The trend of employers shifting rising health care costs to their workers continues, but how much longer can that be sustained?
“A growing number of employers are asking employees to contribute a larger percentage of their health care costs,” said Evren Esen, director of survey programs, Society for Human Resource Management. “But it is important that employers fully assess the potential impact of such a change, especially in today’s improved job market. Shifting health care costs to employees can lower employee job satisfaction and pose a barrier for attracting new talent.”
The latest Strategic Benefits-Healthcare Survey report from SHRM finds 79% of respondents from organizations that provided health care coverage to their employees indicated their organization is “very concerned” about controlling health care costs.
To address the issue, 26% of the organizations surveyed say they plan to increase their workers' share of health care costs and contributions in 2015.
Almost one-fifth of organizations that provide health care coverage indicated use of consumer-directed health plans, such as health reimbursement arrangements and health savings accounts, has been their best measure for controlling health care costs.
Slightly over half of the companies surveyed, 56%, also offer educational initiatives related to health and wellness. But such incentives have had limited results according to Blaine Bos, a worldwide partner with benefits outsourcing and consulting firm Mercer LLC.
"We've maxed out what we can do there," Bos says in The Wall Street Journal, noting that only about 25% - 30% of employees eligible for such programs tend to make use of them.
"The next generation of incentives will take the opposite approach," he says. "We'll say that if you refuse to participate in a chronic-condition program appropriate for you, we will design our plan such that we will not reimburse you for health care in the normal manner, but at a lower rate."
He adds that the goal isn't to punish employees, but rather to encourage them to take responsibility for their own medical conditions and behaviors.
Affordable Care Act
When it comes to health care costs though, there is a huge wild card looming over everyone in 2015, in the form of the unknowns around Obamacare.
We wrote in this widely-shared Staffing Talk article last week about how staffing companies in particular are passing on specific costs related to the Affordable Care act to clients and customers.
Since we wrote that, I came across this quote from David Savarise, senior vice president of About Talent U.S., who said in this Zenith Talent blog post that he has heard some clients are not willing to pay anything extra for ACA.
He also said that among the options for passing those costs on, "it is unlikely that the burden can be spread across all workers; therefore, the cost burden for the rest of the worker population becomes greater as more clients deny any increase.”
Many think this long effort to shift more of the cost of employee health care onto employees themselves may be reaching its "useful limits."
The vast majority of American employers have already boosted the percentage of health insurance premiums paid by their employees, and have adopted health plans that feature bigger deductibles and larger co-pays.
"The very largest employers recognize that cost-shifting has run its course," stated Blaine Bos. "It does not improve long-term cost trends. It improves the trend for one to two years but then you're back in the same ball game, as health-care inflation continues to rise at about two times the rate of general inflation."