Employers' confidence in benefits slipping

June 12, 2009

Employers still confident that they will be offering healthcare benefits a decade from now, but economic downturn and talk of healthcare reform shakes it.

Despite rising healthcare costs and other economic worries, a majority of large U.S. employers remain confident they will continue to offer healthcare benefits to workers 10 years from now. However, the level of confidence has slipped from last year.

The slip comes from economic concerns and uncertainty over the implications of potential healthcare reform, according to a survey by Watson Wyatt and the National Business Group on Health.

The survey of 489 large employers, conducted in January 2009, found that 62% of employers are very confident they will continue to offer healthcare benefits 10 years from now, down from 73% last year. The survey also found that despite today’s economic uncertainty, 41% are sticking with their current healthcare strategy, while the remaining respondents have either revamped their strategy or expect to do so this year.

Previous surveys observed that employers’ confidence (that they would offer benefits for another decade) increased every year as healthcare trend declined. This year’s survey reported trend as flat and projected trend to remain flat at its lowest level in years. Yet employers’ confidence reversed field and dropped more than 10%.

“This probably means that factors other than trend-probably the tough economic environment and the prospect of healthcare reform-are now driving employers’ views of whether they will continue to offer healthcare benefits,” says Bruce Kelley, PhD, national leader, data services, Watson Wyatt Worldwide. “The survey was taken just months after the economy went into a tail spin and there had been extensive discussion of healthcare reform during the presidential election.”

Employers are clearly paying more attention to health reform, Kelley says. In the 2008 survey 35% of employers reported that reform proposals were having no influence, whereas in 2009 only 11% reported reform was having no influence upon their thinking.

“Employers may be concerned that they will not be able to afford to continue to offer health benefits or that they will lose control of benefits due to reform legislation.”

According to Kelley, most stakeholders to the U.S. health system are frustrated by the combination of high and increasing costs, lack of access to coverage and care, disorganized delivery, continuing reports that much of our care does not deliver value for money and that quality is inadequate.

Kelley suggests that employers should be active in the public arena to fend off proposals that would cripple employer-based benefits and to help resolve system-wide problems. “Mostly, however, employers need to focus upon achieving their objectives for health benefits and to address how health system problems, such as cost, quality and impact upon health and productivity, affect their employees,” he says.