Reference no: EM133094724

Different Employers Take Different Approaches to Employee Health Care and Benefits

Health insurance, which accounts for over one-fourth of employer spending on benefits and is thus the single most costly benefit offered by employers, has, as we have also seen, received particular attention by employers. (And, of course, we cannot forget that employees too pay a significant part of their health care costs, especially when not just premium costs, but also co-insurance, co-payment, and deductible costs are included.) As we have also seen in this chapter, different employers have taken different approaches to benefits. Mostly, we have highlighted employers (e.g., Fiat Chrysler) who are moving toward making health care for employees free or as close as possible for at least some types. These employers incur larger costs, at least in the short run. Other employers have created or expanded (either in terms of who is covered or the number of weeks) paid parental leave programs. Again, this means incurring short-term costs. We have also seen examples of employers (e.g., Google) that provide unique benefits. Yet again, these cost money. Of course, other employers take a different approach, instead seeking to reduce such benefits costs. We have noted that this trend exists and differs from some of the examples we have highlighted of companies "bucking" the trend by spending more. Forbes, for example, had an article entitled "Bait and Switch: The Sneaky Way Your Employer Just Passed Healthcare Costs onto You." The article focuses on high deductible health care plans. They give an example of someone who has walking pneumonia. That patient may require a chest X-ray, blood tests, antibiotics, and a follow-up visit. That could costs thousands of dollars. An employee on a high-deductible plan would have to pay that cost before his/her health insurance kicked in (for which s/he has already paid a premium for such coverage). The Kaiser Family Foundation reports that about 10 years ago, only one in eight employees at large companies were covered by high deductible insurance plans. Now, it is closer to one in two employees. At smaller firms, a still larger percentage are covered by high deductible plans. As we also saw earlier in the chapter, the Affordable Care Act includes an employer mandate that employers with 50 or more employees provide health care coverage to their employees. Finally, we also saw that not all people who work at or on behalf of a company are employees of that company and that different approaches are taken in deciding what benefits they receive.

1. Why do employers use such different strategies/approaches to employee benefits, especially healthcare? Are some employers simply more altruistic or are there other factors?

2. What other factors do potentially influence employer benefits strategy choice, especially in healthcare coverage?