The Future of Employee Benefits
After last month's exploration of the current state of employee benefits this month we will delve into future trends that we should expect to see within the next five years, if we aren't seeing them already. There are four future trends that we will look at, focusing on the effects of the trends and their resulting implications.
Trend #1Health insurance financing trends are converging. Over the next five years we will see more federal involvement in healthcare financing in the U.S. It is inevitable; more federal involvement in the U.S. will result in expanded mandates and regulation. It will also result in expanding "some" level of coverage to those who do not have any while expanding everyone's share of the total cost. What we don't know is exactly what kind of coverage will be available from the federal government - but I can guarantee you that it will not be a very rich health plan, it will probably some type of catastrophic coverage.
While we are seeing increased involvement by the federal government, we are seeing a decrease of federal involvement in countries that already have some type of universal healthcare. These two trends will converge and meet somewhere in the middle with some coverage and some health plans funded by the federal government and the rest will be much as it is now. To balance this out, more control (and cost) will be shifted away from employers, and shifted to individuals and the government. Interestingly, though, most insurance experts believe that employers will still be the key portal by which everyone receives their health insurance.
The resulting effects of this converging of financing trends will be increased individual cost-sharing (which will reduce demand), and a shift to a defined contribution system rather than a defined benefit system. There will also be a greater prevalence of tiered delivery and pricing. This could take the form of tiered funding such as Medicaid, basic care, fully private, etc., tiered providers by way of quality and cost, and tiered plan designs.
Trend #2Health care processes are becoming standardized. Providers are facing the same cost increases as consumers, and the desire to reduce costs and increase efficiency will also be responsible for positive improvement on the supply side of the economic equation. It will drive the creation of common platforms, benchmarks, and treatment protocols.
Information sharing will also explode, among providers and consumers, driving this standardization. For individuals, this could partly take the form of some type of smart card that houses all of their medical information (controversial as it is). For providers, some type of "report card" will be developed that individuals can view in order to make more educated choices about where they will have their healthcare provided and who will provide it.
Web-based decision support systems will also be developed to help in making those choices. Each of these standardization trends, among others, will eventually lead to "commodity pricing" for healthcare, which will ultimately bring these ever increasing costs under control.
Trend #3The workforce must adapt to technology and empowered consumers. In business now, more than ever before, it is incredibly difficult to attract young talent if the company is not innovative in its benefit offerings. With such easy access to information via the Internet, prospective employees, especially talented ones, have a lot more information about what other companies are offering, and know what kinds of things benefit providers are offering.
More and more, employees will desire increased workplace work/life programs where they can have flexible time, work from home some or all of the time, and have creative hourly schedules (like four 10-hour days with three days off). Entrepreneurial ventures will flourish in this area because they tend to be much more nimble in their policy changes and will do what it takes to recruit, reward, and retain their top talent.
Competition will require that employees have a satisfactory level of e-education. They will not only be required to have some computer skills to perform their jobs, but they will also be required to use the Internet to manage most of their benefits.
Trend #4New technology will extend life spans; with advances in gene therapy, bio-engineered organs, and other elements of biotechnology, we can expect great leaps in healthcare treatments. Those who want it, and can afford it, will be able to "cheat death" for quite some time. Now I know this sounds kind of like science fiction, but things as simple as feeding tubes and artificial breathing machines already allow individuals to remain alive when they would otherwise not be.
Someone will be forced to draw the line somewhere, and it seems the most logical entity to do that is the government. They will be forced to draw the line for costs, who has access to services, issues of safety, and even cases of heroic efforts.
Out of these trends come twelve resulting implications:
- Consumer friendly organizations will be more successful;
- Organizations that distinguish via branding will be better positioned than those that don't;
- The keys to consumer satisfaction will increasingly be service and speed;
- More and more e-business models will emerge;
- Quality, efficiency, and customer care will be the only issues consumers will care about;
- Seamless healthcare service will replace the current system of "functional silos";
- Some will be forced to retrain their workforce to deal with technology and empowered consumers;
- Employers and individuals will stress prevention and early detection to lower cost;
- Consumers will continue to want more but won't want to pay for it;
- New ethical dilemmas will proliferate;
--There will be new health insurance opportunities outside of the United States;
- The world will continue to attempt to develop global standards of treatment.
In a nutshell, that's the culmination of these four trends. Regarding the 12 implications listed above, one could probably write whole articles about each one. I leave it up to you to think critically about these implications and how to position your companies to continue to remain competitive in your employees' eyes regarding your benefit offerings as this market moves toward this future.
Next month we'll take a look at the much larger implications moving in this industry, and attempt to understand where it is all headed in the next 20 years.