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ROUX: The problem is, though, that we’re in a damned-if-you-do and damned-if-you-don’t scenario. We look at Spain with 25 percent unemployment and all kinds of entitlements that we think are a little bit crazy, but because we are actually not doing anything—our congress is not acting—we have not really solved the problem on either side of the aisle. We’re just sitting here with the problem growing, including the student loan crisis, which everyone seems to think is the next big debt crisis to come, behind the mortgage crisis.
Employers are saying, “I just don’t believe you are going to do anything about it.” So I have to hunker down, maybe not extend myself as much as I would. Credit is much harder to get. Access to capital has been tightened up for businesses. Maybe some of us are making more money, but we’re holding on to it. So that’s making the problem grow even more, ironically. And we feel like we’re on our own because we don’t see the government acting either way.
What are the training implications that this has for you and your companies and HR?
A. THOMAS: For a number of the companies I work with, when we are approaching the benefit package for employees, it’s not just medical, which is kind of what some people translate it into, but it includes your health, your wealth, your well-being, et cetera. A lot of employers are taking it upon themselves to offer some type of financial seminars or training. Because as an employer, if my employees are so far in debt that they cannot be focused at work, that’s not to my advantage. I cannot offer a pension plan, but I could offer a financial planning seminar.
There are a lot of companies—whether they are altruistic or it’s in their own self-interest is somewhat irrelevant—but they are stepping into that void because there is really nowhere else to learn it. A lot of employers will just pick that up and run with it.
LEE: Employers have no choice. They have to [educate employees]. And part of the problem is if employees do not understand the economic factors, the realities that are affecting them personally, they will not have any clue what is going on with the company either. They will not be able to understand why the company is making some of the decisions they are making, and they won’t be able to relate to changes and adaptations to market forces.
So it has to be an ongoing program for two reasons: one, just to keep the employees engaged in providing what the company needs and what they need to contribute, but also for their own personal benefit in the long run.
Let’s talk about healthcare and what impact it’s having on your company, and what you are doing about it.
WHALEN: Costs continue to rise, according to the Utah wage survey we just published, which tracks, for Utah employers in particular, the amount premium costs are going up as well as the employer and the employee share of the premium. We are tracking just slightly lower than the national trends reported by Watson, Wyatt, Mercer, et cetera; but still, for most employers, it truly is getting out of reach.
And years ago they already did a plan redesign, cut back on benefits, implemented higher deductibles, and many of them went to HRAs and HSAs. More recently, there is a large focus on wellness programs. So for the most part, most savvy companies have done just about everything they can to control their costs, and they just keep going up. We are at the brink of where employers may make good on that threat, “Well, then I’m just not going to offer healthcare to anybody.”
Now, I have high hopes for healthcare reform. If it does work according to the theory, which is to spread the risk among a larger pool of people, eventually over time with market forces, that will bring down costs. But it’s going to be painful during that transition period until we get there. So I’m very concerned that employers may stop offering healthcare, and individuals are going to be on their own to find coverage.
LEE: I think that is a given. One of the larger companies I work with has already calculated the penalty tax and found that they could actually save several hundred thousand dollars a year by not offering medical insurance—just pay the tax. Now, that may change over time. There is so much uncertainty about where reform is going, but people are already thinking in those terms.
SISK: You’ve got a company saying, “I’ll pay the tax.” So they’re going to put the money out, taking it away from their employees. I’m going to pay the tax and it’s not going to directly benefit my employee base. That’s deeply concerning.
A. THOMAS: It isn’t guaranteed that the tax is going to remain the same in the future. It could go up significantly.
In every boardroom I’ve sat in, we have had the conversation about what additional risk are you picking up because of healthcare reform, what additional costs have you had, who is rolling off potentially with a Medicaid expansion—which, in Utah, may or may not work the same way the government thinks. We’ve run the numbers. And to a company, it is more expensive under the healthcare reform design to offer benefits, either because they’ve got more people, because of opt-ins and auto-enrolls, or they are adding fees and taxes and passthroughs from the other entities.
So the spreading of risk is a great theory for the insurance world, but that is not addressing the cost of the healthcare itself. That is a whole different discussion that has never really been addressed. And employers have done a really good job of mitigating the costs with wellness plans, incentives or training their people. Just like they have to step in and train them on their finances, they are stepping in and saying how do you become healthier? How do you become a wiser consumer? For companies that have started down that path, we actually do see changes in the way those employees access healthcare—what they buy, how they buy, their underlying health conditions—and so it really does make a difference.
Now, the biggest challenge is with the attrition and turnover. That kind of gets lost. How much money do you want to invest to train somebody who is going to go somewhere else and help their bottom line? So you’ve got these competing factors of how much to invest and how long to stay in the game, because of the unknown of the taxes and also recruitment, retention. Do you really want to be the first employer to say, “I don’t offer health?” I don’t know. But let’s say Walmart stops offering health. Well, now it changes. If you are in the high-tech world trying to attract engineers and programmers, what are the odds you can get away with that?
So, yes, it makes sense on paper, but in the HR world of recruitment, retention, employee morale—what are my benefits, my retirement, et cetera—these are competing factors. For the foreseeable future, healthcare is going to be a drag on people’s profit lines, which is taking new jobs away or something else.