Health care reform is a story that is still being told. Key regulations and guidance are coming forth and more are still in the pipeline. And the ultimate outcome and impact on how employers’ manage their employee health benefit programs remains to be seen.
Yet, clues are starting to emerge. According to the 16th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care, many employers are seeing a potentially game changing outcome over the next several years. The survey of 588 employers conducted in late 2010 and early 2011 found that employer confidence in the status quo for health benefits has plunged.
When asked whether companies will still be offering employee health care benefits in ten years, only 38% were highly confident that employee health benefit programs would still exist in ten years. This is nearly half of the 73% of respondents in 2007 who were very confident that companies would still be providing employee health benefits in ten years.
Historically, the survey has been able to tie the wax and wane of this confidence to the overall health care cost trend. In short, the higher the cost trend, the lower the confidence level. However, no such correlation exists in this year’s survey. The health care cost trend in 2010 was the same as the trend in 2007, yet confidence in the long-term viability of employer-provided health benefits in 2010 is nearly half of the level in 2007. Even in 2003, when the trend stood at about 13% or more than twice as much as today’s 6% trend, more employers (43%) were confident in employee health benefit plans’ staying power than they are today.
Of course, a big part of the health benefits question is likely to be answered after 2014 when the state health insurance exchanges begin operating. At that point, employers can start taking action on the “play or pay” question—that is, whether to continue offering health benefits to employees or to pay the penalties for not offering benefits. If one or more large employers make the leap, will others follow suit? Or will the specter of public backlash, compromised employee health and loss of competitiveness keep employers on the health benefits track?
Any company that has not thought through the implications of such decisions should be doing so now. Developing a comprehensive health care strategy is a good place to start. A health care strategy can help companies examine issues, like the play-or-pay decision, with a broader perspective rather than simply from a financial one. After all, dropping employee health care coverage can have tremendous implications for everything from talent acquisition to a company’s standing in the community to employee pay levels. In fact, once an organization looks more closely at the play-or-pay decision, the answer might not be as financially straightforward as originally thought.
Whatever route an organization chooses, it should do so with the input of the senior management team and leaders throughout operations. Moreover, a lot will be changing in the coming months and years so any decision-making process should be flexible enough to accommodate new data, information and circumstances as they emerge.
The game is just beginning.