Employers Not Ready For DC Healthcare

December 13, 2000 (PLANSPONSOR.com) - Despite increased costs and growing administrative burdens, most employers are not ready to embrace a more "hands-off", defined contribution style approach to health care benefits, according to a new study.

According to the Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans, the vast majority (84%) of employers say they are concerned that some of their employees would not get coverage under such a system, due to the employees’:

  • chronic illness
  • concern they couldn’t afford the coverage
  • perception that they didn’t need the coverage

Most (55%) said they couldn’t predict the cost impact of a general move to a DC-type program, more than a quarter (28%) believe it would raise overall health insurance costs, and just 8% think it would lower those costs.

Web Enabled?

Over a third of employers with 500 or more employees are using Internet/intranet applications to provide benefits, as are two-thirds of those with more than 20,000 employees. Most commonly those applications are used to provide forms and access health and welfare benefit information.

A fifth of all large employers are conducting open enrollment for 2001 via Internet/intranet, though most will also give employees the option of paper or phone enrollment, according to the study.

Court Concerns

Large employers are increasingly concerned about health care plan litigation, with more than three-quarters (79%) expressing concern this year, up from 68% in 1999. Nearly all (97%) of those with more than 20,000 employees are concerned – and 8% of that group say they have been named in a legal action related to medical care provided through one of their sponsored health plans, as have 2% of plans with 1,000 to 5,000 employees.

Alternative “Medicine”

Chiropractic care is now covered by 70% of the larger medical plans, up from 62% a year ago. Acupressure/acupuncture is covered in 17% of plans, up from 12%, while massage therapy is covered in 12%, up from 7%.

Twelve percent of those employers with 500 or more employees now offer health care coverage for same-sex domestic partners, roughly the same as 11% a year ago.

Teething Pain?

Comprehensive dental benefits are now offered by 51% of all employers, while the cost of dental coverage averaged $470 per employee, an increase of just 1%. The survey found no change in either the median deductible ($50) or the maximum annual benefit ($1,000).

The Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans includes responses from more than 3,300 respondents nationwide.