For many years, employers and employees have experienced stifling increases in the cost of health care. In some cases, this cost has crippled companies’ ability to do business. Sometimes, these costs drive companies to cut benefits and reduce health care coverage, causing employees and job candidates to seek other employers that provide better benefits.
In 2010, President Obama signed the Patient Protection and Affordable Care Act (PPACA), which put in place comprehensive health insurance reforms. There is debate regarding how much PPACA will save employers and employees and it remains unclear where costs are headed. Also, we are not sure at this moment how much of the PPACA will survive the Supreme Court’s deliberations. But no matter what happens, the ability to offer a benefits package that will attract and retain talented individuals needed to grow business should remain the paramount objective.
Our businesses are only as good as the people we hire and retain. Our employees bring to us subject-matter expertise that is often in short supply, and competition to attract and keep these individuals is stiff. While there are many considerations an individual makes when deciding where to work, the benefits package can be a deciding factor.
Research shows employee job satisfaction ties directly to benefits. According to the Tenth Annual METLIFE Study of Employee Benefits Trends 2011, among employees satisfied with their benefits, 70 percent say they are satisfied with their job and 61 percent say they are loyal to their employers. In the same 2010 study, half of respondents said benefits were an important reason why they chose to work for a company and 60 percent said benefits are an important reason why they stay.
Since benefits – including health care benefits – are key to job satisfaction, hiring, and retention, there are three important issues that will affect the formation of recruitment and retention strategies in the face of changing market conditions.
First, employees view the importance of health care benefits differently than their employers do. For example, employees newly entering the workforce have different benefit needs and expectations concerning flexibility and personalization than more seasoned workers who are at different stages in life. Companies that are able to create more relevant benefit strategies versus focusing solely on cost reduction will likely be rewarded with greater employee loyalty and higher-quality new hires.
Second, companies must decide how they will offer benefits. Whether it is PPACA or an alternative set of solutions established at a state level, in the coming years companies will have three likely options. One, continue to provide traditional group coverage just as they do today despite potential increases in cost. Two, shift to a defined contribution model where costs are fixed and employees can choose how to use their health care dollars. Three, opt to provide no coverage at all.
Whether a federal solution or a series of state sanctioned ones, it would appear that private and public exchanges are likely to move forward. This could create a temptation for employers to make benefit decisions based largely on cost considerations. However, careful attention should be paid to how current and prospective employees will view a company’s positions on benefit coverage.
Third, now more than ever, there are opportunities for employers, employees, and health plans to find ways that can help improve employee health and reduce costs through wellness programs and other systematic efforts. Whether it is through direct incentives or innovative solutions developed by health care partners, companies that proactively take steps to improve employee health will find both happier employees and reduced costs in the long run.
For those of us who work in businesses that require the best and the brightest individuals in order to do our jobs well, the issue of healthcare benefits looms large. Employee benefits build loyalty and attract top talent. If we approach healthcare as a means to achieving costs savings and introduce the notion of fewer health care options, those valuable employees and potential employees may choose to work elsewhere.