News Flash: Benefit Programs Fail to Meet Needs

Human Resource Executive News

Neither U.S. companies nor employees believe that current benefit programs are fully meeting their needs, according to a new Towers Perrin survey conducted among both company executives and employees. Only 25% of the executive respondents agreed their programs are very effective at meeting cost control objectives, and fewer than half said their programs are very effective at meeting recruiting and retention objectives (42% and 46%, respectively).

OK, we have spent the last 20 years trying to control the rising cost of healthcare by:

  • Restricting consumption (HMO’s)
  • Restricting access (PPO’s)
  • Increasing employee contributions
  • Increasing out-of-pocket maximums
  • At the same time going from DB (we promise) to DC (good luck)

So where is the surprise that employees feel that benefit programs don’t meet their needs? As for the executives surveyed, well costs are still going up, and employees aren’t any happier – so the benefit programs don’t meet their needs either.

We need a long-term focus on improving employee health and productivity for lo competitive advantage (yes this will require an investment) over time to change this equation. Switching vendors and increasing employee contributions each year just won’t get it done any more.

Now it is time for a new approach with a long-term focus on employee health and productivity for competitive advantage. (Yes, this will require investment.) Things to think about:

  • Wellness & disease management (focus on the $$$$$)
  • Communication, communication, communication (personalized)
  • Plan design – incentives for desired behavior + consumerism
  • Vendor management – are they with you or not??

The turning point has arrived – are we up for the challenge??

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2 Responses to News Flash: Benefit Programs Fail to Meet Needs

  1. Jack Towarnicky says:

    As you say, do these results surprise anyone? TP asked people what they think about benefits, what are their perceptions.

    If you want different results, focus first on changing expectations and perceptions for benefits taken as a package. You believe we will change perceptions if we: “… focus all communications, energy and marketing solely on wellness, health and productivity…” Really?

    TP will confirm that benefits are “table stakes” – an expectation not a differentiator, a potential dissatisfier, not a motivator.

    So, if companies wish to manage costs, they need to rethink how company financial support for benefits is indexed at their firm – either as a function of pay, service, age or inflation.

    And, if they want to manage associates’ perceptions, they need to refocus associate attention on the company spend, on value not cost, broaden the discussion beyond health care and attempt to place health care benefits into a different context:
    (1) Perhaps adding a historical perspective, remember that, adjusted for inflation, a $1,000 deductible is not “high”, or
    (2) Perhaps adding new context within the associate’s individual budget, where associate contributions as a percentage of take home pay may be less than what it was years ago:

    That is certainly our experience at my employer – 2007 versus 1984:
    (1) Adjusted for inflation, my $1,260 HDHP deductible, less company HSA contributions, is MUCH, MUCH LESS than the $200 deductible comprehensive indemnity coverage most employees had in 1984,
    (2) My $130 annual pretax associate contribution for single HDHP coverage is a MUCH, MUCH SMALLER percentage of take home pay compared to the $162 annual fter-tax contribution in 1984.

  2. tomob says:

    Jack:

    Great thoughts. I actually don’t think we will change perceptions just by focusing on wellness, health & productivity. I guess where I was going is that plan sponsors need to change their focus (WRT Healthcare Benefits) from cost to investment.

    This does not even begin to address the issue of the wide gulf of mis-perceptions regarding benefits between management and employees. As you say, benefits are “table-stakes” for most large employers, but on the margin, benefits done well (design and communication) can make a difference.

    I also like your point of putting this all in an historical context for employees – adjusted for inflation – just to call attention to what is really going on.

    Tom O’Brien

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