By Evelyn F. Ireland, CAE, executive director, NADP
To create a diversion at the fairy godmother’s office, Shrek says to the receptionist, “We represent the workers in all magical industries, both evil and benign. Are you feeling at all degraded or oppressed?"
“Ugh, a little … We don’t even have dental,” she replies in the popular animated film.
Employees want dental benefits. Savvy employers know this. That is why dental benefits are and will continue to be one of the most popular benefits in an employer’s compensation package, according to the 2011 Group Purchaser Behavior Study, published by the National Association of Dental Plans (NADP). The study also reports the vast majority of employers plan to continue to offer dental benefits to their employees, despite the rising costs of health coverage and the unanswered questions posed by health care reform.
As questions about the impact of health care reform on employer-provided coverage remain unanswered, the dental benefits industry is working hard to minimize impacts on consumers with dental coverage today and the dental market for employers. As well, the industry is working to advance dental benefits with the development of quality measures.
Given the current business landscape, what can employers anticipate regarding dental benefits in the future? To understand what the future may hold, the first step is to understand the current market.
Today’s Robust Dental Benefits Market
According to the 2011 NADP study, more employers offered dental benefits to their employees in 2011 when compared to results from the 2005 or 2008 editions of this three-year survey. In addition, the increase in the percentage of employers offering dental benefits was noted in every geographic region and employer size category. The study also indicates that as the number of employees increases, so does the likelihood of companies self-funding their dental plans.
Not only did more employers offer dental benefits, the vast majority, 96 percent, believe them to be either an “essential” or “differentiating” factor in the recruitment and retention of employees.
Dental PPOs (participating provider organizations), the most common type of dental plan offered, became even more popular over the past three years while dental HMOs (health maintenance organizations), traditional indemnity and discount plans all declined. DHMO products appear to be more popular in the Western U.S. than other parts of the country, especially the Midwest.
Additional key characteristics of the current dental benefit market include:
· Dental coverage is purchased as a separate policy more often from a stand-alone carrier (59 percent), while dental policies purchased “in a package” from a medical carrier and its dental affiliate, subsidiary or partner declined.
· In selecting a new dental carrier for dental coverage, cost is the most important factor.
· The most important reasons for companies to consider offering dental benefits are:
o Employee requests;
o Dental health impacts overall health; and,
o Affordability.
The Impact of Health Care Reform on Dental Benefits
What is the future of the dental benefits market under health care reform? Will dental benefits maintain their popularity among employers and employees under health care reform? Almost half of the employers responding to the study reported they expect no change in their overall employee benefit offerings because of health care reform legislation, while one-third plan to reduce employer contributions. In addition, more than half (52 percent) expect health plan costs to “increase a lot” and another 29 percent expect costs to “increase a little.”
The study reveals more than 80 percent of all companies surveyed are likely to invest in – or continue – offering health benefits rather than pay a $2,000 penalty to the government when the Affordable Care Act (ACA) is implemented. With regard to the dental, the study also reports separate dental and vision benefits will continue to be purchased outside of the Exchange by 69 percent of all employers. In employer groups of 100 or less (those initially eligible to use exchanges), almost 80 percent report they are likely to continue dental coverage outside exchanges.
Maintaining dental coverage will create a new challenge for employers when the ACA is implemented. While initially this challenge is greater for employers with 100 or fewer employees, there are some initial impacts on employers of all sizes.
The challenge arises from how the ACA defines the benefit package to be offered in the exchanges. The ACA includes ‘pediatric oral services’ as part of the essential health benefits package to be offered in the small group and individual market—both in the exchanges and the private market.
In the exchanges as in the private market today, the pediatric oral services can be covered in a dental policy while the other health services will be covered under a medical policy. However, one of those little know “glitches” in the language of the ACA requires that in the private market all the required services be provided under one policy from the medical carrier.
This leaves several critical questions that will impact employers. What happens when employers continue offering dental coverage outside exchanges but go to exchanges for their medical coverage? Will the dental coverage their employees have be accepted or will employees be required to purchase duplicate coverage in the exchanges. What happens when two working parents work for small employers? Or one for a large employer and the other for a small employer? What if there are no children in the family? Will both have to buy dental coverage that includes pediatric oral services? Will the coverage they select from one employer or the other be accepted as meeting the mandate? These are scenarios that create HR complaints that employers and insurers want to avoid so NADP is working to clarify these questions.
“To deliver on the promise made by President Obama and congressional leaders that Americans can keep their coverage and doctors, consumers with dental benefits need the option they have today to purchase medical that does not duplicate the dental coverage they already have,” remarked NADP Executive Director Evelyn F. Ireland, “Regulators must clarify that dental policies consumers have now will be accepted by exchanges to meet ACA requirements for children. They should also clarify that health plans can offer medical coverage without dental both inside and outside the exchanges. Without these clarifications, dental coverage could be disrupted for 1.65 million small businesses providing dental policies to 43.7 million employees including 22.9 million children and the confusion from the change in market operation will impact many more.”
Other New Horizons for Dental Benefits
As NADP’s executive director suggests, much remains uncertain on the regulatory front because of needed clarifications in the ACA. Adding to that uncertainty last year were new requirements by the Centers for Medicare and Medicaid (CMS) that the dental industry begin development of dental quality measures – which currently do not exist. Prior to the CMS requirement, NADP had taken the lead in the industry’s development of these measures through its participation on the Steering Committee of the Dental Quality Alliance (DQA) & in the National Quality Forum.
What does this mean for employers with regard to dental benefits? With the knowledge gained from the development and integration of dental quality measures, dental plans can develop innovative product designs based on oral health outcomes. This will provide more choice for employers and employees. The additional measures could also result in more detailed data for employers to use when evaluating and comparing dental plans.
No one’s crystal ball reveals the detail about how dental benefits will be structured in the future. Even so, NADP is leading the charge to ensure that dental plans participate in the development of viable solutions for health care reform implementation. NADP as dental benefits industry’s representative, with participation of all its members, will ensure that the development of quality measures proceeds in a way that adds value for the purchasers and users of group and individual dental benefit programs.
About NADP
NADP is a Texas nonprofit corporation with headquarters in Dallas, Texas, is the “representative and recognized resource of the dental benefits industry.” NADP is the only national trade organization that includes the full spectrum of dental benefits companies operating in the United States. NADP’s members provide Dental HMO, Dental PPO, Dental Indemnity and Discount Dental products to 143 million Americans, approximately 90 percent of all Americans with dental benefits.
