There are a lot of things that keep executives awake at night, but employee healthcare benefits traditionally has not been in the top 10. In the United States, however, that situation has changed.
Today, senior-level leaders, and not just their HR departments, find themselves wrestling with the implications of the Affordable Care Act—the national healthcare plan approved by the US Congress during President Obama’s first term.
The legislation has confronted employers with a welter of complexities and seemingly endless questions on matters ranging from portability to penalties for noncompliance. Depending on your answers to these questions, your company may or may not want to continue offering its own healthcare coverage. You may or may not wish to provide employees with access to a health insurance exchange. You may or may not need to pay a penalty.
And you may or may not feel the need to take a long vacation after deliberating on these matters.
In this podcast interview, the authors discuss the implications of the US Affordable Care Act, and how companies can change their talent strategies in response to it.
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As challenging as these healthcare changes are in the short term, they also offer an opportunity to create a unique value proposition for a company’s current and prospective employees. By weaving healthcare coverage decisions into their talent strategies, and by managing the new healthcare situation as a strategic change program, companies can capitalize on opportunities to create a talent advantage.
Complacent and confused
Beyond all of the new rules and regulations, an important concern for executives planning a proactive response to new healthcare options is that a certain complacency about the coming changes can be seen among employees. The Affordable Care Act will introduce approximately 51 million people to the individual healthcare marketplace, shifting industry dominance away from employer plans and from a wholesale to a retail model. Yet the implications for both cost and personal responsibility are only dimly understood, by employee and employer alike.
According to a recent Accenture healthcare study, almost two-thirds (62 percent) of all consumers in the healthcare marketplace list “affordability” as their top concern when it comes to choosing a healthcare plan. Yet only 20 percent are willing to change their primary care doctor for regular office visits, and only 39 percent are willing to use a nurse practitioner instead of a doctor for routine health checkups. These are some of the most obvious steps consumers can take to make their plans more affordable, but relatively few actually wish to change their habits and routines (see chart).
Other research paints an even grimmer picture—one of almost total bewilderment among average citizens. In 2012, pollsters from Stanford University quizzed thousands of Americans about the basics of the new healthcare legislation, including identifying statements according to whether they were or were not part of the actual law. Zero percent—that’s right, no one—answered all of the questions correctly. Only 14 percent of respondents were able to answer even a simple majority of questions correctly with a high degree of certainty.
What does this complacency and confusion mean? In part, it underscores the need by companies to approach the new healthcare situation as a major organizational change program, not simply as a benefits-related event confined to the HR sphere or something that can be addressed by making a few classes or online knowledge resources available.
The talent advantage
This is where the opportunity arises to transform the healthcare
challenge into a talent advantage. HR administrators and staff will
continue to advise employees about healthcare benefits. But a typical
company is likely to remain fairly passive and reactive in terms of the
guidance provided by HR.
By contrast, companies seeking an advantage in recruitment and retention will take the time to understand their workforce, not monolithically but in a way more attuned to different segments of the employee population with different circumstances and healthcare needs. In this way, HR representatives can offer more proactive and helpful guidance.
Such companies will also prepare their frontline managers and other supervisors to be agents of change. This means coaching them about the impact of healthcare reform on the organization and its people so that they, in turn, can set expectations with employees, be positive rather than disparaging about the situation, help people understand and take ownership of the impact, and in general help employees feel like an active part of the change rather than its passive victim.
Formulate a strategy
When thinking about the implications of healthcare legislation for your talent strategy, you should ask a series of important questions that support more effective decisions.
1. What are your industry’s unique talent needs?
It is important to consider the particular talent attraction and retention strategies unique to your industry and business. In the services and retail sectors, for example, turnover is generally high (from 20 percent to 35 percent or even more) and workers are often young. (In the grocery business, one-third of workers are between the ages of 16 and 24.)
The talent strategies of high-tech, Silicon Valley-type companies are strongly influenced by the presence of Millennials in the workforce—most of whom presume they won’t work their entire lives for the company. For these kinds of companies, attracting a continuous supply of qualified workers often takes precedence over retaining them for an extended period. So understanding whether or not healthcare is a relevant benefit to attracting workers to these industries is vitally important. Health insurance exchanges may be an attractive option, not just for the companies but for their employees as well, who can find their coverage more portable as they move from one employer to another.
By contrast, companies in industries such as aerospace and defense might well continue to believe that their company’s performance hinges on retaining experienced, long-term employees. That is, not only the attraction of employees but also their retention may be important aspects of these companies’ talent strategies. Providing company-sponsored health insurance is more likely to remain part of the value proposition such a company offers its employees to attract and retain them, even in the wake of the Affordable Care Act.
Companies with multiple business units, each of which may have slightly different workforce configurations, will need to ask similar industry-specific questions. In such a case, workforce preferences when it comes to health coverage are unlikely to be uniform across the different business units.
2. What are people’s needs across different locations?
Getting more specific about who needs what when it comes to healthcare options also applies to thinking about employees in different locations. Simply put: Politics vary in the United States from state to state. That means that exactly how the law is interpreted and applied in one state’s health insurance exchange will not necessarily be the same in another state.
Some states may charge users of their exchange a fee to cover operational expenses, either directly or via a per-enrollee fee on insurers selling in the exchange. And some states will offer no exchange at all but will let the federal government operate it. These differences have obvious talent planning implications for companies operating in multiple states.
3. Who needs and wants what?
Many companies are still coming to terms with the changing nature of loyalty in today’s workplace—of employee to employer and vice versa. The new healthcare benefits situation casts a particularly intense light on those changing loyalties.
Given the growing presence of Millennials in the average workforce, the portability offered by health insurance exchanges might actually be a selling point, as that generation is less likely than their predecessors to look for lifetime employment, at least in some industries. The rise of insurance exchanges will dramatically increase the number of individual-insured consumers and the options that are available to them. As a result, these workers may be less likely to make health benefits a deciding factor in their employment decisions.
A company that considers the different options and provides direction about healthcare service choices other than employer-sponsored health programs may be able to attract and retain younger workers more effectively than one that ignores this need. In general, a key to success will be to understand workforce needs in light of the changing healthcare environment.
Master segmentation and engagement
A critical step in understanding employee needs in the context of an industry or particular business is to get more detailed and granular in terms of the different healthcare and health insurance needs of different workforce segments.
The 2012 Accenture Healthcare Consumer Survey identified five different segments of the consumer population based on their needs, attitudes and behaviors in the healthcare area. For example, “bargain buyers” simply want coverage to be basic and cheap, even if it means reduced benefits. By contrast, “loyalists” want the highest-quality healthcare coverage, and they may be willing to pay more for it (see chart).
Understanding these segments is obviously important to insurers, who can use that insight to invest in targeted consumer acquisition and retention strategies and tailor forms and channels of service to the segments. Employers can also, however, tailor benefits, incentives, information tools and guidance to employees depending on those different segments—potentially improving employee engagement and retention.
Who will provide the guidance employees need to make the healthcare coverage decision right for them? Is that the job of the insurers or the job of the exchanges? Both will indeed play such a role.
Yet much of the guidance offered by health insurance exchanges will be passive—often delivered via a self-service website where people can compare plans and determine whether they are eligible for subsidies. Live assistance will also be available through state- or federally-sponsored call centers. But it’s unlikely that even the best customer service representative from an exchange will have the talent interests of any particular employer in mind.
Another concern is how effectively insurers are engaging with consumers when it comes to their healthcare options. Employees are often unwilling to acquire new habits that could both improve their health and save them money. Yet few employers believe that the insurers themselves are doing enough to more deeply engage those employees.
If companies truly want to create more engaged employees and thereby secure a talent advantage during this time of change, they should take a more active role in providing information tailored to different segments of the workforce. With so many options available, it will not be a wise choice for an employer to say, “Here’s a voucher and here’s a link to the health insurance exchange. Good luck.”
By taking into account industry specifics, location and segmentation information, companies can improve employee engagement whatever their ultimate approach to healthcare coverage. Even if a company decides not to offer company-sponsored health insurance, it can still strengthen its relationship with employees by making information about accessing and using the exchanges available to its workforce. In this way, the company will continue to serve as a benefits resource for its employees.
Manage the change
Beyond the tactical issues of assessment and counsel, the larger challenge for companies will be managing the complex portfolio of change factors and the overall journey across the new health benefits landscape. Because of the wide-ranging impacts of the Affordable Care Act on most companies’ existing operations, it will be more important than ever to manage the overlaps or touchpoints between different initiatives and to manage the necessary interactions between relevant parts of the organization.
Managing the new benefits situation will require, for example, extensive interaction between the HR, finance and legal functions. It will also require the coordinated assessment, as discussed, of different employee needs across locations and business units.
Effective change management programs also address the need to manage employee expectations. “Change fatigue” can set in for a workforce buffeted by the demands made on them by successive changes thrown at them over an extended period of time.
The workforce needs to be able to assimilate the scope and depth of change at a very personal level. Decisions about health are hard enough for individuals; the stakes are even higher for employees with partners, children or other dependents.
Beyond these higher levels of strategic planning and management, several specific supporting activities will be critical to managing the effects of the changing health benefits situation on individual employees and the organization as a whole.
Communications and transparency.
Communicating with employees is, in part, simply a legal requirement of the Affordable Care Act. However, companies seeking a talent advantage will, as discussed, provide robust and comprehensive communications as well as information tailored to the needs of individuals.
Effective communication is about more than just providing information, however. It’s also about establishing trust. That means that transparency will be vital.
One approach more companies are relying on uses social media platforms such as Facebook and Yammer to facilitate the sharing of questions and concerns and, more important, to quell false rumors and deliver accurate, consistent and timely information to employees almost instantaneously.
Training and change sponsorship.
Effective training for HR staff as well as those working in call centers will be essential to answer the increased volume of questions coming from employees. Business managers will need to have a general level of knowledge about the changing healthcare environment, though not the same level required by the HR staff. Far more important: Business leaders need the training that can help them become more effective change managers and sponsors.
Companies should look for proven curriculums in the area of change management—including courses in developing and managing change plans; engaging stakeholders and building commitment to change; creating effective two-way communication programs; delivering cultural change; and transitioning to new ways of working.
Employers also need to consider what kind of organizational model they will use to deliver change expertise across the enterprise. For example, one model that is rapidly becoming a best practice is to establish a dedicated change management resource group within the company. This group can provide high-level strategic experience as well as specific expertise in such related areas as program management.
Technology and process change.
Because of the need to facilitate interaction with a variety of state health insurance exchanges, companies will need to manage the related changes to benefits processes and then the technical implications for systems, applications and networks. IT will need to adapt in a variety of areas, including enrollment, pricing, billing and customer service. These impacts on healthcare IT are certainly affecting payers, but all companies should be focused on how, for example, their enterprise systems are interoperating with health insurance exchanges.
There are many challenges ahead for employers and employees alike as the implications of the Affordable Care Act become clearer and as lessons are translated into best practices from an HR and talent perspective.
There will be more than a few stumbles along the way. But in the midst of the uncertainties, companies have an opportunity to achieve a talent advantage by understanding their employees’ healthcare preferences more accurately and then by providing the kind of counsel that leads to better engagement, productivity and retention.
Essential to achieving those benefits, however, will be anticipating and managing the effects of change on people, leadership and the entire organization—enabling a company and its people to adapt to and even embrace the possibilities of the years ahead.
For further reading
"Reconciling the Great Healthcare Consumer Paradox: Are consumers willing to change to get what they want?" Accenture 2012
About the authors
David Smith is the senior managing director responsible for the Accenture Talent & Organization group. He is based in Hartford, CT.
Breck Marshall is the managing director responsible for Talent & Organization within Accenture’s Health & Public Service industry group. He is based in Washington, D.C.
J.P. Stephan is the managing director responsible for the Accenture Health Customer Relationship Management (CRM) group. He is based in Pittsburgh, PA.
The authors would like to thank Tami Hale, a senior manager in the Accenture Health management consulting group, for her contributions to this article.