Wednesday, October 26, 2011

Public Sector Employers Focused On Cost-Containment Too

Like their private sector counterparts, public sector employers faced with escalating health care benefits costs are focused on taiming those costs. Eighty percent of human resources managers with public sector employers said their organizations are looking at ways to reduce the cost of their employee benefits plan, according to recent research from Colonial Life & Accident Insurance Company and the International Public Management Association for Human Resources. In fact, more than half (58%) said controlling costs is the benefits program’s top priority. The ability to retain key employees and create employee satisfaction rated a distant second priority at 20%.

The survey showed public sector employers plan to make significant changes in their benefits programs within the next year, many of them strategies to control costs:

• Increasing employees’ health insurance premiums 64%
• Implementing wellness programs/promoting healthy behaviors 52%
• Increasing employees’ health insurance deductibles and/or copayments 45%
• Redesigning health plans to include higher deductibles 27%

“Budgets are tight and organizations are looking to save money,” said Pat McCullough, Colonial Life’s assistant vice president and public sector practice leader. “If they can’t save through premiums or services, they’ll have to reduce head count and nobody wants to do that.”

Change Drives Communication Needs

Public sector human resource managers almost unanimously agree that it is important for employees to understand their benefits and appreciate their employers’ investment in them, with 89% saying it is very important. However, like their counterparts in commercial industries, they do not think that their employees actually do understand their benefits. Just over half—54%—responded that their employees have some understanding and only 42% said their employees have a good understanding.

“Any time you’re introducing changes, especially if it involves cost shifting, a strong communication plan is essential to the success of the entire benefits program,” Mr. McCullough said. “Public sector employers have a tremendous opportunity to improve benefits communication without raising costs if they partner with a benefits provider that offers communication and enrollment services. It doesn't have to cost them—or the taxpayers—one dime.”

A comprehensive communication plan is also important to drive understanding of and participation in wellness programs, Mr. McCullough noted. “Wellness programs can have an impact not only on employee satisfaction but directly on the bottom line through reduced claims and absenteeism. But participation tends to be low unless the program is accompanied by good communication.”

While employers reduce their own spending on health care benefits, employees face higher costs for these, reduced, benefits.


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