Time to End Health Care Illiteracy in the Workplace

CFOs don't need to be told that employee benefits, particularly health benefits, are expensive and becoming more so. The most recent data from the U.S. Department of Labor's Bureau of Labor Statistics shows that employee compensation costs averaged $30.07 per hour worked this past March. Of that amount, wages and salaries averaged $20.91 per hour worked (69.6%) and benefits averaged $9.15 per hour worked (30.4 %).

Breaking these numbers down further shows that companies spent an average of $2.12 per hour for health benefits or 7.5% of total compensation. Comparing these numbers to data from March 2001 shows that the percentage of total compensation spent on health benefits has increased by a third from 5.6% in 2001 to 7.5% in 2011.

Yet, even though health benefits are becoming a larger percentage of total compensation and they are spending large amounts of money on health benefits, companies still don't do enough (or, in some cases, anything) to communicate that financial commitment to their employees. A new study of 138 health care benefits specialists conducted by the Institute for Corporate Productivity (i4cp) found that 65% of companies do not integrate health benefits into their total rewards strategy.

We've discussed the need to communicate total reward values to employees before. But the i4cp study shows that now is a particularly important time to shape employee perceptions of the value of health care benefits. Once the economy improves, many of those employees might be looking for opportunities elsewhere. For example, the i4cp study suggests that companies emphasize the link between health benefits plan design and individual employee actions and decision making by focusing on:

• the evidence and analytical rigor that supports health plan design parameters,
• how individual choices impact individual and group health outcomes,
• the role of incentives in shaping the employee health choices,
• the impact of employee health and well-being on workforce productivity and company performance,
• how employees' good health or “health security” contributes to their financial security,
• how employees benefit from a risk management perspectives.

Getting these messages across requires clear and frequent communication. To prepare, companies need to gauge how well employees understand health care in general and their own health plan specifically. This can serve as a baseline for measuring the impact of information shared during open enrollment as well as ongoing communication throughout the year. Based on how well employees are taking in those messages, companies may need to recalibrate the information they are sharing to reflect the changing level of employee “health care literacy.”

The full study report is available for download by i4cp members only, but there is more information about the study here.