Healthcare Notes

Healthcare Cost Strategies Jeopardized by Communication Barrier

A widening gap between employer and employee views on healthcare threatens to undermine employer efforts to use consumer-driven healthcare (CDHC) strategies to slow the growth of healthcare costs, according to survey results from the Towers Perrin 2004 Healthcare Consumerism Survey: Aligning Employer and Employee Interests.

In response to the cost pressures, almost all U.S. employers have moved to share a portion of the added costs with employees in recent years, either through increases in employee contributions for coverage or through reductions in benefit levels. In addition, most employers are moving forward with efforts to help employees be better consumers. For example, 71 percent of the employers surveyed have provided information and tools to help employees make better decisions about coverage. More than half also introduced information or programs to encourage employees to adopt healthier behaviors.

Also notable is that more than a quarter of the participating employers have implemented consumer-driven health plan (CDHP) designs in the last few years, while half will implement or consider offering CDHPs in the next few years.

From the employee perspective, only 28 percent of the workers surveyed feel it would be appropriate for their employers to ask them to absorb additional cost increases, and only 15 percent feel that further benefit reductions are appropriate. In last year's survey, almost half of employees felt it was appropriate for their employers to ask them to absorb more cost increases.

Eighty-two percent of the employees surveyed believe they are already good consumers, up from 72 percent of employees who responded to last year's survey. Other Towers Perrin research shows that in most companies that have introduced CDHPs, employee participation rates are relatively low.

Notably, only a third of employee respondents agree that rising healthcare costs have implications for the success of their companies, while 43 percent flatly disagree. In addition, just more than half said they believe what their companies communicate about rising healthcare costs.

"Our findings suggest that the disconnect may stem from the fact that many employers' communications have focused primarily on costs and their impact on the company, says Jim Foreman, managing director of Health and Welfare for Towers Perrin's HR Services business. "Only about a quarter of our employer respondents say they communicate with employees about healthcare issues other than costs. And surprisingly, only 31 percent feel that their companies have sent clear messages about how employees can be effective healthcare consumers.

"Employees understand that healthcare costs are a problem, and they're open to behavior changes that could reduce costs both for them and for their employers, but they're not motivated to change just to save the company money, Foreman observed. "Employers need to recognize that healthcare is primarily an emotional issue for employees, not a cost issue. For consumerism to be fully effective, employees need to believe it is in their self-interest.

The research involved a survey of more than 1,000 employees of midsize and large U.S. companies, and a companion survey of executives and managers at more than 120 major U.S. companies.

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