Over the years, there have been numerous references to the end of employment-based health coverage. Have employers reached a tipping point with health benefits?
While alternatives may hold merit in the future, employment-based health coverage remains a vital cornerstone of the U.S. health insurance system. The current model not only benefits employees but also plays a crucial role in addressing ongoing recruitment and retention challenges employers face, particularly in a tight labor market marked by high turnover and rising expectations from a workforce with many different needs and expectations.
The Employee Benefit Research Institute (EBRI)/Greenwald Workplace Wellness Survey finds that workers highly value health benefits and are generally satisfied with the benefits employers provide. In fact, employees prioritize health coverage above other benefits, such as retirement plans and paid time off. With job turnover rates a concern for employers since the 2021 “Great Resignation,” offering comprehensive health benefits has been one of the key ways employers can reduce the risk of losing valuable employees to competitors. In a labor market where workers often leave jobs to pursue better benefits, health coverage is an invaluable tool for retention.
An imperative benefit
According to EBRI’s study “ERISA at 50: No Midlife Crisis for ERISA Preemption,” businesses remain committed to providing health benefits. Despite concerns about the rising costs of health benefits, employers indicated their companies would continue to offer health coverage for the foreseeable future. Employers also made clear the immense value that certain provisions in the Employee Retirement Income Security Act of 1974 (ERISA) offer their organizations. ERISA allows companies to offer a consistent menu of high-quality benefits to workers across state lines and fosters employer innovations that address those workers’ specific needs. Were the various benefits of ERISA to disappear, benefits executives were not sure how their companies would adapt to the uncertain world and potential morass of state-level regulations, but they recognized that health benefits are still an important tool to recruit and retain a high-quality workforce.
The generosity of coverage and the variety of plans offered are key factors in why employment-based health insurance remains a popular employee benefit. Companies that provide multiple plan options give employees the flexibility to choose coverage that best fits their needs — whether they are a young professional with few health concerns, a parent seeking family coverage, or an older worker with chronic conditions. This flexibility allows employers to cater to the various needs of their workforce, a critical aspect as the labor pool becomes more varied, encompassing multiple generations, backgrounds, and health needs.
Strategies to increase effectiveness
However, in an environment of rising health costs and a tight labor market, employers are stuck between a rock and a hard place. Balancing comprehensive benefits with financial sustainability is not easy. However, there are strategies employers can use to make health benefits offerings more effective. Human resources professionals, for example, can leverage wellness programs, mental health support, and preventive care programs to manage costs while improving employee well-being. By incorporating programs that promote healthier lifestyles, companies can not only reduce long-term health expenses but also boost job satisfaction and productivity.
In addition, employers can look to innovative solutions such as telemedicine, on-site health clinics, and personalized care management to provide more convenient and cost-effective healthcare access. These tools can help create a more fulfilling, healthier work environment, which in turn can reduce turnover and improve employee retention.
Ultimately, while the future of healthcare in America faces challenges, employment-based health coverage does not appear to be going anywhere anytime soon. It is an essential benefit for both recruitment and retention. As long as employees continue to place value on health benefits and employers recognize their importance in creating a healthier, more productive workplace, the employment-based health coverage model will remain a cornerstone of the U.S. health insurance system.
Click here to access the short-form report of EBRI’s Workplace Wellness Survey.
