Yeah! Employers Are Keeping Employee Health Care Coverage

December 1, 2014 Insurance Topics 0

Most organizations are continuing to offer health care coverage for their employees, according to a survey by Society for Human Resource Management (SHRM) and the Employee Benefit Research Institute (EBRI) released last month.

It’s obviously a good sign for employees who fear finding insurance as individuals through state exchange programs (ObamaCare). Those of us who have avoided the bumps in the road during ObamaCare implementation are sympathetic to Americans who have gone through the arduous process.

And sure, it also means employers recognize that offering employee benefits is still key to attracting and retaining employees.

But I am hoping there is another important reason why employers will be compelled to continue offering coverage even in 2018 — when a 40 percent excise tax will apply to the value of more expensive health care plans.

My hope is that employers will see health care coverage as more than employee benefit, but as an integral part of investing in employee health to encourage productivity and presenteeism (or absence management.) By integrating medical insurance with wellness, safety, disease management and return-to-work programs — along with other initiatives — employers will see a return on their investment. Just think about how much it costs to pay a temporary worker or the stress it causes the rest of the team to share a person’s job, not to mention loss of morale.

We’ve known this for a while. Even back in 2002, when I wrote a 16-page booklet for Business & Health magazine, there was evidence that investing in employee health and productivity saves more than double the costs of absence.

The challenge is to educate employees
about the costs of health care and absence
in their own personal lives.


In the booklet, the estimates were that the total cost of employee absence equals revenue capacity (assuming employee contribution is worth 150 percent of daily income for organizational profitability) plus wage replacement. So for a worker getting paid $20 per hour, using the formula and assumptions, it would be: ($20 X 1.50) + $15, which would make lost productivity cost about $45 hourly. (To see the article, “Selling the CFO,” click here and go to page 7. Warning: it takes a while to load.) The formulas today are undoubtedly more detailed and complex, but this equation makes the point.

That said, health care costs are ever-increasing at a time when Americans are becoming more unhealthy. The trick is cracking the code of how to motivate people to live safer and healthier lives.

I believe part of the code is educating employees about the costs of health care and absence in their own personal lives. I don’t think employers or insurers, for that matter, do this enough.

People need to see differences in annual claims costs. One comparison, for example, would be looking at a claims for two people of the same age and comparing the cost of individual co-morbidities. They need to understand that preventable contributors to health care costs make it difficult for employers to hire more people or offer additional benefits.

They also need to understand what obesity, for example, will do to their quality of life in the short and long-term. One obvious result is getting Type 2 Diabetes. People hear about the risk of diabetes, but do they know what it means in real life? My school-aged daughter, who has had Type 1 (non-preventable) Diabetes for nearly eight years, can tell you.

The diabetic lifestyle not only means pricking fingers and the risk of insulin dependency (which requires poking an insulin pump tube into the body every three days) but can also lead to organ failure (kidney dialysis anyone?) pain when walking (how about those diabetic nerve drug commercials?) and more difficult recoveries. Sure, this approach will not help everyone, but it at least a start.

They also need to understand that getting back to work as soon as medically possible is the best for them. Stay off too long and long-term income potential decreases.

Finally, I am thrilled that employers are continuing to offer health care. The real key in reducing the costs of health care, however, are up to us. And I say, the less we need health care the better off we are.