Rising costs have forced three-quarters of U.S. employers to change the design
of their healthcare plans at least once since 2002, and those changes have usually
meant transferring a bigger share of the costs to employees, a survey by the
Society for Human Resource Management (SHRM) shows.
In its 2004 Health Care Survey, SHRM randomly selected HR professionals from
its membership rolls and polled them early this year on their their organizations'
healthcare plans. A total of 373 HR pros participated.
Almost all of the participants (99 percent) said their organizations offer
some type of healthcare coverage. Fully 75 percent said changes were made in
the design of their plans in 2002 or 2003. The number one reason for the changes:
cost, with 87 percent specifically citing employer costs as a factor. Employee
costs were a factor for 46 percent.
And what kinds of changes were made to these plans? Participants said they
most often involved asking employees to shoulder a greater share of the costs:
Increased copays and/or coinsurance - 69%
Increased amount plan participants pay for prescription drugs - 68%
Increased participant cost - 65%
Increased deductibles - 52%
Switched providers - 31%
Changed pharmacy providers - 21%
Shifted to or enhanced consumer-driven health plan offerings (i.e., flexible
spending accounts, medical savings accounts where the consumers, not the company
or insurance provider, determine how and where to spend their money) - 21%
Increased scope of benefits - 17%
Introduced tiered networks for doctor visits and/or hospital stays - 10%
Changed provider facilities based on performance (e.g., measurement of outcomes,
customer satisfaction, medical errors, ability to meet national averages,
safety citings, etc.) - 9%
Decreased scope of benefits - 9%
Decreased amount plan participants pay for prescription drugs - 6%
Decreased participant cost - 4%
Restricted participant eligibility for coverage - 4%
Decreased copays and/or coinsurance - 3%
Decreased deductibles - 2%
Other - 9%
Overwhelmingly, SHRM reports, cost is the number one factor in evaluating health
care plans; the survey found that 93 percent of organizations use it as a prime
piece of data in health care evaluation. In contrast, just 44 percent evaluate
their health plans based on quality of treatment. Only 14 percent evaluate the
outcomes of treatment, and a mere 7 percent evaluate provider availability.
SHRM says the data indicates that the focus has become what a company can afford
to offer and what employees can afford to pay.
Faced with the challenge of providing health care to employees while keeping
costs down, organizations are finding alternative ways to approach the problem.
Many are looking to preventative measures--in fact, 67 percent provide
participant incentives to encourage healthy behavior. To do this, 76 percent
of respondents report using Employee Assistance Programs to promote healthy
lifestyles. In addition, 52 percent use educational programs to inform employees
on how they can take steps to improve their overall health.
Some companies (16 percent) are partnering with other organizations to purchase
health care coverage collectively to receive discounted group rates. Grouping
together is helping some smaller organizations leverage their buying power to
get rates that were only available to large organizations. Seventy-four percent
of survey respondents support legal changes to allow employees to band together
to purchase health care coverage.
"Health care costs have increased by double-digit percentages year after
year, forcing employers to grapple with the consequences. Employers know the
value of offering health care as a powerful recruitment and retention tool and
as an important measure to maintain a healthy workforce," said Susan R.
Meisinger, SPHR, president and CEO of SHRM. "To retain the value of an
attractive benefits package, HR professionals are diligently working to find
the balance of health care plans that are affordable and beneficial."