The Change in Corporate Health Care Benefits

Health care costs in America are quickly becoming a national crisis for both employers and employees. Ever since WWII, most Americans have depended on their employer for health care coverage. In 2004, 100 million people (71% of workers) looked to their employer for health insurance, but rising costs have changed the way health care works. Once upon a time, employers offered full coverage either as part of general employee benefits or for a nominal fee. Times, however, are a-changing.

Employers currently spend more than $390 Billion, yes Billion, per year in health care costs for their employees. In 2006, employer costs for health care increased 7.7%, twice the rate of inflation. For small employers that amounted to 8.8% and for companies with fewer than 24 employees, it was 10.5%. Before long, health care costs will overtake profits for most employers, so it isn't surprising that employers are taking drastic measures to reign in the cost of health care.

There are new buzzwords in the health care world: CDHC means "consumer driven health care". CDHP means "consumer directed health plan". Both of these acronyms are being adopted by employers to force employees into more responsibility for their own health care. Once voluntary employer-provided programs like smoking cessation and subsidized gym memberships have become very aggressive and no longer voluntary. Some employers like Scotts Miracle-Gro Company in Marysville Ohio reserves the right to fire any employee who uses tobacco.

Reasoning that smokers cost companies 25% more in health care costs than non-smokers, Western & Southern Life Insurance, based in Cincinnati Ohio, charges higher premiums to employees who smoke. According to Noreen Hayes, Senior Vice President of Human Resources, 40% of Western & Southern employees pay extra charges ranging form $15 to $75 each month. In 2006, 15% of those employees received a refund of those premiums for changing their behavior to company standards. Other companies monitor their employees for body fat, cholesterol level, blood sugar and blood pressure. Their pay is reduced by $5 to $10 per check for infractions and re-assessed at an annual checkup.

Criticism is made against these companies for attempting to control personal behavior and for amassing a lot of personal information, but the bottom line is money. Health care costs are threatening to put companies out of business. Otherwise, it is unlikely that corporations would have much interest in the personal habits of their employees.

Meanwhile, rising health care costs are a looming national disaster and no one seems to have a good answer for the problem. It seems unlikely that employers can control the health of their employees no matter how much they fine them. People with health problems will pay more for insurance or be driven from the workplace and on to public assistance. Older workers will have to continue to work just to maintain health coverage because they cannot afford to retire. Employers continue to stagger under the weight of health care costs. It is a situation in which no one wins.

The changes happening in corporate health care benefits affect all of us. Employers are reflecting the expectations of health care providers by screening employees for lifestyle habits. Soon, how you live will help determine what you pay for health care coverage.

sources:
Paul Fronstin, Ph.D., "Workers' Health Insurance: Trends, Issues, and Options to Expand Coverage", The Commonwealth Fund
"Health Insurance Cost", National Coalition on Health Care
Lisa Cornwell, "Smokers Pay More for Health Benefits", Mindfully.org
Associated Press, "Employees starting to pay for poor health", msnbc.com
"Reducing Corporate Health Care Costs", Deloitte.com
Barbara Gniewek, Martha Priddy Patterson, Shane Heiser, "New Trend to Reduce Corporate Health Care Costs: Employers Realizing Savings Through Multi-Pronged Approach", HRResource.com