In the early 2000s, the average worker paid about $2,000 for his or her share of health care benefits and out-of-pocket expenses.Today, those same employees are paying nearly $5,000 for the same coverage.
Try explaining that kind of spike in costs to employees when the topic of employer-sponsored health care coverage comes up.
“Employee contribution rates have accelerated dramatically in the past 10 years, and one reason is advances in technology,” said Tim Nimmer, chief health care actuary for consultancy Aon Hewitt.
According to a 2013 Aon Hewitt analysis, employee contributions and out-of-pocket costs climbed from $2,011 in 2004 to a projected $4,969 in 2014. But getting employees to understand and appreciate how much their employer contributes to their health care plan can still be a challenge.
“You hear a retiree say, ‘I remember when my health care spend was $1 a month.’ ” Nimmer said. “We take for granted the types of technology we have today. We always want the best and we want it now. We don’t want care that’s outdated by 10 or 20 years. Employers have paid that cost.”
In 2011, 44 percent of workers surveyed said their benefits were 'definitely worth it,' given the out-of-pocket costs. Last year that figure dipped to 32 percent, according to a Mercer survey.
According to the 2013 Mercer Workplace Survey, the perceived value of benefits is eroding among workers who complain about out-of-pocket health care expenses. In 2011, 44 percent of workers surveyed said their benefits were “definitely worth it,” given the out-of-pocket costs. Last year that figure dipped to 32 percent, according to the Mercer survey. And nearly three-fourths of employees surveyed feel that their employers should offer better benefits.
The most prevalent way to shift costs is through plan design changes like increasing deductibles, copayments or coinsurance, Nimmer said.
“These are the most easily communicated to employees,” he said. “If you change a deductible from $500 to $700, employees know what that means and we know that there’s an immediate impact on health care costs.” Other cost-saving strategies that don’t involve benefit plan changes include steering employees to the most cost-effective providers and using wellness incentives to encourage better lifestyle choices, he said. “Employers have a lot of different levers that they can pull.”
While employees need information to help them understand why and how their out-of-pocket expenses are increasing, Joann Hall Swenson, a communications consultant at Aon Hewitt, said that too much information can be a bad thing.
“We often find that clients, especially HR leaders and in the C-suite, want to give employees the whole rationale behind these changes. We say that’s well and good but employees want personal information about their health plan,” she said. “They want to know, ‘When I go into the doctor, what’s it going to cost me? Keep your rationale and all the details for the C-suite. People get lost and really annoyed. For employees, think about how communicating clearly and personally is important.”
In fact, more employees are asking for personal guidance in choosing their benefits than ever before, she said.
When health care was very inexpensive for employees, “you didn’t need that much information, but because of the complexity of health care today and the rising costs and all the different tools and options that they have, it’s confusing,” Swenson said.
According to David Slavney, a communications consultant with Mercer, the key message to employees needs to be, “We are all in this boat together.”
“Costs are going up for employers, too,” he said. “Certainly, employers are talking about how those costs are divided between employer and employee, but it’s a very tough conversation to have.”