qotd: Fortune 500 companies shift more costs to employees

University of South Carolina
September 18, 2014
Survey: Fortune 500 employees can expect to pay more for health insurance
By Peggy Binette

Employees working for Fortune 500 companies can expect to pay higher
employee contributions for their health insurance, according to a survey
of chief human resource officers about the impact of the Patient
Protection and Affordable Care Act (also known as PPACA or Obamacare)
conducted by the Darla Moore School of Business at the University of
South Carolina this past May/June.

Patrick Wright, a professor in strategic human resource management,
directs the annual the HR@Moore Survey of Chief HR Officers.

Key findings from the survey include:

• 78 percent report a rise in health insurance costs (average of 7.73
percent);
• 73 percent report having moved or will move employees to Consumer
Directed Health Plans;
• 71 percent report raising or plans to raise employee contributions to
health insurance;
• 30 percent report moving or plans to move pre-65 retirees to ACA
health exchanges;
• 27 percent report cutting back health insurance coverage eligibility;
• 24 percent report ensuring that part-time employees work less than 30
hours weekly to avoid penalty;
• 12 percent report increasing or plan to increase part-time workers; and
• 10 percent report limiting or plan to limit the full-time employee hires.

87 percent of chief HR officers reported taking or planning to take last
least one action to reduce costs. And, most of those actions are being
shouldered by employees.

The most common strategy is moving employees into Consumer Directed
Health Plans. CDHPs provide employees with a set amount of money for
regular (not catastrophic) healthcare that they manage, which shifts
responsibility from employer to worker. Firms also are defraying the
rising cost of health insurance to employees by raising the premiums
they pay for their health insurance and limiting dependent coverage.

PPACA requires employers to provide health insurance to employees who
work 30 hours or more weekly. While small businesses are more likely to
hire part-time workers, Wright says, larger firms are enforcing the cap
to avoid increased costs.

One CHRO told Wright "When we put the limit at 30 hours, we frequently
had people that worked 32-34 hours, and if enough of them did so, it
would put us at legal risk for fines. Therefore we now limit workers to
27 hours to ensure that we minimize the number that might exceed 30 hours."

The recent U.S. jobs report in June reported an increase of 799,000
part-time jobs compared to an increase of 288,000 full-time jobs, which
may reflect the employment strategies being reported in the HR@Moore survey.

Wright says what continues to be unclear is whether the quality of
employee healthcare has improved or suffered as a result of Obamacare.

http://www.sc.edu/uofsc/newsreleases/2014/09_mooreschool_hr_chro_survey_ppaca.php#.VBx3sUur_-B

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Comment by Don McCanne

This academic survey of human resource officers at Fortune 500 companies
shows that they plan to address rising costs of their health benefit
programs by increasing the financial burden on their employees. Check
the key findings from the survey listed above. Each one is bad news for
the employees.

The most important reason given for choosing the model of reform that
became the Affordable Care Act (ACA) was that the majority of Americans
were receiving their health care coverage through their employment, and
that these plans provided the best coverage available. The best of the
best were the plans offered by the very large employers - the Fortune
500 companies.

So what is their response? As if there were not enough problems already
with excess deductibles, narrower provider networks, tiering of health
care services and drugs, limiting dependent coverage, and other
innovations that impair access and reduce costs, in the face of ever
more increasing costs the employers are now raising employee
contributions to the plans, shifting to consumer directed plans that
place a greater financial burden on the employees, reducing eligibility
for their employees, shifting retirees out of their plans, reducing
hours for part-time employees in order to avoid ACA penalties, and
limiting full-time employee hires while increasing part-time workers.
And this is the best of the best!

The diagnosis is obvious. ACA was the wrong model for reform. We need a
single payer national health program. Delaying that change will only
cause the deficiencies to get worse, especially when we leave the
private insurers in charge. It's too bad that the Fortune 500 executives
don't have a little more empathy for their employees. After all, it's
their employees who have been responsible for the increases in
productivity - the gains of which the executives are scooping off the top.


If empathy doesn't cut it, the executives need to be reminded of Nick
Hanauer's "The Pitchforks Are Coming… For Us Plutocrats":

http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014_full.html