PwC: CEOs Satisfied With Company's Health Plan

September 11, 2003 ( - The majority of Chief Executive Officers (CEO) see their company's health-care benefit as either above or in line with industry standards.

Garnering the highest marks were the 46% of CEOs who rate their company’s health care benefit plan as “good-in line with industry standards,” followed by 36% who said it was “excellent-above industry standards.” However, the good feelings were not unanimous as 15% rated their health plans as just “fair-below industry standards,” according to PricewaterhouseCoopers’ (PwC) “Trendsetter Barometer” study of 402 CEOs in product and service companies.

While not as high, CEOs also see the majority of their employees are satisfied with their plan. Overall, nearly a quarter (24%) of the CEOs polled described their employee satisfaction as excellent, compared with the majority (55%) that says it is good and only 16% describing it as fair.

Found to be problematic by PwC was that only less than half (43%) of the companies examined actually survey their employees on a regular basis to determine satisfaction and needs related to health care. When employee polls are taken, higher health plan ratings were found among those using surveys – 84% “excellent” or “good,” versus 78% among those not conducting surveys.

“It is surprising that more employee surveying is not done when it comes to this highly valued and quite expensive cost of doing business-especially when it appears there is a relationship between surveying of employees and higher satisfaction with their company’s plan,” said Ron Bachman, a PWC Human Resource Services Group principal. “For example, surveys may show that workers want choices and options that ease access to care. These needs could be satisfied by Consumer Directed Healthcare and Health Reimbursement Accounts (HRAs).”

Health Care Costs

Also not being done on a regular basis by those CEOs canvassed by PwC were metrics when budgeting for their company’s health care coverage, which is somewhat surprising considering those top executives also said their 2003 health care benefits will cost nearly $4,860 per full time employee. Further, allocations are higher among service companies than product companies – $5,035 versus $4,660, respectively.

However, despite this high cost, and very vocal dissatisfaction about rapidly rising costs, only 20% of the CEOs in the panel report using metrics when budgeting their company’s level of spending. Their most-used metrics include:

  • percent of payroll – 43%
  • percent of revenue – 23%
  • percent of operating budget – 20%
  • percent of profit – 5%
  • other (misc.) – 18%.

“These CEOs might benefit from benchmarking their health care costs to a large commercial database of their peers,” noted Bachman. “Also, if cost control or reduction is an issue, newly approved by the IRS, Health Reimbursement Accounts (HRAs) enable both employees and employers to share savings. Creative use of incentive awards and other additions to HRAs can allow employees to deal more effectively with chronic and persistent conditions. Behavior change is the key to cost reduction rather than just cost shifting.”

Even though the minority does benchmarking, most companies (79%) said the rising cost of health care was important to their company’s profitability in the next 12 to 24 months. As such, many of the companies represented in the study (90%) have still taken actions against rising health care costs. Implemented by more than half was a rising of deductibles (57%) and changing carriers (54%). Other changes included:

  • changed to HMO or Fee-for-Service program (21%)
  • eliminated or reduced coverage (19%)
  • increased employee contributions (18%)
  • changed to cafeteria plans (17%)
  • obtained employee concessions (7%)
  • other (4%).

The “Trendsetter Barometer” is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.