Health Reform and Labor Shortages Hit Head On
To combat the difficulty of recruiting and retaining skilled talent, companies are going to have to re-think their approach to health-care-cost containment because a political solution is almost definitely not in the near future.
By Dallas Salisbury
Each day we see new recommendations on ways to change the nation¿s health system, with groups announcing new principles, proposals, health summits and analyses of implications of proposals.
At the same time, Congress is in a frenzy of hearings and proposals, with universal coverage the central tenet and coverage of all children the first step to be considered. Yet, despite concern over total health spending and health-care inflation, most of the proposals call for more money, not less, to be spent on the nation¿s heath, as a first step to eventually spend less.
And lest anyone think one more commission might make health solutions easy, the Associated Press reported on March 14 that President Bush rejected the health-reform recommendations of the Citizens' Health Care Working Group. The group had been established by Congress to hold hearings and community meetings across the country on health-care coverage and cost issues. Its
"Health Report to the American People"
was presented to Congress and the president in September 2006.
The states are marching as well.
Massachusetts was first out of the gate with a heath-coverage program, but officials recently announced the pricing of the insurance policies will be far higher than assumed when the legislation was enacted last year.
Now, the state is grappling with how to move forward with what was enacted, or what revisions are necessary to make it affordable to purchase the required minimum insurance coverage. Meanwhile, the action in Massachusetts started dozens of other states talking about the issue, although the new cost estimates may slow down action.
When it comes to health care, reform has never been simple.
In the business world, health-care cost control has usually meant shifting part of the cost of coverage from the company to the employee with premium co-pays, higher deductibles, new consumer plans with much higher deductibles and heath-reimbursement or -savings accounts. For about the last 15 years as this has been happening companies have not been particularly worried that such actions would affect recruiting and retention, viewing cost control as a bigger issue.
But, guess what? The long-warned-of skilled-labor shortage is finally coming to fruition -- and health benefits will play a big role in whether individual companies are able to recruit and retain the workers they need.
Two recent surveys -- one by Deloitte Consulting and the International Society of Certified Employee Benefit Specialists and another by Met Life -- reported that the No. 1 issue for employers was finding workers, not the cost of health care.
That's a dramatic change from prior years, when executives said that controlling health-care costs was the No. 1 priority and HR issue.
So, suddenly, health-care costs aren't the top priority for executives, but that's not true of the workers.
Studies, such as the
EBRI Value of Benefits Survey
and the
EBRI Health Confidence Survey
, continue to find that health insurance is the No. 1 benefit workers want, the No. 1 benefit workers consider in job-change and job-choice decisions, the benefit most workers are willing to give up more wages to keep in place, and a benefit they prefer to get through their employers.
The problem of finding and keeping workers is only going to get tougher in the years ahead. The Bureau of Labor Statistics forecast for the next 20 years estimates the slowest growth in the number of new job candidates in decades, just as the boomers are looking for the exit doors from full-time work.
And finding enough workers with technical skills will be even tougher, with the medical profession, itself, being affected.
A health summit in May at Princeton University will be dedicated to discussing the massive projected shortage of doctors and nurses who specialize in cancer care -- at the same time the number of cancer patients and survivors grows by the millions. Where will we go for care? What will the price of care be if free market supply and demand are actually allowed to set the price of service?
In reality, health-reform legislation will be a long hard slog that -- under the best of circumstances -- would be passed by Congress and signed into law in 2010, with an effective date unlikely to be prior to 2012.
The reality for employers and employees is that a political solution is not going to occur any time soon. They should assume the current system will be the system for many years to come, except for minor piecemeal actions around the edges.
Tracking and involvement in the policy process will prove prudent, but neither the Lone Ranger nor his silver bullets are within sight. Employers are going to have to solve this dilemma on their own -- for at least the next several years. That may mean employers paying relatively more of total health costs in the years ahead in order to attract and retain the workers they need.
March 19, 2007 Copyright 2007© LRP Publications
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