Successful Companies Will Be the Ones that Design their Own Health Care Reform Model
With the federal government preparing to mandate an Essential Health Benefits (EHB) package, companies are going to have to get creative. If they fall prey to EHBs, costs will continue to rise. The successful companies will be the ones that wrangle the problem by implementing their own customized design for health benefits, just like they do wages, that de facto becomes their own version of Health Care Reform.
Despite what appears to be incentives to drop their plans and send their employees into the state-run exchanges when they start up in 2014, companies will have a vested interest in continuing to provide a health benefit package to their employees for 2 main reasons:
- Health benefits are a major component of total employee compensation needed to recruit and retain workers.
- Losing control of the cost and design of an important component of rewarding and retaining employees can jeopardize business success. See our book, Who Survives? How Benefit Costs are Killing Your Company.
Labor costs vary dramatically from industry to industry, so applying a one-size-fits-all approach with EHBs will wreak havoc with many, and particularly smaller businesses. This is especially true for low-margin and low-wage industries. The cost of EHBs will take resources away from wages to pay benefits. Plus it won’t provide the incentives that align employee behaviors with business goals. What company can afford that?
The obvious next question is how do companies get control of rising health benefit costs? We’re informing our clients how to implement their own version of Health Care Reform. This includes a total compensation package (including benefits) that fits their business and improves the rewards and responsibilities incentives shared by workers and the company. Such an approach can improve health while reducing health benefit costs.