High-Profit, Low-Profit Organizations Spend the Same on Health Care

By Andrew Mariotti, SHRM Customized Research Services Mar 30, 2012

In the U.S., the average health care cost per covered employee in 2010 was $9,531, according to data from ​the 2010-2011 SHRM Benchmarking Database.

Spending on health care did not vary significantly based on the profitability of the organization.Organizational profitability was measured as a ratio of net income to revenue. Organizations with low profitability were under pressure to spend the same as highly profitable organizations.

Less profitable organizations might have health care spending at levels similar to more profitable organizations in order to retain and attract staff by offering a standard level of health care coverage for their employees. According to the March 2012 SHRM Leading Indicators of National Employment (LINE) report, the manufacturing sector continues to have increasing difficulty in recruiting. This could cause less profitable organizations to use health care benefits as a recruiting strategy while finding ways to reduce costs in other areas.

The survey, created by the Society for Human Resource Management (SHRM) Strategic Research Program and reviewed by SHRM’s Total Rewards/Compensation and Benefits Special Expertise Panel, was fielded to 13,000 randomly selected SHRM members who are HR managers, assistant or associate directors, directors, assistant or associate vice presidents, vice presidents or presidents. Of these, 2,558 senior HR professionals responded on behalf of their organizations, yielding a response rate of 20 percent.

Andrew Mariotti is a strategic research analyst at SHRM.

SHRM Customized Benchmarking Service

The SHRM Customized Benchmarking Service uses more than 400 benchmarks and draws on a database of 10,000 organizations. Reports can be customized based on industry, employee size and other factors.

For more information about SHRM Customized Health Care Benchmarking reports, as well as customized reports on Human Capital Benchmarking, Retirement and Welfare Benchmarking, Employee Benefits Prevalence Benchmarking, and Job Satisfaction and Employee Engagement Benchmarking, visit www.shrm.org/research/benchmarks.

Related Articles:

Health Care Benefits Changes on the Horizon, SHRM Online Benefits Discipline, March 2012

Are Health Premium Tiers a Good Idea?, SHRM Online Benefits Discipline, January 2012

Employers Accelerate Efforts to Control Health Plan Costs, SHRM Online Benefits Discipline, November 2011

HSAs Viewed as Cost-Saving Option by Employers and Account Holders, SHRM Online Benefits Discipline, November 2011

Health Care Cost-Shifting Benchmarks, SHRM Online Benefits Discipline, November 2011

Large U.S. Employers Revamping Health Benefits for 2012, SHRMOnline Benefits Discipline, August 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

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