Companies Face Worker, Health Care Challenges as Millennium Closes

   
by Matt Bolch, Managing Editor
and Doug Field, Publisher and Editor-in-Chief, CDHC Solutions and EmployersWeb.com magazines

Thank goodness the decade is over. After the mostly fabricated panic over Y2K dissipated as 2000 dawned, the Internet bubble burst on the heels of the Sept. 11 terrorist attacks, sparking not one but two wars that are still going on. 

However, the American spirit still burns brightly, and the economy eventually rebounded from these events as the stock market soared beyond the 14,000 mark. But then the financial markets collapsed in late 2008, coupled with faltering consumer confidence and a plunging stock market to lead us to the Great Recession, which may be over—depending on whom you listen to. 

The stock market has recovered nicely, consistently closing above the feel-good 10,000 mark after falling below 6,500 at the height of the crisis. But the recovery so far has been jobless, with the unemployment rate hovering just south of 10%. The Federal Reserve predicts that unemployment could hover between 9.5% and 9.7% this year, drop to between 8.2% and 8.5% in 2011, and range between 6.6% and 7.5% in 2012. Of course, the accuracy of predictions becomes fuzzier the further out one gets, so the Fed numbers probably are a best-case scenario. 

Likewise, the Federal Reserve predicts growth of no more than 3.5% this year, with expectations between 3.4% and 4.5% the next two years. However, the general consensus is that economic growth needs to top 5% to make a dent in unemployment. 

Those mixed economic signals and the continued push by the Obama administration to bring fundamental changes to the nation’s health care system have many employers wondering what to do next.

A forecast by The Conference Board shows that salary increases in 2010 will be under 3%, the lowest in a quarter century. In addition, salary adjustments for the year to cover changes in the cost of living will be under the board’s projected inflation rate of 2.6%. 

So while pay may be stagnant, at least employees can count on good health insurance and other benefits, right? Once you quit chuckling at that, we’ll tell you that medical premiums are expected to rise at four times the rate of the average salary, according to research from Sibson Consulting. 

While that might sound outrageous, family premiums for employer-sponsored health insurance increased 119% between 1999 and 2008, shows a Commonwealth Fund report. As a result, by 2008 total premiums—including employee and employer shares—equaled or exceeded 18% of the average household income for the working-age population in 18 states, compared with just three states in 2003. 

The importance of consumer-directed health plans can no longer be overlooked, with more than one-half of U.S. employers offering them, according to research from Towers Watson. Despite the wide availability of HSAs, FSAs, and HRAs, the main concern for CDHPs continues to be employees who don’t seek treatment because of the perceived cost. 

That’s an education and communications challenge that employers need to face on nearly a daily basis. It’s not enough to send out an enrollment package in the fall and expect employees to make the best choice for themselves and their families. Innovative companies are engaging workers in new ways, including the use of social media, to explain the differences among health care plans, the advantages of voluntary options, and the value these benefits bring to an employee’s total compensation package. 

Two in three employers are actively engaged in wellness programs with their employees, according to Hewitt Associates. Most of these programs deal with the treatment of chronic conditions, but a groundswell of support for overall wellness programs has been occurring. The main sticking point to wider adoption is lack of clear return on investment for employer outlay. Vendors that can provide that critical information likely will increase market share. 

Finally, heavy criticism over giant premium increases such as the 39% rate hike by WellPoint’s Anthem Blue Cross in California and Obama’s pledge to pass some sort of health care reform promise to keep this  issue at the forefront of both employers and workers this year. 

Doug Field is president and CEO of FieldMedia LLC, publishers of CDHC Solutions and EmployersWeb.com magazines and their related online communities. Doug is a publishing and HR/benefits/health care industry veteran, with more than 25 years of experience in business-to-business publishing. He can be reached at 404-671-9551, ext. 101 or dfield[at]fieldmedia.com.