As CFOs have become more involved in health plan design and cost management, the once-common double-digit annual plan increases have begun to disappear. (Photo: enciktepstudio/Shutterstock.com)
Over the last several years, CFOs have taken an increasingly active role in managing the design and cost of employer-sponsored health coverage. Not only has this led to a diminished role for HR in this key benefit area, but it has expanded the use of outside experts as resources for crafting the plan.
This is among the big-picture takeaways from a survey of 54 organizational financial leaders conducted by Willis Towers Watson (2020 Survey, Health Care Costs). The survey provided more evidence that the C-suite places a higher value than ever on the details of the health plan, and that HR has ceded considerable responsibility during that process.
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While the transfer of health plan responsibility has been occurring gradually, the shift to CFO dominance will be all but complete by 2023, the survey indicated. shared responsibility between the two offices has been an upward trend. That will continue to grow, respondents said, while the percent of HR professionals with full responsibility for the employee coverage will continue to dwindle. (Only 11% of plans will be HR's responsibility within three years.)
But these CFOs are not intending to go it alone. They understand that forecasting health plan costs is not in their wheelhouse; less than one quarter say they are well-positioned for predicting and managing health care cost volatility.
So they will turn to benefits consultants for guidance. They see in the next few years opportunities to restructure health plans: 55% expect significant plan design revisions to take place over the next three years. That compares to the 32% that reported making changes in the past three years.
Given that desire for change, a majority of CFOs in the survey said they will likely engage in serious strategic design and cost discussions with brokers who offer innovative solutions that will guarantee a strong benefits package while meeting the employer's fiscal goals. This indicates that the ranks of the non-traditional benefits consultant will continue to ramp up to meet the CFO demand for a broader range of health plan options.
That determination to offer meaningful benefits at a lower cost is already paying off. As CFOs have become more involved in health plan design and cost management, the once-common double-digit annual plan increases have begun to disappear. Most of those interviewed for this survey (nearly 80%) predicted an annual increase of less than 7% for 2021, with fully one-third forecasting an increase of less than 4%.
In terms of plan design, the effects of the COVID virus could be easily spotted in the responses. Companies will offer more flexible working conditions; they will rely increasingly on telemedicine to support employee health; and they will offer more mental health services, largely via video portals.
As to the long term continuation of offering health benefits to employees, 100% said it was highly likely they would offer them five years hence, and 98% were either certain or pretty sure they would be for the next decade.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
