How Does HR Look Without Benefits? With 30% Dropping Them, We’ll Find Out

If you (like me) always found health care benefits’ odd pairing with human resources problematic, you might soon see what it could look like without it at all.

That’s because a new study by consulting firm McKinsey shows that 30 percent are likely to drop health care benefits. And as CNBC reports, even many employees are okay with the transition:

McKinsey, which based its projection on a survey of more than 1,300 employers of various sizes and industries and other proprietary research, found that 30 percent of employers will “definitely” or “probably” stop offering coverage in the years after 2014, when new medical insurance exchanges are supposed to be up and running.

Losing employer-sponsored insurance would not prompt workers to leave their jobs, contrary to what many employers assume, McKinsey also predicted. The study found more than 85 percent of employees would remain at their jobs even if their employer stopped offering insurance, although about 60 percent would expect increased compensation.”

Benefits adminstrators on the lookout for 2014

While some of the provisions of the landmark health care reform were immediately implemented, many were put off additional years with the mandatory employer coverage being pushed back to 2014. This has allowed companies to rightly consider their strategy as to how they’ll deal with the most significant changes.

But it has also led to a lot of handwringing about the issue. Businesses are making easy decisions look tough as they try to implement new programs with an eye toward the future. For some, they are still trying to figure out exactly how they’ll deal with it.

In talking with an unscientific sampling of benefits administrators, most seem confident that they will be retaining all or most of their health care benefits (and thus, employment). They see much of the hype about it much ado about nothing. But still, there are some who are concerned. Especially those in lower margin, high health care expense sectors.

Not a shocking number

While it may come of some surprise that nearly a third of companies are seriously contemplating dropping employer-sponsored coverage, it isn’t far off other numbers we’ve seen. Several months ago, TLNT Editor John Hollon pointed to another survey, this one done by Towers Watson and the National Business Group, that said that a bit less than four in 10 employers were confident they’d be able to offer health care benefits. That’s a sharp decrease from 2007 when nearly 3/4 of employers said they were confident they’d be able to offer health care benefits.

What shouldn’t be lost on anyone is the fact that the national employee health care mandate will certainly reduce the number of people covered under employer provided health care. While I’m certain that any reform of this matter would have resulted in some shift away from employers, it should at least be a partial indictment that significant health insurance cost controls that were not written into the law are playing a role in the shift. After all, if you are playing a flat penalty rather than an ever increasing health care bill, any company would have to at least investigate it as an option.

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The “new look” HR department

Getting back to my point, what will HR look like without benefits? If it feels a little grim to say that the focus of bottom line impact on employers would be less about an employee being healthy and more about being at work, productive, and not dying or dead, you’re not alone. The inevitability of dropped wellness plans as the ROI on such programs becomes much less numbers based will cause some to celebrate.

But I wonder whether we’ll lose a little piece of our heart if we drop employer-sponsored health care? I’m the first one to be cynical about the big brother, intrusive nature of some employer health care initiatives. And I really hate the fact that employers ever got involved in the health care game in the first place (and why we have such divergent, weird views about it).

When I’ve dealt with an issue personally about a specific coverage though, it brought some of the human back into human resources. I’m not a doctor, but playing a small role in someone getting care for cancer or diabetes was one of those things that always stuck out and was rewarding.

That may not be strategic and it may not get a seat at the table but I’ll be a little sad when it finally goes away.

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7 Comments on “How Does HR Look Without Benefits? With 30% Dropping Them, We’ll Find Out

  1. Huge lack of transparency with the McKinsey study…primarily:
    1.  How was it conducted?
    2.  What questions were asked?
    3.  What was the breakdown based on employer size?
    4.  How did they choose the employers for the survey?
    5.  Who funded the study?

    Lots of skepticism to be taken with the results.

    1. Interesting questions from Matthew. I went to McKinsey’s website to look at what they wrote about this survey, and Matthew is right — the background information on how this study was conducted and who conducted it is non existent. Plus, the comments on the story from readers who read it at McKinsey are equally critical.

      So, caveat emptor on this one. McKinsey does nobody — including themselves — any favors by not being more transparent and up front in how this survey was done.

    2. Interesting questions from Matthew. I went to McKinsey’s website to look at what they wrote about this survey, and Matthew is right — the background information on how this study was conducted and who conducted it is non existent. Plus, the comments on the story from readers who read it at McKinsey are equally critical.

      So, caveat emptor on this one. McKinsey does nobody — including themselves — any favors by not being more transparent and up front in how this survey was done.

    3. This is such a huge unknown. All predictions seem like no more than guesses. I think we — along with all other major companies — will need to wait until that first brave (or desperate) soul breaks and drops benefits. 

      f

    4. matthew, time magazine has written about these questions and some of what they discovered when they called mckinsey. one biggie: they educated respondents before asking them the survey questions. more here http://paper.li/~/articles/761282208 

      fran

    5. Fair enough. Though, I think it would be perhaps just as shocking if it is the CBO’s projected 7% holds true. As the Towers Watson survey showed, a decrease by almost 50% in the number of companies confident they’d be offering health care in ten years so it isn’t like this is a lone study in a sea of nonaffirming ones.

  2. Thanks Fran.   It also interesting that the White House requested the info, and McKinsey still wouldn’t turn it over to them.   Hurts the credibility even more.

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