Employee retention needs to be a major part of their
calculations.
Most people have heard the noisy debate about the extent to
which the health care reform legislation passed earlier this year
will burden businesses. But on the flip side, the reform
initiatives also underscore the necessity to re-examine social
contracts between employer and employee. At this watershed moment,
employers must determine how tomorrow's health benefits will help
them attract and retain talent.
Employers have always played a key role in health in the U.S. as
active agents on behalf of their employees. In 2008, 61% of
non-elderly Americans had an employment-related health insurance
policy; currently, the estimate runs at around 59%. But few
companies understand how much they rely on health benefits to
attract and retain quality talent. Today 74% of employees consider
health benefits a key reason for their loyalty to employers, second
only to their salary, according to industry research. On the flip
side, most companies underestimate the true economic cost of
employee churn. Bain & Company analysis shows that the
"turnover tax" on corporate earnings, though invisible in most
accounting systems, is larger than current state or federal
tax.
Now the Patient Protection and Affordable Care Act offers
companies the chance to revisit the connection between health care
benefits and employee retention. At its core, the legislation
pursues two goals. First, it increases access to health insurance
through the expansion of public programs, employer and individual
mandates and federal subsidies. Second, it pushes for greater
transparency in a more regulated health insurance industry. The
government has always used the tax system to encourage
employer-provisioned health insurance, but the PPACA adds
incentives via mandates, subsidies and transparent purchasing
channels. Employers with more than 50 full-time employees must
provide coverage or be subject to fines. For smaller businesses,
employing fewer than 25, the PPACA promises temporary coverage
subsidies for lower-income employees.
Short term the legislation feels onerous to businesses, and for
good reason. Most already consider their health costs crippling. By
2015, Bain & Company estimates, employer health costs could
rise more than 60% from current levels. That's almost three times
the expected growth in real wages and overall inflation during the
same period. A majority of employers, nearly 70% according to
industry surveys, expect the reform law to lead to higher health
costs, which it undoubtedly will, because of elements like expanded
coverage for dependent children, the elimination of pre-existing
condition clauses and the enrollment of more than 30 million
uninsured. Not surprisingly, even though health reform mandates
don't kick in until 2014, many employers have already begun
modifying their health benefits.
In doing so, they face several choices . . . .
Read the full article on Forbes.com
