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All I Want for Labor Day Is Great Health Care

August 31, 2007
Related Topics: Benefit Design and Communication, Strategic Planning, Latest News
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If Labor Day was like Christmas, American employees would be opening better health insurance as their present this year.

That’s the upshot of a recent survey of 1,223 employed U.S. adults by Harris Interactive. The study, released Tuesday, August 28, and sponsored by human resources software firm Kronos, found exceptional health care coverage to be the most desired benefit currently not offered by employers. Among benefits employees currently do not have, 100 percent coverage of health care costs by the employer is considered a more desirable benefit to employees than competitive salary.

“Along with competitive pay, employees are clearly looking for increased fringe benefits, most importantly, health care,” Jared Bernstein, senior economist at the Economic Policy Institute think tank, said in a statement. “Employers who recognize and respond to these needs will be rewarded with stronger employee relationships and a more dedicated workforce.”

The system of employer-based health care coverage in the U.S. has roots in the World War II period, when companies began offering health insurance as a fringe benefit to attract workers in a tight labor market. But the percentage of Americans without health care coverage has been rising in recent years. The U.S. Census Bureau on Tuesday, August 28, said the number of people without health coverage rose from 44.8 million—15.3 percent—in 2005 to 47 million—15.8 percent—in 2006.

One reason for the trend is that employees are struggling to pay for their share of employer-sponsored health care, says Helen Darling, president of the National Business Group on Health, a nonprofit group that represents large employers. 

Darling says big companies generally are not pushing a higher percentage of health care costs to employers these days, as they were doing several years back. On the other hand, raising the level of the employer’s share much beyond the national average of 80 percent does not make sense, she argues. That’s because employees are unlikely to value a benefit if it is completely free, Darling says.

“I don’t think anybody’s going to do that,” she says.

Like the new Kronos-sponsored survey, a study earlier this year by the National Business Group on Health found health care coverage to be vital to employees. Its poll of 1,619 employees at large U.S. employers found that most workers consider the health plan to be their most important benefit and that they have little interest in purchasing coverage on their own. The report also showed that employees are generally unwilling to reduce their health benefits in order to increase other benefits such as a retirement savings plan.

Darling says smart organizations are taking steps to improve the health of their workforce, which can help employees and reduce health care costs for the corporation. These measures include paying for selective preventive services, such as colonoscopies and vaccinations. She says companies are also giving financial incentives for healthy life choices, such as not smoking.

“I think we will see more and more of that,” Darling says.

During the past four decades, the average growth in health spending in the U.S. has exceeded the growth of the economy as a whole by between 1.3 and 3.1 percent, according to an August report by the Henry J. Kaiser Family Foundation. But since 2003, the foundation says, the rate of increase in premiums for employer-sponsored health insurance has been falling, to 7.7 percent last year.

That’s good news for U.S. businesses, which frequently compete with foreign-based competitors who can rely on national health care systems to provide their employees with health coverage.

Despite the trend of slower-growing premiums, there’s plenty of talk in the country about bigger reforms to the health care system. These include greater use of health savings accounts and some form of universal health care.

In the meantime, the recent Kronos-sponsored study suggests companies should continue to provide their employees with health insurance if they want to fight turnover. Workers surveyed in the report ranked a comprehensive health care benefits program among the top three reasons they have stayed with their longest-term employer.

—Ed Frauenheim

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