How - if at all - are employers adjusting their benefits strategies based on recent reform proposals in Congress?
For one, they absolutely refuse to absorb resulting higher health costs. A Towers Perrin report released last month (an initial study, with no doubt more to come) reveals employers are willing to take any measure to offset unfavorable cost impacts. They'll do so primarily by cutting benefits, or possibly by reducing head count or increasing prices for customers. Specifically, experts predict, it will be industries with high turnover and low wages that are most likely to cut health care plans.
According to the report of 433 human resource executives: "Overall, most employers will take the opportunity to revisit their role in sponsoring health care coverage for active employees and retirees, thoroughly consider alternatives ranging from incremental adjustments to significant changes in direction and chart an optimal path for the future."
But even under several cost scenarios, about 30 percent of survey participants said they're not sure exactly what they'll do. The rest said they would most likely reduce benefits if reform legislation results in higher health benefit costs. And if the burden of cost is on the employee, 86 percent said they are going to allow that to pass on. Only 9 percent said they will increase pay or benefits to partly absorb the cost.
For now, employers are in wait-and-see mode. But findings show at least 23 percent are already rethinking benefit changes, despite the fact that most key reform provisions have effective dates several years into the future.
As soon as lawmakers can center on a solution, a majority - 89 percent - of respondents expect to re-examine their health benefit strategy for active employees and about half will refocus their health care strategies for retirees.
In the meantime, the most important issue at stake for employers is cost and containment. Despite this concern, however, 61 percent of respondents say they'd be likely to continue investing in employee wellness and health promotion programs post-reform. If a pay-or-play mandate were to be passed requiring companies to provide coverage to workers and their families or pay an assessment to the government, almost 30 percent would discontinue company-sponsored health coverage and pay assessment if the per-employee cost of payments to the federal government were substantially lower than their current per-employee benefit costs.
The study concludes: "Coupled with significant shifts in the employment relationship brought by the economic downturn, health care reform may in fact prompt employers to strike a new deal with employees - a deal that may or may not include comprehensive company-sponsored health benefits, but one that could bring increasing responsibilities for individuals in managing both their physical and financial health."
