Attracting and retaining a skilled workforce is the most important consideration among U.S. chief financial officers (CFOs) in weighing whether to continue offering employee health coverage, according to a survey by the Integrated Benefits Institute (IBI).
Regardless of the outcome of the U.S. Supreme Court ruling over the constitutionality of the Patient Protection and Affordable Care Act (PPACA), employers will face a dilemma over whether to continue offering health benefits or drop coverage and point employees to the individual insurance market, revealed analysis by IBI, a nonprofit provider of health and productivity research.
According to the February 2012 survey report, Making Health the CFO's Business, attracting a skilled workforce was cited by 80 percent of U.S. CFOs as one of the top three reasons to provide health benefits. Other high-ranking considerations were:
• Impact on employee satisfaction.
• Ability to promote healthy behaviors in the workforce.
• Ability to manage medical treatment to improve workforce productivity.
CFOs appeared to recognize the established links among workforce health, productivity and financial performance. A large share of the 313 CFOs surveyed described poor health as having a significant impact on financial success through factors such as opportunity costs, sick leave and turnover that influence productivity.
“These concerns indicate that CFOs see medical coverage as a competitive necessity in managing human capital, rather than simply a cost to be minimized,” said IBI President Thomas Parry. “While there is widespread speculation among employers, insurers, benefits professionals and corporate leadership as to how organizations will respond as this historic legislation is rolled out, it’s apparent that the C-suite sees the importance of medical coverage not only as a means to maintain a skilled workforce but also as a tool to be leveraged in improving employee health and productivity.”
Regulatory Concerns Not Predominant
Interestingly, the PPACA's "play or pay" penalty was not cited as a major reason to continue providing employee health coverage. Just one in five CFOs cited the cost of the fine as a top-three factor regarding whether to continue providing health care benefits, and only 8 percent cited the PPACA's tax implications as a top-three factor. In short, "the regulations contained in the PPACA may be among the least important factors that financial executives consider in determining health benefits investments," the survey found.
The report advises benefits professionals to determine the metrics and performance goals valued by their CFO and to use them in conveying their health care program's results and goals. Likewise, CFOs are encouraged to ask for the information they value and need from benefits professionals and suppliers. Based on the survey’s findings, such information is likely to be available and useful, but CFOs must make their needs known.
Viewpoint: Reconsidering Group Health Insurance Benefits, SHRM Online Benefits Discipline, February 2012
Finance, HR Execs See Roles Changing in Health Care Reform's Wake, SHRM Online Benefits Discipline, December 2011
CFOs Take on HR, SHRM Online Business Leadership Discipline, October 2011
Nearly One-Third of U.S. CFOs Plan Health Care Cost-Cutting, SHRM Online Benefits Discipline, November 2010
SHRM Online Benefits Discipline
SHRM Online Health Care Reform Resource Page