HEALTHCARE BENEFITS
New pan-European survey of employer health benefits
The cost of providing healthcare benefits rose by an average of 5% per employee across Europe in 2007, according to a survey by Mercer.
Despite the rising costs, companies plan to maintain their health and benefit programmes - citing the role health benefits play in attracting and maintaining staff as a key objective against a backdrop of welfare reforms and tighter controls in state benefits and health provision.
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The respondents stated that “retaining key talent” was the most important rationale in providing health and benefit services, while “managing company health risks” and “improving productivity and performance” were also rated as important.
Cost on payroll
According to the research, European employers are spending an average of 5.3% of their total payroll costs on health benefit provision:
Employers spend above the median in those countries with a general taxation-financing model for their public health system; companies in the UK, for example, spend an average of 7%.
By contrast, in countries with a social insurance financing model, the average spend is less than the median, at 4.6% of payroll.
The research also indicated that over half of employees (57%) do not pay towards their employer-provided health benefits. Steve Clements, principal at Mercer, said: “Compared to the US where employees commonly pay around a quarter of the cost of their health benefits, European employers still have some room to manoeuvre to balance the scope of cost and benefit.”
Cost increases
The cost of health benefits is rising. Despite this increase, 41% of employers said they were unlikely to make changes to their current programmes to contain these cost hikes.
When pressed on which changes they were most likely to make:
38% said they would restrict the scope of coverage
34% would shift the cost to employees
some respondents also mentioned the use of implementing flexible benefits programmes to manage costs and better match employee requirements.
Scope of benefits
European companies are providing a broad scope of health-related benefits to their staff:
the most common is company sick pay, offered by 71% of companies.
income support for employees with long-term disabilities is provided by 51% of companies
dental benefits are offered by just 37% compared to nearly universal dental coverage in the US.
Poor co-ordination of benefits across multinationals
The survey also highlighted poor co-ordination of benefits across countries. Only 50% of multinationals actively attempted to co-ordinate their activities, and around a quarter had common regional strategies.
“The research reflects the breadth and diversity of healthcare benefit provision across the region,” said Clements, “However, there is scope to implement better regional co-ordination and co-operation, and to capitalise on scale and efficiencies. Initiatives like risk pooling, which are relatively straightforward and well established, often result in enhanced terms and conditions as well as reduced costs to balance increases elsewhere. Improving governance by sharing best practice can also help.”
A final word
“Over two-thirds of respondents said they would struggle to retain top-performing employees if they did not offer good health benefits. These programmes are particularly valued as a staff attraction tool by companies in emerging Eastern European countries where migration to western economies has produced a scarcity of talent. There is also evidence that health benefits often rank as the most highly valued company benefit in those countries where employees perceive national health provision is relatively poor.” - Steve Clements, principal at Mercer.
Want to know more?
Title: 2008 Pan-European Employer Health and Benefits Survey, Mercer.
Survey sample: The online survey was opened to employers in 24 countries in Europe from May to June 2008. Completed surveys were submitted by 842 employers.
Availability: To purchase the report visit www.mercer.com/healthbenefitsurvey.
Mercer is the “global leader for trusted HR and related financial advice, products and services.” It has more than 18,000 employees serving clients in over 180 cities and 40 countries and territories worldwide. To find out more visit www.mercer.com.