Most Employers Investing in Employee Health to Cut Costs

A Hewitt press release said that while the number of companies focused solely on mitigating annual health care costs has more than doubled this year – from 15% in 2008 to 31% in 2009 – almost two-thirds (65%) of employers surveyed said they are continuing to make significant investments in improving the health and productivity of their workforce despite the troubled economy. However, the changing political landscape – coupled with ongoing cost pressures – has prompted many companies to seriously consider their future role as a health care benefits provider, according to the announcement.

Most companies (75%) said they plan to focus on improving employee health and productivity in the next three to five years, but one-fifth (19%) said their strategy is to move away from directly providing health care benefits, up from 4% in 2008.

“In today’s environment, employers are under pressure to cut health care expenses, but they realize that short term cost management tactics do not address the underlying drivers of health care cost,” said Jim Winkler, head of Hewitt’s North America Health Management Consulting practice, in the announcement. “This leaves them with two options: making a long-term commitment to improving the health of employees and their families, or exiting health care altogether. Most companies believe that investing in the long-term health of their population is the most effective way to mitigate costs and create a more productive and engaged workforce.”

According to Hewitt Associate's survey, the state of the economy has had little influence on health care programs in 2009, but more than half (52%) of companies said the economic downturn will have an impact on their 2010 health care programs.

Nearly two-thirds (65%) of companies plan to shift more costs to employees, and almost half (49%) plan to reduce the number of benefit plans offered to workers. In addition, Hewitt found more than a quarter (26%) of employers plan to reduce retiree health care benefits, and 13% plan to cut back on part-time employees' benefit offerings.

One-third of survey respondents said they plan to increase their focus on wellness programs in 2010, and almost 40% plan to increase the prevalence of consumer-driven health care plans.

In January 2009, Hewitt conducted a survey of more than 340 employers, representing more than five million employees.