Rising health care costs and evolving regulations continue to be the top human resources challenge facing employers, and many companies are struggling to effectively meet that challenge, according to a new survey by Arthur J. Gallagher & Co.
Sixty-three percent of employers polled in Gallagher’s 2nd Annual Benefits Strategy & Benchmarking Survey, released on Thursday, said that managing the rising cost of providing group health care benefits was their greatest HR challenge.
More specifically, employers ranked controlling their health care costs as their top benefits management priority for 2014 by a margin of more than two to one. The second-most pressing benefits priority in 2014 cited by employers was keeping up with regulatory and legislative changes, primarily relating to their obligations under the Patient Protection and Affordable Care Act.
However, only 31% of employers polled said they have quantified the additional costs their company will incur as a result of the health care reform law. What’s more, only 10% of employers have formalized a total rewards or strategic benefit plan that includes measurable objectives for managing employee benefits-related challenges, according to the survey results.
“Although organizations may be aware of the changes that are shaping the future of the employee benefits market, the survey suggests that many are not yet ready to face the challenges these changes will bring,” James W. Durkin, Jr., Gallagher’s Itasca, Illinois-based president of employee benefit consulting and brokerage, said in a statement released on Thursday. “Those that adequately adapt to the current reality will optimize their ability to mitigate future costs.”
Gallagher’s survey results showed that 62% of employers saw their group health care premiums increase by at least 4% at the most recent renewal, with 25% of employers’ premiums increasing by 10% or more.
But despite the increasing costs and regulatory complexity, 98% of employers polled indicated their commitment to providing some form of health care coverage to their employees for the foreseeable future.