The following is the executive summary of a research report I wrote for the Institute for Corporate Productivity on employee health care benefits. The full report is available to members of i4cp. I am the director of primary research for i4cp.
The financial burden of employee health care benefits has long been a source of angst for employers and employees alike. Employers’ annual costs of providing health benefits have risen at double-digit rates the past decade and employees have increasingly taken on greater cost-sharing and diminished coverage.
With recent legislation opening up the range of employee health care solutions, employers and employees need to recalibrate their strategies and expectations. The old status quo of offering competitive yet minimal health care benefits may soon become untenable for organizations intent on attracting and retaining key talent as the economy recovers and hiring picks up.
i4cp surveyed 138 U.S. leaders and specialists in employee health care benefits in mid-2011 to find out how organizations are currently approaching health care benefits and how they are planning to do so in the coming year. The survey went beyond examining offerings and plan parameters and asked organizations about:
- Their rationales for the current portfolio of health care plans offered;
- how the portfolio will change and why;
- which cost-management approaches have been most effective;
- and which approaches are most effective in communicating to employees about health care benefits.
The survey data confirm that cost management is the prevailing strategic concern among respondents and that most organizations are delaying making major changes or overhauls to their health care benefits – at least through the next year.
And while significant change is not in the offing in terms of the types of health plans employers offer employees, high-performing organizations are differentiating themselves by communicating about benefits effectively, emphasizing wellness and health finance literacy, and incenting employees to make healthy lifestyle choices. High-performers also employ online medical expense calculation tools and online medical plan comparison tools to enable employees to model outcomes.
Despite the continuing popularity of preferred provider organizations (PPOs), there is still plenty of cost-saving potential in consumer-directed approaches that hold individual employees accountable for the lifestyle and health choices that add to employer costs. There is also room for thoughtfully designed incentives to nudge employees toward healthy and smart choices.