Employers Still Struggling with Health Care Costs

November 15, 2010 (PLANSPONSOR.com) – Companies are reprioritizing business objectives to limit their exposure to increasing costs associated with providing health-related benefits, according to new research.

A Prudential news release about its Worker Productivity as the Next Frontier in Benefits Cost Management report said seven in 10 plan sponsors say controlling health care costs is “highly important” to them.

Three of their top five benefits objectives in 2010 are cost-related, namely, employers are placing greater emphasis on productivity-focused strategies such as wellness initiatives, absence management, and benefits integration. Achieving work/life balance, maintaining a healthy lifestyle, and reducing stress are top of mind for employees and they expect their employers to help them reach these goals, the news release said.

“Making sure employees are healthy and active at work is in everyone’s best interest as it helps keep health care costs down and increases productivity,” said Jim Porter, vice president of product development for Prudential’s Group Insurance business. “Going forward more companies will start investing in wellness, prevention and return-to-work programs as part of a short-term/long-term employee retention and cost management plan.”

Return-to-work initiatives were the most common cost-management strategies among plan sponsors in 2007, according to Prudential. Since then, there’s been moderate growth from 39% to 45% in program participation and nearly half of all survey participants say using both return-to-work and absence management systems has been highly effective in improving the productivity of their workforce.

Fifty-four percent of plan sponsors surveyed have started combining parts of their medical, pharmacy, disability, and workers’ compensation products into integrated plans. As might be expected, most benefits integration programs are in the early stages of implementation, so success is difficult to gauge, but 57% of plan sponsors involved in these types of activities say they have measurable cost-savings goals in place and have already seen modest improvement.

The study was conducted via the Internet during April and May of 2009 and consists of three surveys targeting plan sponsors, plan participants, and brokers/consultants. The research was conducted for Prudential by the Center for Strategy Research.