Employer – Employee Gap on Health Care Costs

Employer-Employee Gap on Health Care Costs

Towers Perrin Poll Shows Significant Employer-Employee Gap on Health Care Consumerism

Employers Want Employees to Become Better Health Care Consumers Employees Feel They Already Are Improved Communication Seen as Key

(Newstream) — Faced with four consecutive years of double-digit increases, employers are seeking a new ally – their employees – to help curb rising health care costs. Yet the companies face a hard sell: While employees agree that rising health care costs are a problem, they do not believe it is theirs to fix.

“Our poll reveals serious disconnects between employee and employer perceptions on health care,” said Jim Foreman, managing director of Health and Welfare for Towers Perrin. “Employers’ challenge is convincing their employees to change behavior around utilizing health care while their workforces feel that they already pay a fair share of health care costs and view themselves as effective healthcare consumers.”

The Towers Perrin survey, entitled Keeping Employees Engaged About Health Care, found that most employees (87%) agree that health care costs are outpacing inflation. A majority (63%) also agree that such costs have an impact on employer profits. However, less than half (46%) believe that employers are unable to absorb the increase or that it is fair for employers to ask employees to pay more out of pocket. (see CHART 1)

Nevertheless, as many U.S. companies shift more responsibility and accountability for health care costs to employees, they also are considering health plan designs that encourage employees to become more effective health care consumers.

“Health care consumerism is a shared employer-employee responsibility,” explained Foreman. “Employers provide employees with the tools they need to become better consumers. Employees, in turn, agree to share in the costs and make informed decisions about lifestyle and health care choices.

“Some people confuse the term consumerism with consumer-driven health plans,” Foreman noted. “Consumer-driven health plans are simply one element of a consumerism strategy. These plans bundle accountability and support by providing a health care reimbursement account and catastrophic coverage.

“While some employers are switching from traditional plans to consumer-driven health plans in an effort to reduce costs,” Foreman added, “most are simply weaving elements of consumerism into their existing health plans.”

Communication Is Key

“Rather than just communicating information about health care costs to employees, companies must be more visible in how they actively manage the experience that employees and their families receive,” said Mark Schumann, the leader of Towers Perrin’s Communication practice. “While employees aren’t looking to their companies for health care advice, the employer can be the vehicle to deliver trusted and helpful information.”

The survey, according to Schumann, shows that the most helpful employer- provided communications are those tied to health-related Web sites and medical hot lines not under the employer’s control. “This foretells a future of company partnerships with best-in-class information providers to relay messages and keep employees engaged,” Schumann added (see CHART 2).

Age and Health Factors Influence Perception

Age and health status also is significant in employee perception on health care consumerism, according to the Towers Perrin survey. Other key findings indicate that younger workers (less than 35 years old) are less inclined to support sharing cost increases: Only 28% of younger workers polled thought it was fair for employers to ask them to absorb some of the annual increases in health care costs, compared to more than 50% of older workers (35+ years). And only 44% of younger employees believed that increasing health care costs have an impact on an employer’s bottom line, compared to more than 70% of older workers.

Employees who consider themselves to be in poor health are far more receptive to receiving expert guidance and following suggestions from health experts regarding care than others who consider themselves to be in good health; those in poor health are also more interested in receiving information and support than healthier colleagues (see CHART 3).

“In many ways, the findings of our consumerism survey mirror the findings of an earlier survey by Towers Perrin and Gang & Gang, entitled Working Today: Exploring Employees’ Emotional Connection to Their Jobs,” said Foreman. “Our Working Today study found that unless employers make the effort to understand what drives employees, they may invest in some of the wrong programs and fail to create the type of work environment they seek.”

“In both surveys, Towers Perrin found creating a positive work environment is well within reach,” added Schumann. “The key to success is to keep employees engaged during this process. Companies that do this well will achieve their cost- saving goals and motivate employees to contribute to long-term solutions. Consumerism is not a magic pill, but it represents a critical element in achieving sustainable cost savings.

“Companies need to clearly articulate what they need from employees, or consumers, at the three points of choice,” continued Schumann. “Those three points are when a plan is chosen at enrollment, as people manage their lifestyles, and as they manage their care. Variations will exist from company to company by virtue of plan design and the role of the consumer at each point of choice. By establishing the means of effective communication with employees, and helping them become better health care consumers, companies can minimize the effects of double-digit health care cost increases.”

Sean Connelly, the Towers Perrin organization and employee research consultant who helped to design and manage the study, says that it is absolutely critical to understand the perceptions of employees when it comes to these complex, and often sensitive, issues. “In fact, not a lot of research has yet been done about what drives employee behaviors relative to health care utilization. Companies that take the time to benchmark and monitor employee perceptions in this area are much more likely to deliver programs and services to truly change behavior.

“While this study provides an excellent overview of the issues, every company has unique circumstances that are important to diagnose,” adds Connelly.

About the Survey

To understand employee perceptions on health care, Towers Perrin conducted a national survey in February 2003. Survey respondent requirements included:

  • Working for an employer with at least 1,000 employees
  • Health benefits are provided by employer (or spouse’s employer).

Results were weighted to be representative of the U.S. population.

About Towers Perrin

Towers Perrin is one of the world’s largest human resource consulting and administration firms. It helps organizations manage their investment in people to achieve measurable performance improvements, focusing on human resource strategy and service delivery, benefit and compensation design and implementation, employee and organizational communication, HR technology and outsourced HR administration. Towers Perrin is part of a broader family of businesses that also includes Tillinghast(Towers Perrin, a management consultancy for financial services companies worldwide, and Towers Perrin Reinsurance, a reinsurance intermediary and consultancy. Together, these businesses have over 9,000 employees and 78 offices in 76 cities and 23 countries. More information about Towers Perrin is available at www.towersperrin.com.


Produced for Towers Perrin – April 2003

Stanley Davis
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