or damaging our careers or reputations. I’m a big fan of irony, and I couldn’t help but notice how it followed me out of an elementary school assembly I was recently attending where my 4-year-old daughter was being honored as a student of the month in her preschool class.
The underlining theme of this event was loyalty, but educators also were recognizing all of the major virtues and positive behaviors that everyone is taught at a young and impressionable age, including respect, kindness, honesty, friendship, etc. When it was my daughter’s turn to accept her award, I fumbled for my iPhone, which had been stashed in a loose-fitting pocket on one of those Mexican-style white shirts with embroidery that I had been wearing. Included in that same pocket was a set of keys and a Post-It note wrapped around a $20 bill with a reminder to make change for a purchase later in the day for an item on Craigslist. The seller asked for exact change, which I didn’t have at the time. Knowing I had money in that pocket, I double checked to see if it was there just 30 minutes or so before discovering on my way out of the assembly that suddenly it had disappeared. I walked back into the auditorium where the event was held in a panic, looking frantically for the $20. Then I retraced my steps since the last time I remember seeing it on the school grounds and came up empty handed. I even spoke with some of my daughter’s preschool teachers and the office administrators, all of whom said no one came by to report any lost cash, but that they’d somehow get it to me if anyone was honest enough to turn in the money. Feeling dejected, I decided to let go of my frustration, particularly since money is so tight for so many people these days (including myself), and chalk it up as a learning experience. Then, almost as if to soothe my soul, I thought about how ironic it was some lucky person at the school just didn’t get the message about the importance of virtues and how we should all aspire to behave a certain way no matter what age we happen to be. I suppose you can’t put a price on lessons in morality or practicing virtues in the real world, but oh what a wonderful world this would be if we all were honest enough to turn in lost cash, which I realize is a total stretch for most individuals. Another realization was that being able to convey the irony of this experience to a few friends was almost worth the price I ended up paying for pocket disorganization. Almost is the operative word. I’d rather have my $20 back! |
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