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Businesses are the backbone of the U.S. health insurance system, providing health benefits to nearly 175 million Americans as part of workers’ total renumeration. Yet, ever-escalating health care costs are placing a huge strain on employment-based health insurance while leaving nearly 45 million other Americans without any health insurance whatsoever.
Many companies are at a loss over what to do about rising health care costs for their own employees. Companies also now recognize that America’s legions of uninsured must rely on expensive emergency care for their health needs, which in turn indirectly drives up the cost of health insurance for all company-based benefit plans.
Surveys of chief executives’ views on the state of the U.S. health care system and interviews of individual CEOs in the mainstream press drive home both points. Yet little specific case study work has been conducted on companies’ actual decision-making about health benefits. Unlike broad-based surveys or anecdotal evidence culled from the press, illustrative case studies can dive deeper into the health care experiences of individual businesses and the reasons why they choose to provide different kinds of health insurance or none at all.
The 10 case studies that constitute the bulk of this report provide key insights into the challenges facing employer-based health insurance. Through extensive interviews, these case studies highlight companies’ decisions about how (or whether) to offer employee health care packages, and their strategies for determining how (or whether) to provide health benefits amid rising costs over time.
This paper examines 10 different kinds of businesses, including two large multinational corporations, two medium-sized companies, and six small businesses. These 10 businesses, based in different parts of the country, are engaged in manufacturing, technology development, retail sales and services, education, staffing, and the media. They include a local grocery store and a gift shop, a global technology manufacturer and a worldwide retail store operator.
Our case studies are not based on a large or nationally representative sample of businesses, yet they do provide valuable information about the intricacies of company decision-making on health care. Most importantly, they reveal in detail the views of individual company executives concerning health insurance for their own employees, for their business rivals both here and abroad, and for the broad U.S. labor pool.
Our interviews with the executives directly responsible for making health care decisions for their companies have produced information that generally track national survey data. Executives in our case studies and in national surveys understand that:
- A healthy workforce can lead to increased productivity and efficiency.
- Rising health care costs seriously strain employer-provided health care.
- Providing employee health benefits may strain U.S. businesses’ global competitiveness.
- Uninsured Americans are a hidden cost in their own health care plans.
Our case studies boast rich details on all of these points, which in turn allow for more in-depth examinations of the motivations, successes, and challenges of American businesses in the provision of health benefits to their employees. Before we present them, however, we must first set the stage with an overview of the current state of the U.S. health care insurance system and how U.S. companies in general are coping with an increasingly dysfunctional system. That broader analysis begins on page 5; our individual case studies begin on page 12.
These 10 case studies tell a compelling story of the strain experienced by businesses under the current health care system, and offer possibilities for reform. Among the experiences that can be drawn from this survey are:
Substantial resources are invested by businesses in deciding on a health plan. Many small business owners pay an external broker, while larger businesses employ staff to specifically handle such decisions.
All businesses, regardless of size, are dealing with rising health care costs. Some businesses have decided to forgo offering health insurance to their employees, while others have increased cost-sharing with their employees. Larger businesses engage in utilization management programs to control their health care spending, but medium- and small-sized businesses that offer health insurance often lack the time, resources, or expertise to engage in such management programs.
Health care costs, along with the resources invested in making decisions on health plans, affect business as a whole. Employment decisions, product pricing, investment in research and development, and other employee benefits are now weighed against the impact of rising health care costs.
Employee education presents a challenge for employers. Employees often do not appreciate health care benefits as part of their overall compensation, and are not always proactive participants in health care decisions.
High health care costs and the rising number of uninsured are two major areas for potential health care reform. Many businesses link these two problems because they realize that the uninsured ultimately generate higher health care costs through their inefficient use of the U.S. health care system—costs that are passed on to the insured.
A partnership between business and government is essential. Sustainable health reform will necessitate the involvement of all players, including the government, employers, providers, health plans, and patients.
All of the executives at the 10 businesses interviewed in these case studies recognize that the current U.S. health insurance system needs to be fixed. While there is no obvious consensus on what shape the reforms should take, what is evident to all of them is the need for a partnership between business and government. All of the executives recognize that sustainable health care reform is critical to their businesses’ productivity and competitiveness and will require the involvement of the government, employers, health insurance plans, health care providers, and patients.