Q: Like most companies, we have been struggling to absorb the runaway costs of our health benefit. We've negotiated and changed providers, and we've shifted some of the additional burden to our people. Now we're thinking seriously about discontinuing the benefit all together. Have any other companies done this? What was the impact on recruiting and retention?
A: You are not alone in your concern. In a recent American Benefits Council survey, 86 percent of respondents were very concerned that increasing costs would adversely affect their ability to provide quality health coverage.
There's no doubt that increasing health costs are impacting many businesses. Companies we work with have reported several years of double digit increases that far surpass the inflation rate, and it doesn't look like that is going to let up any time soon. In a time when many organizations are still trying to hold or even cut costs, that spiraling growth can quickly eat away at the bottom line.
However, employees consistently list health benefits as the single most important consideration when considering an employer. Even as employers struggle to absorb those costs, a recent article in Managed Care Week reports that the percentage of companies offering coverage has actually risen slightly.
Many companies have had to shift an increasing portion of the burden to their employees. Even that step is producing friction. In January, union workers at General Electric went out on strike to stop the company from passing additional health care costs through to employees.
Companies have taken steps to make ancillary benefits, like vision programs, voluntary. Since voluntary programs typically cost participants more, their own fiscal good sense will tend to optimize your benefits plan to get the best return on investment.
The Society for Human Resources Management found that 25 percent of companies have cut back on other benefits to off-set increasing health costs. Programs like employee assistance, health screening and prenatal care all saw varying degrees of cuts.
Now that employers have been forced to reduce their staff levels as much as possible, many companies are looking to add back productivity with contingency or just-in-time staffing. This allows an organization to be flexible and efficient, while keeping payroll expenses and benefits costs as low as possible.