- The cost of employee benefits as part of compensation has gone up 24% between 2001 and 2015, according to a Willis Towers Watson (WTW) report — largely thanks to the doubling of healthcare cost.
- Shifts in Benefit Allocations Among U.S. Employers shows that in the 2001 to 2015 time span, healthcare, retirement and post-retirement costs rose from 14.8% to 18.3% of compensation. Healthcare costs for active workers alone doubled, from 5.7% to 11.5%.
- Interestingly, retirement benefit cost, including defined benefit, defined contribution and post-retirement medical plans, declined by 25%, from 9.1% to 6.8% of compensation.
WTW predicted a rise in healthcare costs alone of 7.8% worldwide in 2017. Previous WTW studies and other analyses confirm the staggering rise in benefits for employers and the cost shifts to employees that have become necessary.
But employers can expect to see pushback from employees — who have had to assume more of the cost of their benefits thanks to the shift to high-deductible healthcare plans and defined contribution plans — if companies attempt to push any more costs employees' way.
Employers will have to change strategies to keep healthcare costs down, and instead focus more on cost at the provider level. Accountable care organizations (ACOs) are one such lever that experts say may improve care quality while keeping costs lower.
With the healthcare debate stewing in Washington over the fate of the Affordable Care Act (despite the failure of both ACA replacement bills so far), little government aid may be coming in the near future. Employers right now must focus on complying with the status quo, and finding ways to innovate within those parameters.