Benefits Strategies Must Adapt To Changes In The Workforce

Faced with an array of challenges, including escalating health care costs, an aging workforce, and mounting demand for better work-life balance among employees of all ages, employers should develop benefit strategies and educational tools that will enable them to remain competitive over time, a study on employee benefits trends released by insurance provider Unum and research firm LIMRA International recommended.

Researchers analyzed a range of data, including existing Unum studies, research conducted by LIMRA International and the Society for Human Resource Management (SHRM), and a variety of articles published in business, government, and trade journals. The study identified broad socioeconomic and employee benefits trends, and it examined the implications of these trends for employers.

While health care cost increases have slowed slightly since 2003, employment-based health insurance premiums have more than doubled since 1997 and continue to increase at twice the rate of inflation and twice the growth in employee earnings, the study said. Unless action is taken to reverse this trend, health insurance costs will exceed profits for some employers by 2008, researchers warned.

Premiums for employers are climbing in part due to the effects of general inflation and forms of inflation specific to the health care sector, such as the rising cost of technology and cost-shifting from Medicare and the uninsured to private payers, the study said. However, researchers added, increases in utilization of health care account for an estimated 43% of the overall rise in premiums. Increased utilization is, in turn, fueled by greater consumer demand, more intensive diagnostic testing, an aging population, advances in medical treatment, and unhealthy lifestyles.

Replacing managed care plans with consumer-driven health plans (CDHPs) is often discussed as a possible solution to rising health care costs, researchers noted. But, they cautioned, because CDHPs shift some of the costs and risks associated with health care to the employee, participants should have access to tools that would enable them to use these plans appropriately, such as health care cost and quality information, wellness and disease management programs, health information and coaching, and financial tools.

While some employers have been using disease management and wellness programs as a means of improving productivity and curbing health care costs, the study found that there is currently no conclusive evidence demonstrating that programs of this kind actually save plan sponsors money. However, researchers said, a recent review of studies analyzing the economic impact and return on investment for disease management programs showed a positive return for programs targeting specific chronic ailments, as well as for programs addressing multiple health conditions.

Researchers emphasized that the aging of the baby boomers will have a profound impact on the composition of the labor force in the coming years. A large segment of the baby-boom generation is expected to retire later than members of previous generations, but surveys show that many of these older workers will prefer part-time to full-time employment or will seek to alternate between periods of work and leisure. In addition, the study predicted, members of this generation may need time off work to care for their elderly parents or other sick family members.

Employers should consider adapting their benefits packages to better meet the needs of older workers, researchers advised. In addition to offering basic health care and retirement plans, employers should consider offering voluntary benefits such as short-term disability insurance, supplemental medical insurance, and long-term care insurance.

Finally, researchers said, as increasing health care and other benefits costs force employers to shift a greater part of the responsibility for managing their health and retirement to workers, employers should provide ongoing education, informational tools, and other forms of support designed to help workers understand their benefits and make financial decisions appropriate to their individual circumstances.