Being an important form of compensation in an employee’s salary, employee benefits are swiftly increasing for both profit and nonprofit organizations. Demographic changes in the American labor force as well as the general population continue to manipulate the stipulations and design of worker benefit programs. According to Entrepreneur Media (2017), benefits add up to about 30 to 40 percent of employees’ basic pay. Health insurance is the most preferred benefit among many workers. A study conducted by hbr in 2000 revealed that most employees aged between 18 and 81 preferred to have a low paying job with more perks, with a huge number opting for healthcare benefits (Jones, 2017). According to them, improved health, vision and dental insurance were top in the list, with 54 percent of the participants saying that they would heavily consider this element when selecting a job. 61 percent of the women were more inclined to this proposal against 47 percent of their male counterparts. Employee benefits can only be as successful if the employees understand the value of the perks offered to them by their employers. For this reason, there is need for an organization to monitor and evaluate its employee benefit program for it to remain a valuable tool of conscription and retention.
While health care is an important form of compensation in an employee’s salary that is mostly sought after, health coverage is a costly affair for an employer “with an average cost of $6,435 per employee for individual coverage, or $18,142 for family coverage” (Jones, 2017). An analysis by Hewitt showed that “the average health care cost per employee in 2014 was $10,717, up from $10,266 in 2013,” and that “for 2015, average health care costs are projected to increase to $11,304 per employee.” Considering the high cost that comes along with medical cover, few employers are currently footing the bill for their employees. As such, the Entrepreneur cites a survey of California by William M. Mecer, a human resources management consulting firm that showed 91 percent employers requiring their employees to make a contribution to the health insurance program, with 92 percent requiring their workers to make a payment towards the cost of covering their dependants.
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Hewitt supports this notion by citing how there was an increase in employee premium contribution from $2355 to $2487 in 2013 and 2014 respectively. Accordingly, copayments, deductibles, and coinsurance payments that employees make from their pockets also went up to $2295 from $2005 in 2014 and 2013 respectively. The result is that employees are required to put up 23.6% of the overall health premium payments coming to $2664 in 2015. This means $2,487 is the average out-of-pocket payments by employees.
Global Manufacturing Company hires 3,000 employees who all receive full health perks. The health care cost trend in the United States has been gradually rising and is expected to heighten in the coming years (Thorpe, 2005).
PROBLEM
The rates of premium policies have clearly increased in the recent years with premiums rising by over 50 percent in the real terms between 2000 and 2005. This trend is still on the rise and Global Manufacturing Company feels the impact already. The economic theory advocates that a workforce that regards it medical cover benefits will stand the lumber of elevated premiums in the form of lesser pay even in the case of little or no change in the rank of employment or overall salary and reimbursement to workers. In the case where companies do not have the capacity to make up for elevated benefit expenditures through lower salaries such as through lowest income laws or union contracts, then Global Manufacturing Company would be forced to scale down on their workforce numbers or to transfer employment to the workforce that does not receive benefits such as the part-time employees as a result of the growing premiums. There is a need to comprehend the significance in the emergent policy correlation between health insurance premiums and employment considering that a number of proposals to cover employees who are not insured depend on ‘employer fiats’ that would necessitate employers to provide cover for their workforce. Premiums that keep increasing offer an opportunity to carry out surveillance on the labor market effects of advanced benefit outlays.
There could be a number of reasons that affect the influence of labor market concerning rising medical insurance premiums. Factors such as the size of the organization as well as the family status of the employees are key contributors. However, there are unobservable characteristics that could affect the insurance premium such as the quality of the workforce which influences the health benefits as well as the salaries. To bring down the increasing premiums, Global Manufacturing Company in conjunction with its workforce needs to bear the health insurance burden in the form of reduced salaries. There have been organizations which have taken to working with part-time workers who do not receive or are offered limited benefits in the hope of reducing the high cost of insurance premiums. Increasing premiums often result in such workers being denied such benefits by their employers. As such, it is possible to find that such employees do not have any value for health insurance perks at their cost or organizations face challenges in lowering the wages of their labor force.
The problem with such a case is that Global Manufacturing Company will be forced to pass on the cost to the work force in the form of reduced wages. Also, there is the risk of an organization shifting its reliance more on employees who are not permanently employed which undermines the objective of the mandate. As a result, employees will have to bear the great burden of the growing health insurance premiums and will also increase the status of both the workers who are not insured as well as those who are not employed. The company therefore has to make the right decision regarding this issue considering that the increase of premiums have risen by 25 percent over the same time frame. This is costing the company $40, 300 for employees who are married and have families, $ 24,893 for two-person families and $20,250 for single employees each year. As a result, the company is forced to foot a bill of $ 45 million per year. The only option left here is to scale down the number of employees in the company. The company’s board of directors however would rather cut down expenses as opposed to terminating employee positions. For this reason, there is the need to look in to the health benefit premiums so as to see if there is anything that can be done to cut down this expenditure.
PURPOSE AND SCOPE
Considering the matter presented above, it is proposed that research be carried out to establish feasible answers to the escalation in the cost of health care premiums. At the same time, it would be important to consider carrying out a research on the cost-of-illnesses as well as cost-effectiveness. A cost-effectiveness research will comparatively analyze two or more substitute interventions in terms of their wellbeing and fiscal end results, whose outcomes are articulated in an incremental cost-effectiveness proportion, the proportion of disparities in outlay involving a pair of health check involvements to the variations in the equivalent wellbeing results. The research methods employed are mostly imperative to chronic diseases with devastating natural histories, long-standing origins, and a rising number of stirring, yet expensive treatment options that exist.
Data gained from economic evaluations can be used to trail present costs and forecast future costs, enlighten resolutions of health care coverage, the right to care, and the allocation of resources. The question of cost-effectiveness will also be taken care of since the main objective will be to make a comparison between the values of new or costly interventions with the standard of care. At the same time, it would help in factoring in the ages of the employee population in the company and consider what health care insurance premiums are offering. A report would then be prepared outlining the findings of the possible solutions. The intention of the report is to decide on the alternative healthcare plans that are available in the market that would trim down premium costs whilst preserving an effectual, all-inclusive healthcare package for the labor force. This undertaking will investigate and contrast various healthcare plans such as PPO, HMO, POS, HSA, Fee for Service, and Cafeteria Plans among others in the quest of finding coverage, cost, as well as expediency. This report will endeavor to find a solution that will egg on the effort to retain employees who are qualified. As such, it will center profoundly on employee contribution programs.
PROCEDURES
The information that will be collected for this report will be attained through administrative data from sources such as internet sites, consumer indexes, health periodicals, medical journals and government sources. These data sources should provide information regarding the trend of health insurance policies in the country, alternative insurance policies that are available in the market as well as their premium rates, and proposals for the various insurance policies among others. at the same time, these sources will be used to determine the practicable insurance policies that are available and favor the condition of the company and its employees. This means that these insurance policies will need to offer better insurance cover terms that will help Global Manufacturing Company in making considerate thoughts and plans for its work force. To get existing direct quotes from insurance companies located locally and nationally, interviews will be carried out so as to make the necessary evaluations and proposals.
CONCLUSION
Information attained from the findings will be examined and suitable illustration like charts and tables will be developed. Statistical facts will also be included in the report to give a glimpse of the situation within and outside the borders of the country for comparison and confirmation purposes. The findings will give information detailing on facts according to the situation at hand. a summary of the findings will also be included in short bullet points to give the reader a quick glimpse of what is detailed in the report on the matter insurance premiums. Concluding statements and recommendations will be made as fitting to make available the best medical healthcare coverage for the company’s employees. At the same time, they will serve to uphold insurance premiums within the financial ability of the company.
The best way to find the solution to this problem can only be through research. For this reason, I apply for your approval to carry on with this proposal and seek for answers to the existing situation. The recommendations will conclude in a report that will put across the findings gathered in the research and will offer final recommendations concerning the what Global Manufacturing Company should do to deal with this matter.
I look forward to receiving your rejoinder to this proposal.
