Employers Committed to Providing Health Care Still a Majority

March 12, 2009 (PLANSPONSOR.com) - Despite rising health care costs and other economic worries, a majority of large U.S. employers remain confident they will continue to offer health care benefits to workers 10 years from now, according to a new survey by Watson Wyatt and the National Business Group on Health (NBGH).

According to the survey, 62% of employers are very confident they will continue to offer health care benefits 10 years from now, down from 73% last year. In addition, despite today’s economic uncertainty, roughly four in 10 employers surveyed (41%) are sticking with their current health care strategy, while the remaining respondents have either revamped their strategy or expect to do so this year.

“This is the first time in the 14 years that we have conducted this survey that employer confidence has declined, and it is not related to an increase in cost trends,” said Ted Nussbaum, North America director of group and health care consulting at Watson Wyatt, in a press release. “This clearly reflects the uncertainty among large employers over the impact that the fragile economy is having on their ability to stay competitive in the face of health care costs that persistently rise at double the rate of general inflation.”

Most survey respondents do not support most of the commonly prescribed solutions to the issues with the health care system; however more than two-thirds (68%) are very or somewhat supportive of reforms that advance the consumer-oriented model and emphasize greater individual responsibility. Respondents are least in favor of tax policy changes that remove tax deductibility of employer premium contributions (12%).

Other findings from the survey, according to the press release, include:

  • Employers continue to monitor costs by conducting dependent eligibility audits (see Employers Use Eligibility Audits to Control Health Care Costs ). While 47% did so in 2007, that number increased to 54% in 2008. This year, 61% of companies conduct dependent audits.
  • Health savings accounts (HSAs) are currently offered by 34% of companies. By 2010, that number is expected to increase to 43%. Health reimbursement accounts (HRAs) are offered by 21% today, and only 3% plan to add one next year.
  • Medical coverage for retirees under age 65 is offered by 23% of companies, down from 24% last year. Coverage for retirees over the age of 65 has declined from 23% in 2008 to 20% in 2009. Only 12% of companies provide traditional retiree medical coverage to new hires, down from 15% in 2008.

The Watson Wyatt/NBGH survey of 489 large U.S. employers, conducted in January 2009, identified a group of "consistent employers" that have maintained a long track record of lower health care cost increases over the past four years. These employers have outperformed other employers in five key areas: appropriate financial incentives, effective information delivery, quality care, metrics and evidence, and maximizing health and productivity, according to a press release.

While the median two-year trend for all employers is 6%, the survey identified 53 "consistent performing" companies that have maintained health care cost trends at or below the median trend for each of the last four years. According to the survey, consistent performers have strategies and programs in place that have saved them nearly $60 million since 2004.

"The track record of these performers clearly demonstrates that by taking a specific course of action it is possible to successfully control health care costs," said Helen Darling, NBGC president, in the press release. "By building employee accountability for health care now, employers will be better positioned to weather the financial storm and to address potential health care reform on the horizon."

The 14th annual NBGH/Watson Wyatt survey report can be viewed at www.watsonwyatt.com/2009nbghsurvey .