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Large U.S. Companies Confident They Will Offer Health Benefits in 10 Years

March 13, 2009 — A majority of large U.S. employers are confident they will continue to offer health-care benefits 10 years from now, according to a new survey.

The survey of 489 large U.S. employers, conducted by Watson Wyatt and the National Business Group of Health in January 2009, found that while companies plan to continue offering benefits, their level of confidence has slipped from last year due to economic concerns and uncertainty over the implications of potential health-care reform.

The survey also found a group of what it calls consistent employers that have maintained a long track record of lower health-care cost increases in the past four years. The survey found that these employers have outperformed other employers in five key areas: appropriate financial incentives, effective information delivery, quality care, metrics and evidence, and maximizing health and productivity.

Survey results show that 62% of employers are very confident they will continue to offer health-care benefits 10 years from now, which is down from 73% last year, and 41% said they are sticking with their current health-care strategy.

“This is the first time in the 14 years that we have conducted this survey that employer confidence has declined, and it is not related to an increase in cost trends,” said Ted Nussbaum, North America director of group and health care consulting at Watson Wyatt. “This clearly reflects the uncertainty among large employers over the impact that the fragile economy is having on their ability to stay competitive in the face of health-care costs that persistently rise at double the rate of general inflation.”

According to the survey, employers do not support most of the commonly prescribed solutions to the issues that plague the health-care system: 68% are very or somewhat supportive of reforms that advance the consumer-oriented model and emphasize greater individual responsibility; 12% support tax policy changes that remove tax deductibility of employer premium contributions.

Employers do not support most of the common health care reform proposals

According to the survey, companies continue to show dramatic differences in their ability to control health-care cost increases. The median two-year trend for all employers is 6% and the survey identified 53 “consistent performing” companies that have maintained health-care cost trends at or below the median trend for each of the last four years.

According to the survey, consistent performers have strategies and programs that have saved them nearly $60 million since 2004. The survey found that these employers have made great strides in five key areas, but especially in their use of financial incentives and by providing employees with essential information to manage their health. 
 
“The track record of these performers clearly demonstrates that by taking a specific course of action it is possible to successfully control health-care costs,” said Helen Darling, president of the National Business Group on Health. “By building employee accountability for health care now, employers will be better positioned to weather the financial storm and to address potential health-care reform on the horizon.”

Other key findings:

• Employers continue to monitor costs by conducting dependent eligibility audits. While 47% did so in 2007, that number increased to 54% in 2008. This year, 61% of companies conduct dependent audits.
• Health savings accounts are offered by 34% of companies. By 2010, that number is expected to increase to 43%. Health reimbursement accounts are offered by 21% today, and only 3% plan to add one next year. 
• Medical coverage for retirees under age 65 is offered by 23% of companies, down from 24% last year. Coverage for retirees over the age of 65 has declined from 23% in 2008 to 20% in 2009. Only 12% of companies provide traditional retiree medical coverage to new hires, down from 15% in 2008.  

To read the survey report, log on to www.watsonwyatt.com/XXXXX.

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