Hanging on to Health Insurance (for now)
i4cp member Fidelity Investments, a leading provider of employer benefits, announced this week that a survey it conducted in June found that most U.S. employers (84%) "…expect to revisit their health care benefit strategy this year, following the passage of health care reform legislation."
That's not surprising in light of the persistent annual double-digit increases in health care costs and the near demise of institutions such as Ford and GM, which largely suffered from slow strangulation due to monster health-related costs of employees and retirees.
Something's got to give. And seeing how - for larger employers - the reform legislation's penalty for not providing health insurance to employees will be less costly than actually providing coverage, dropping the benefit may seem like the best bet and in some cases, the only way to survive. So revisiting the issue makes sense. What employers will ultimately decide to do is anybody's guess. But the idea that someday - not far from now - employer-sponsored health care coverage will be a thing of the past is not that far-fetched.
No way, you say? Trust me. Time will pass, dust will settle, things will change. Remember pension plans? Remember when it was acceptable to smoke indoors pretty much wherever you pleased? It's difficult now to imagine, but people used to smoke everywhere - in the movie theatre, in the grocery store, in restaurants, the library, college classrooms, even in hospitals. The days when hospital workers tapped their cigarettes into the overflowing ashtrays found at most nursing stations were not that long ago; the last time I saw smoking inside a hospital was in the mid-1990s. But the tide of public perception turned, a social revolution took place and it will again when it comes to ideas about health insurance, health care and who should be responsible for it.
The Fidelity study found that almost half (49%) of smaller employers (500 employees or less) anticipate significant increases in health care costs in the short term, while just 25% of larger employers (500 employees or more) indicated the same concern. This is probably because no one really knows how things will shake out right now.
"There is a lot of confusion out there about the real impact of the health care legislation and the accompanying costs," said Sunit Patel, senior vice president of Fidelity's Benefits Consulting services. "Depending on a company's strategy in designing its future health plans, cost increases can be minimized."
What will those cost-saving strategies look like? Employers will likely step up wellness programming to keep employees healthy and to help manage chronic issues, and many will likely opt for high deductible plans and HMOs. But that's only for now. The tension that's currently building feels like the last few seconds of a breath-holding contest. Who will be the first major employer to give in to the pressing weight of employee health coverage costs? Time will tell.
What's in it for employers who continue to offer health insurance? It's a factor in recruitment and retention of talent. And a healthier, happy workforce is more productive. But none of this may matter once the first Fortune 500 Company makes the decision to drop the benefit. Others will likely follow, and they'll do so swiftly. It will become, like the lean, cut to the bone staffs of many organizations these days, the new and permanent normal.
What changes does your organization plan on making to the health care benefits they currently offer? Has there been a serious discussion on dropping them altogether? Has this come up as a concern among your employees?
