Survey Shows How Businesses Are Struggling With Health Care Changes

Here’s something that shouldn’t be a big surprise: America’s employers are really struggling to come to grips with federally mandated changes in health care.

Yes, I know you’re shocked to hear that, but that’s my takeaway after persusing Aon Hewitt’s 2011 Health Care Survey, a snapshot look at how more than 1,000 employers feel about their current and future health care plans and practices.

And in case anyone thinks I am being too pessimistic about this survey (and you can get a complimentary copy for yourself here), read what the very first paragraph of the Executive Summary has to say:

Legislative reform has forced employers to reconsider how they approach and administer benefits, including how to motivate employees to embrace wellness and accept responsibility for their benefit choices. The global financial crisis, coupled with ever-increasing health care costs, leaves businesses struggling to regain profitability, reduce benefit cost, and realign talent to maximize productivity.”

“Significant” changes are ahead

Aon Hewitt’s summary of key findings expands on this view.

Strategic decisions were postponed in 2010, prompting consideration of significant changes ahead. Aon Hewitt perspective — The passing of PPACA (the Patient Protection and Affordable Care Act, also known as Obamacare) in March 2010 “appears to have caused many employers to take a “wait-and-see” approach to strategic health improvement and cost management approaches. The uncertainty of reform in 2010 resulted in a year focused on reform compliance and little strategic activity. However, nearly every strategic element in the survey is “under consideration” by employers for adoption over the next few years.”
Providing employees with health care benefits through employer-sponsored plans. Aon Hewitt perspective — “Survey results indicate that employers intend to remain ‘in the game,’ offering health care benefits to their employees for the foreseeable future. Along these lines, employers show signs they will continue to shoulder most of the health care cost burden, but are expected to accelerate cost shifting over the next few years. This is a potential cause for concern if cost sharing is not balanced with other cost reduction strategies. Given the industry-wide forecasts of high health care cost trends, cost shifting alone is unsustainable — for both employers and employees.”
Improving workforce health and managing cost. Aon Hewitt perspective — “While most participating organizations simply made tactical changes to their health care programs in 2010, employers indicate that the next three years will be a period of deploying a mix of new and existing tactics aimed at improving workforce health and productivity that are data-informed and focused on mitigating cost.”
Engaging plan participants to take charge of their health. Aon Hewitt perspective — “There is growing interest in raising the bar on awareness and education to shift focus from ‘react and repair’ to ‘predict and prevent.’ For example, consumer- driven health plans (CDHPs) and value-based insurance design (VBID) approaches continue to gain momentum among employers as part of a broader strategy to engage employees in better managing their health and reduce future medical trend increases.”
Upping the ante on incentives. Aon Hewitt perspective — “Almost uniformly, employers are upping incentives as a reward for healthy behaviors, making it more difficult to justify unhealthy behaviors — utilizing approaches where the employer provides the most generous benefits or funding to those who are doing the most to maintain or improve their health. Employers are also showing more willingness to impose penalties, suggesting they will be increasingly requiring of employees (and dependents) to take more accountability for their health over the next few years.”
Embracing a culture of health. Aon Hewitt perspective — “More organizations are seeking to create a culture of health in the workplace to drive long-term sustainable results through the delivery of a comprehensive set of programs that focus on both the individual and organization. This includes offering programs to improve overall well-being that span the entire health continuum, from disease management and health/wellness to behavioral health and absence management, as part of their overall health and productivity strategy.”

What employers want in 2011

I don’t think anyone should be surprised that businesses are struggling to get a grip on how to move ahead on health care given the huge changes that the PPACA is demanding, but the Aon Hewitt’s 2011 Health Care Survey also detailed what health care outcomes organizations would like to achieve this year:

56 percent want to improve employee health habits;
49 percent are looking to lower the health care cost trend;
44 percent would like to decrease worker health risk;
37 percent want to increase participant awareness of health issues; and,
37 percent are trying to enhance participation in health improvement/disease management programs.

Achieving these outcomes might be a struggle, however, as the survey also found that 56 percent of respondents say motivating participants (aka, employees) to change unhealthy behaviors is the most significant challenge to accomplishing their 2011 health care program goals. Employers surveyed also said they were concerned with the reluctance of employees to change (26 percent), the unpredictability of costs (23 percent), government regulations/compliance (22 percent), and how they would manage the health of an aging workforce (21 percent).

“Employers are spending millions of dollars annually on health care, and yet many report they do not have a specific plan for how best to manage that investment,” notes Jim Winkler, Large Employer Segment leader in the Health & Benefits Practice with Aon Hewitt, in a press release about the study. “Given the risks and opportunities presented by health care reform, it is imperative that employers develop a written strategy for controlling cost and improving health.”

More emphasis on carrot-and-stick approach

One cost control strategy that seems to be gaining momentum is this — the old carrot-and-stick approach.

According to the Aon Hewitt survey, 22 percent of employers will have programs in place by the end of 2011 to reward participants for achieving specific health outcomes, and 10 percent will have similar programs to penalize participants for exhibiting unhealthy behavior. However, by 2016, 64 percent of organizations said they will add programs that reward for good health, while 46 percent said they will add programs that penalize for unhealthy outcomes.

This isn’t a surprising finding; carrot-and-stick programs like this, designed to motivate employees to focus more on improving their own health, have been around for some time, but weren’t particularly widespread. What the Aon Hewitt survey clearly shows is that in the wake of federally-mandated health care reform, these reward-and-punish programs are finally spreading and taking hold.

There’s a lot more to chew on in Aon Hewitt’s 2011 Health Care Survey, of course, and it has the kind of breath and depth you would expect from a research study done by a large global HR consultant. It shows that a lot of organizations are struggling with the changes in health care, but they are certainly not alone because many, many U.S. businesses are having a hard time getting a grip on how they move ahead now that Obamacare is becoming more of a reality. Developing a specific plan of attack seems to be critical.

“Employers are spending millions of dollars annually on health care, and yet many report they do not have a specific plan for how best to manage that investment,” notes Jim Winkler, Large Employer Segment leader in the Health & Benefits Practice with Aon Hewitt. “Given the risks and opportunities presented by health care reform, it is imperative that employers develop a written strategy for controlling cost and improving health.”