ee benefits ca-healthcare

SHRM Survey Findings: Employee Benefits in California—Health Care

April 23 2014

Employee Benefits in California—Health Care ©SHRM 2014 2

• This is part three of a series of SHRM survey findings examining employee benefits in the workplace of California organizations.

• The following topics are included in the six-part series titled Employee Benefits in California:

» Part 1: Wellness initiatives » Part 2: Flexible work arrangements» Part 3: Health care» Part 4: Leveraging benefits to retain employees» Part 5: Leveraging benefits to recruit employees» Part 6: Communicating benefits

Introduction


• For the purpose of this survey, the term total health care costs includes employer-paid premiums, administration costs and any possible individual medical claims covered by the employer.

Definition


• How are organizations trying to control the costs of health care? The majority (79%) of organizations are “very concerned” about controlling health care costs. The top three activities organizations have engaged in to control health care costs include 1) increasing the employee share contributed to the total costs of health care (40%), 2) creating an organizational culture that promotes health and wellness (38%), and 3) providing lower-cost generic prescription or over-the-counter drugs (34%).

• Can employees expect to pay a larger portion of total health care costs in the future? Looking into plan year 2014, 24% of organizations reported they plan to increase the employee share contributed to the total costs of health care, whereas 22% of organizations do not plan to increase the employee share; 54% were unsure.

Focusing on the next three to five years, 21% of organizations currently paying the majority or an equal portion of health care costs believe that employees at their organizations will eventually be paying the majority of health care costs.

Key FindingsCalifornia


• The current expectation of whether employees will take on more of their health care costs is largely unclear. Many organizations (36% in California, 40% nationally) are not sure if employees will be responsible for the majority of health care costs in the next three to five years. However, roughly one-fifth of organizations (21% in California and nationally) expect that employees will cover the majority of total health care costs in that time frame.

• Organizations are using several strategies to control health care costs, and may continue to add more as organizations comply with the Affordable Care Act (ACA). More than two out of five organizations (44% in California, 45% nationally) increased the employee share contribution in 2013 to battle rising health care costs. Many organizations also promoted health and wellness (38% in California, 41% nationally). Organizations taking this more proactive approach to support preventive health may see positive outcomes such as fewer health care claims.

As health care costs continue to increase, HR professionals will have to determine modifications to their organization’s health benefits plan, and whether these changes will have any impact on their organization’s overall total rewards strategy. For instance, will trimming or eliminating health care benefits hinder an organization’s ability to attract and retain talent?

What do these findings mean for the HR profession?

6

How did your organization’s total health care costs change from the last plan year compared with the plan year before?

Note: Only respondents whose organizations provide health care were asked this question. Respondents who answered “not sure” were excluded from this analysis. Percentages may not total 100% due to rounding.

Increased

Remained the same

Decreased

78%

16%

6%

72%

19%

10%

Overall (n = 366)California (n = 308)

Employee Benefits in California—Health Care ©SHRM 2014


How concerned is your organization about controlling health care costs?

Note: Only respondents whose organizations provide health care were asked this question. Respondents who answered “not sure” were excluded from this analysis.

Very con-

cerned

Somewhat concerned

Not very concerned

Not at all concerned

79%

19%

2%

0%

83%

16%

1%

0%



Which of the following activities has your organization engaged in for the purpose of controlling the costs of health care?

Note: Only respondents whose organizations provide health care were asked this question. Respondents whose organizations had not conducted any activities to control the costs of health care were excluded from this analysis. Percentages do not equal 100% due to multiple response options.

ActivityCalifornia(n = 351)

Overall(n = 417)

Increased the employee share contributed to the total costs of health care

40% 39%

Created an organizational culture that promotes health and wellness

38% 41%

Provided lower-cost generic prescription or over-the-counter drugs

34% 39%

Provided educational initiatives related to health and wellness 33% 45%

Offered consumer-directed health plans (e.g., HRAs, HSAs) 33% 40%

Increased employee participation in preventive health and wellness initiatives

31% 43%

Provided incentives or rewards related to health and wellness 25% 35%

Other 5% 7%

9Employee Benefits in California—Health Care ©SHRM 2014

Comparisons by organization staff size

2,500 to 24,999 employees (57%) >1 to 99 employees (19%)

100 to 499 employees (27%)

Which of the following activities has your organization engaged in for the purpose of controlling the costs of health care?


• Organizations with 100 to 24,999 employees were more likely than those with 1 to 99 employees to indicate they provided lower-cost generic prescription or over-the-counter drugs to control the costs of health care.


100 to 499 employees (35%)500 to 2,499 employees (44%)

2,500 to 24,999 employees (60%)> 1 to 99 employees (14%)

Note: Only statistically significant differences are shown.

• Organizations with 2,500 to 24,999 employees were more likely than those with 1 to 499 employees to indicate they increased employee participation in preventive health and wellness initiatives to control the costs of health care.


2,500 to 24,999 employees (63%) >1 to 99 employees (12%)

100 to 499 employees (16%)

• Organizations with 2,500 to 24,999 employees were more likely than those with 1 to 499 employees to indicate they provided incentives or rewards related to health and wellness to control the costs of health care.


Which of the following activities has your organization engaged in for the purpose of controlling the costs of health care? (Continued)


• Organizations with 500 to 2,499 employees were more likely than those with 1 to 99 employees to indicate they provided educational initiatives related to health and wellness to control the costs of health care.


500 to 2,499 employees (44%) > 1 to 99 employees (18%)


Comparisons by organization sector

• Publicly owned for-profit organizations were more likely than privately owned for-profit and nonprofit organizations to indicate they provided incentives or rewards related to health and wellness to control the costs of health care.


Publicly owned for-profit (44%) >Privately owned for-profit (21%)

Nonprofit (15%)


Which one activity has been the most successful in terms of helping your organization control the costs of health care?

Note: Only respondents whose organizations provide health care and conduct some kind of activity to control the costs of health care were asked this question.

ActivityCalifornia(n = 281)

Overall(n = 365)

Increased the employee share contributed to the total costs of health care

31% 20%

Created an organizational culture that promotes health and wellness

17% 12%

Offered consumer-directed health plans (e.g., HRAs, HSAs) 14% 22%

Increased employee participation in preventive health and wellness initiatives

10% 13%

Provided lower-cost generic prescription or over-the-counter drugs

9% 10%

Provided incentives or rewards related to health and wellness 7% 9%

Provided educational initiatives related to health and wellness 6% 7%

Other 6% 7%


In plan year 2013, did your organization increase the employee share contributed to the total costs of health care?

Note: Only respondents whose organizations provide health care were asked this question. Respondents who answered “not sure” were excluded from this analysis.

Yes

No

44%

56%

45%

55%



In plan year 2013, did your organization increase the employee share contributed to the total costs of health care?



500 to 2,499 employees (58%) > 1 to 99 employees (27%)


• Organizations with 500 to 2,499 employees were more likely than organizations with 1 to 99 employees to increase the employee share contributed to the total costs of health care in plan year 2013.


Publicly owned for-profit (67%) > Privately owned for-profit (39%)


• Publicly owned for-profit organizations were more likely than privately owned for-profit organizations to increase the employee share contributed to the total costs of health care in plan year 2013.


In the next plan year, does your organization plan to increase the employee share contributed to the total costs of health care?

Note: Only respondents whose organizations provide health care were asked this question.

Yes

No

Not sure

24%

22%

54%

24%

21%

55%



In plan year 2013, is your organization paying the majority (more than half) of the total health care costs?

Note: Only respondents whose organizations provide health care were asked this question.

Yes, the organiza-tion is paying the

majority of the total health care costs

No, the organization and employee pay an equal share of

the total health care costs

No, the employee is paying the majority of the total health

care costs

90%

6%

4%

92%

5%

3%



In three to five years, do you believe employees at your organization will be paying the majority of health care costs?

Note: Only respondents whose organizations provide health care were asked this question. Respondents whose organizations indicated that employees were paying the majority of total health care costs were excluded from this analysis. Percentages may not equal 100% due to rounding.

Yes

No

Not sure

21%

44%

36%

21%

39%

40%


Demographics



1 to 99 employees

100 to 499 employees

500 to 2,499 employees

2,500 to 24,999 employees

25,000 or more employees

31%

36%

18%

10%

5%

Demographics: Organization Staff Size

n = 310


Privately owned for-profit

Nonprofit organization

Publicly owned for-profit

Government sector

Other

60%

19%

13%

7%

2%

Demographics: Organization Sector

Note: n = 322. Percentages do not equal 100% due to rounding.


PercentageProfessional, scientific and technical services 24%Health care and social assistance 13%Manufacturing 12%Finance and insurance 10%Government agencies 8%Educational services 8%Transportation and warehousing 7%Retail trade 7%Whole trade 6%Real estate and rental and leasing 5%Accommodation and food services 4%Administrative and support and waste management and remediation services 4%Construction 4%Information 4%Utilities 4%Religious, grantmaking, civic, professional and similar organizations 3%Mining 2%Arts, entertainment and recreation 2%Repair and maintenance 2%Agriculture, forestry, fishing and hunting 2%Personal and laundry services 1%Other 9%

Demographics: Organization Industry

Note: n = 328. Percentages do not equal 100% due to multiple response options.


Demographics: Other

U.S.-based operations only 79%

Multinational operations 21%

Single-unit organization: An organization in which the location and the organization are one and the same.

30%

Multi-unit organization: An organization that has more than one location.

70%

Multi-unit headquarters determines HR policies and practices.

59%

Each work location determines HR policies and practices.

5%

A combination of both the work location and the multi-unit headquarters determines HR policies and practices.

37%

Is your organization a single-unit organization or a multi-unit organization?

For multi-unit organizations, are HR policies and practices determined by the multi-unit headquarters, by each work location or by both?

Does your organization have U.S.-based operations (business units) only, or does it operate multinationally?

n = 324n = 325


Corporate (company-wide) 78%

Business unit/division 15%

Facility/location 16%


What is the HR department/function for which you responded throughout this survey?


SHRM Survey Findings: Employee Benefits in California—Health Care

• Response rate = 13%

• 373 HR professional respondents in California organizations from a randomly selected sample of SHRM’s membership participated in this survey

• Margin of error +/- 5%

• Survey fielded May 3-June 7, 2013

Survey Methodology


• SHRM Research Findings: Health Care Reform—Impact of Health Care Coverage and Costs

• SHRM Research Findings: Health Care Reform—Challenges and Strategies

• Health Care Reform Resource Page

• SHRM Toolkit: Managing Health Care Costs

• California's Group Health Premiums Outpace National Average

Additional SHRM Resources

http://www.shrm.org/Research/SurveyFindings/Pages/SHRM-Health-Care-Reform-Impact-Costs-Coverage.aspx

http://www.shrm.org/Research/SurveyFindings/Pages/SHRM-Health-Care-Reform-Impact-Costs-Coverage.aspx

http://www.shrm.org/Research/SurveyFindings/Pages/SHRM-Health-Care-Reform-Challenges-Strategies.aspx

http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/HealthCareReform.aspx

http://www.shrm.org/templatestools/toolkits/pages/managinghealthcarecosts.aspx

http://www.shrm.org/templatestools/toolkits/pages/managinghealthcarecosts.aspx

http://www.shrm.org/hrdisciplines/benefits/Articles/Pages/California-Premiums-Outpace.aspx

About SHRM Research

• For more survey/poll findings, visit www.shrm.org/surveys

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Project leaders:Christina Lee, researcher, SHRM Research Yan Dong, SHRM Research

Project contributors:Alexander Alonso, Ph.D., SPHR, vice president, SHRM ResearchEvren Esen, director, Survey Research Center, SHRM Research

Copy editor:Katya Scanlan, SHRM Knowledge Center


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About SHRM

Founded in 1948, the Society for Human Resource Management (SHRM) is the world’s largest HR membership organization devoted to human resource management. Representing more than 275,000 members in over 160 countries, the Society is the leading provider of resources to serve the needs of HR professionals and advance the professional practice of human resource management. SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China, India and United Arab Emirates. Visit us at shrm.org.


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