A recent research report by S&P Capital IQ Global Markets Intelligence (GMI) details how, under the Affordable Care Act, U.S. companies with 50 or more workers could realize a savings of $3.25 trillion through 2025 by redefining the traditional role they play in the healthcare system and moving employees to the public health exchanges.

Under the ACA, companies with 50 or more employees must offer healthcare coverage or pay a tax. The GMI report calculates the cost savings for companies that opt to do this and transfer healthcare responsibility to their employees.

According to the report, the ACA may eventually come to be historically recognized as the starting point of the reconstruction of the U.S. health care benefit industry and a catalyst for how companies provide health care insurance for their employees. It compares the change to employers’ redefining employee retirement benefit policies decades ago as workers assumed more responsibility for these accounts.

Further, the report argues that the transformation would have drawbacks as workers lose coverage through group plans and their premium costs rise if they don’t qualify for subsidies. And, importantly, companies that do not provide healthcare to employees would be at a competitive disadvantage in recruitment and retention of talent to businesses that do.
But there is downside risk to the overall health and productivity of their workforces.

What some proponents of removing employers from the healthcare system fail to fully understand is the impact of employee health on employer business performance. Furthermore, they do not comprehend that employers provide a setting within which employee health can be supported.

Employers should carefully consider whether to exit the healthcare system because of the impact of employee health on productivity, and the impact of productivity on their performance. There is a critical difference between employers’ decisions about financing health care and their choices about managing workforce health and its business-performance outcomes.

Since the passage of the ACA, there are two employer camps forming around the issue of employer-provided healthcare coverage. One camp is focused on minimizing healthcare costs in the short run. The other camp is thinking strategically about how to use data about employee health to achieve desired business outcomes.

Even if employers send their employees to exchanges, the value of connecting health, performance, attendance and other work-related information remains. At the IBI, we think focusing on the fluctuation in health care costs over time can be misleading. What is more important is connecting changes in employee health and investments made in maintaining employee health with broader work outcomes that matter to both the employer’s business value and the employee’s quality of life.

While employers choosing to send their employees to the public exchanges may save on the cost of maintaining medical insurance for their employees, they stand to lose an important (if not essential) key to effectively managing employee health, which directly impacts both their bottom and top lines—costs and productivity/performance.

Decades of providing health coverage to employees has enabled companies to amass huge amounts of health data. This data includes lost work time due to illness, relationships between certain lifestyle habits/choices and work, the effects of obesity on long-term productivity, and more.

Direct investment in health care coverage, while only one among many investments an employer can make, provides an opportunity for employers to obtain aggregate employee health information that can be tied to key business metrics, and as such, is an important investment. Working through supplier partners, having employee health data integrated with work-related outcomes, such as attendance, performance and business results can help employers better understand the connection between various health investments and results that benefit both employees and employers. The overriding question employers should be asking is, what is the overall return on our healthcare investment in our workforce.

Employers must appreciate the full value of a healthy workforce. Healthy employees come to work more often and do a better job; healthy employees are good for business. Employers that don’t understand this, and are only focused on short-term cost savings, are risking their business.

Companies need to think beyond cost savings into tying healthcare investments back to the larger impact on business outcomes related to the health and productivity of their workforces. Integrating health and related benefits can help support a healthier and better-performing workforce, which ultimately maximizes the efficacy of their human capital.

Thomas Parry is president of the Integrated Benefits Institute (IBI), an independent nonprofit membership organization and the leading provider of health and productivity research, measurement and benchmarking.

Philadelphia-area members include Comcast and the Greater Philadelphia Business Coalition on Health.

Article original posted in Philadelphia Business Journal.

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