Survey: Controlling Health Care Costs Priority Number One in 2005

January 3, 2005 ( - Controlling the cost of health care to employees is the number one benefits priority for 2005, according to the Top Five Total Rewards Priorities Survey from Deloitte.

Ninety percent of respondents to the survey said this was a priority. Following this, 56% stated that ensuring the company’s rewards package attracted new workers and motivated current ones, while 52% said addressing the willingness of employees to pay a larger portion of their benefit plan coverage was a major priority. Increasing employee responsibility in managing their own rewards budgets was noted by 42% of respondents, while managing the cost of providing retirement benefits to employees was noted by 41%.

Since 2000, controlling health care costs has been the number one priority, according to last year’s survey, available here .

Cost containment is a noticeably common theme among the top priorities. Cost-sharing plans are becoming increasingly prevalent due to the idea that lower costs are the result of the employee realizing the actual cost of benefits and making more cost-effective usage decisions. Eighty-three percent of employers have either increased such programs in the last year or are planning to do so in the next year. Seventy-two percent are placing increased emphasis on employee consumerism for health and wellness programs in an attempt to lower overall costs. In an effort to educate employees on the subject, 85% of employers have improved or plan to improve education and communication programs.

There are concerns other than strictly controlling benefit costs, however. The survey points out that 41% of respondents are looking to better measure the return on investment in their rewards programs, and almost half of respondents are looking to increase outsourcing of benefits programs.

Priorities, not surprisingly, differ by both industry and region. The cost of providing health care benefits to employees was the greatest concern in the insurance industry (98%), and lowest in the health care/life insurance industry. Making a rewards program that attracts workers and motivates them as well was cited by a larger percentage (61%) in health care/life sciences and manufacturing. Not-for-profits were much more concerned with increasing the payments from employees for health care (79%), a concern which was least common in the technology/media/telecommunications industry.

Also, despite its well-noted effects in the coming year, the impact of proposed legislation and guidelines on rewards programs, such as Sarbanes-Oxley, was only noted as a top-five priority in the technology/media/telecommunication industry (58%).

Differences by Geography

Geography also made a difference in priorities, with the Southeast most worried about the cost of proving health care benefits to employees (95%). The Southwest is the least concerned on the subject; however, 87% still said it was a top-five priority. Notable priorities that differed from the top five include:

  • The ability of a company to invest for growth while simultaneously meeting financial obligations for rewards programs (Northeast, 48%).
  • The impact of employee base pay (Southeast, 46%).
  • The impact of recent proposed legislation on rewards programs, such as Sarbanes-Oxley, HIPAA, and stock options accounting (Northwest, 44%).

This was the eleventh consecutive year for the survey, which asked members of the International Society of Certified Employee Benefit Specialists (ISCEBS) what their major priorities are for the coming year. The survey is run by Deloitte Consulting LLP’s Human Capital practice in conjunction with ISCEBS. For the purpose of the survey, “total rewards” was defined as all the compensation, benefits, perquisites, and any other direct or indirect payments made to employees.