Get access to the exclusive HR Resources you need to succeed in 2018.
Sign up for free email newsletters and get more SHRM content delivered to your inbox.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 14 cities across the U.S. this fall.
Gain the skills you need to rise to the next level in your career. Jon us at SHRM's Leadership Development Forum, October 2-3 in Boston.
Executives foresee continued health-cost shifting to employees
For the third year in a row, chief financial officers (CFOs) in the U.S. cited rising health care costs as their No. 1 concern, according to the Bank of America Merrill Lynch 2014 CFO Outlook survey.
Of the financial executives who participated in the annual survey of middle-market companies, nine out of 10 also said they expect their organization to increase or maintain the size of its workforce in 2014.
When asked about potential negative effects on the U.S. economy, CFOs most often named health care's impact on labor costs, with 67 percent ranking it as a significant concern, up from 62 percent in 2012. This was followed by worries about the effectiveness of the U.S. government (62 percent) and the U.S. budget deficit (57 percent). All three issues were the top concerns of CFOs in last year's survey.
Other major risks keeping financial leaders up at night are the U.S. regulatory environment (49 percent) and consumer confidence (42 percent).
Despite fears about the economic risks posed by health care reform, nearly three-fourths of CFOs said their company is completely or mostly ready to comply with the rules and regulations of the Affordable Care Act (ACA), with 28 percent claiming their organization is completely ready and 46 percent, mostly ready.
More than half of financial executives (53 percent) said their company’s labor costs will increase as the business complies with the ACA, and, to offset those costs, 77 percent plan to increase the amount employees must contribute toward their health care expenses.
Other health care data the survey revealed include:
Additional measures to offset higher labor costs include cutting spending in other areas of the business (75 percent), implementing wellness-promotion programs (71 percent), and raising prices on products and services (63 percent).
"We're not seeing seismic change in company health care plans at the middle-market level; we're basically seeing some variation on existing health care coverage, in one form or another," commented Alastair Borthwick, head of global commercial banking at Bank of America Merrill Lynch, during a Dec. 10, 2013, teleconference.
One area of high uncertainty, Borthwick noted, is the ACA's impact on the number of employees and their families who opt into a company's health coverage. "Respondents articulated that if it looks like their costs will go up more than expected [due to increased enrollment], then they will need to take additional steps" to offset this expense.
Among other notable findings in the 2014 CFO Outlook:
The 2014 CFO Outlook interviewed 751 CFOs, finance directors and other executives who were randomly selected from U.S. companies with annual revenues of between $25 million and $2 billion. Interviews were conducted from late September to early November 2013.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 10,000 companies