TIME FOR A CHECK UP? Rising Health Care Costs Challenge Employers

July 5, 2000 (PLANSPONSOR.com) - Rising healthcare costs are already under the microscope at large employers, though proposed changes may not deal with increased employee discontent with their healthcare programs, according to a new study by Watson Wyatt.

The study finds that over half (58%) of employers surveyed have plans to deal with rising healthcare costs. Respondents reported health plan rate increases of 9.8% in the past year, compared with a 7.5% increase from 1998 to 1999.

A tight labor market has pushed worker satisfaction ahead of cost concerns of most of the 175 employers surveyed.  Still, only 39% say they plan to take steps to improve employee satisfaction with these programs – and 88% of employers reported that workers currently rate their health-care programs “average to poor.”

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“If the benefits are not satisfying to an employee, they might wonder, ‘Why am I working for an organization that treats me like this?’, said Steven Richter, senior consultant at Watson Wyatt and co-author of the study.

Under Consideration

Employers are looking at:

  • fewer plan offerings
  • geographic analysis of costs
  • prescription-drug costs
  • moving to three-tier copayment systems
  • moving to electronic claims processing

Can’t Get No Satisfaction

“Many people would assume there’s a tradeoff between cost and employee satisfaction,” according to  Richter. “What we found out was that employers that were having the best outcomes on employee satisfaction were more likely to have the best outcome on costs. Those employers really get down and manage these plans effectively.”

Employee complaints range from:

  • incorrect, delayed or poorly explained claim payments
  • mistakes and delays in issuing ID cards
  • being put on hold too long by telephone representatives
  • a lack of follow-through on remedying problems

Still, as employers struggle to reduce costs, they may add to the list of worker concerns with current programs.
The study covered employers with an average of 16,000 workers each, with findings based on interviews with benefits managers of the companies, not employees directly.