American Workers Moving Towards More Responsibility for Healthcare, But Are They Making the Right Moves?
Oct. 18, 2005 (Des Moines, IA) — American workers are taking note of rising health care costs, and taking action. Whether these behavior changes are in workers' best interest is debatable. Their actions will have significant implications for our country and our economy's future, according to the 2005 Health Confidence Survey (HCS) released today by the Employee Benefit Research Institute (EBRI) and Mathew Greenwald and Associates, Inc. and underwritten by the Principal Financial Group®.
Not surprisingly, the majority of Americans with health coverage have experienced rising costs in the past year. One of the major factors in cost increases is higher premiums, occurring at the same time workers are experiencing a reduction in benefits. According to the most recent Principal Financial Well-Being IndexSM, 41 percent of growing companies have increased employee co-pays, 37 percent have increased deductibles and 20 percent have reduced medical benefit coverage options.
As a result, EBRI Survey respondents say they are changing their behavior, although all the changes may not be in their best interests. They are choosing generic drugs (79%), taking better care of themselves (71%) and talking to their doctor more carefully about treatment options and costs (57%). What's worrisome, however, is that 40 percent are delaying going to the doctor and 21 percent are not taking prescribed medications.
"Delaying doctor visits and not taking prescribed medication could lead to a worsened condition and longer recovery time for the individual. For employers, beyond just increased health care costs, this behavior can also lead to a decrease in worker productivity and an increase in absenteeism and presenteeism, potentially costing thousands of dollars. Multiply this by each employer in the United States, and we have a significant problem," said Jerry Ripperger, director of consumer health for the Principal Financial Group.
"With an ongoing focus on cost, employees are sometimes left to make decisions that are unwise for their long-term health, but in the short-term, benefit their pocketbook," said Ripperger. "This is where health programs like high deductible health plans, health savings accounts and health reimbursement arrangements can ease the strain, because they provide desired coverage while sharing more of the cost between employers and employees."
Rising Health Care Costs Impact Plans for Retirement
The Survey revealed that health care costs are also making an impression on Americans' long-term
financial security. Almost three in ten responded that they had to use up all or most of their savings to pay
medical expenses and nearly a quarter of respondents indicated difficulty in paying for basic necessities,
such as food, heat and housing. Eighteen percent responded that they had to borrow money for medical
expenses. Forty-five percent of respondents have had to decrease contributions to savings to pay for
health care expenses, with 26 percent lowering contributions to their retirement plan.
"As these responses illustrate, rising health care costs have led to an erosion of the safety net that Americans rely on for financial security should they become ill. The distress caused by rising health care costs goes beyond health care and into financial stability," noted Ripperger.
Furthermore, Paul Fronstin, director of the Health Research and Education Program at the Employee Benefit Research Institute noted, "The increasing cost of health care has disproportionately affected lower-income Americans. They are less likely to express satisfaction with health care and more likely to report shifting resources or changing health care usage to cope with the cost increases they have experienced."
Workers Welcome Increased Health Coverage Over Increased Pay
If given the choice between a salary increase and increased health care coverage, most American workers favor health care. Eighty percent of HCS respondents would prefer $6,700 in employment-based health insurance coverage rather than the identical amount in pay. Two-thirds of respondents would prefer employment-based coverage over $10,000 of taxable income.
"Consistently, we have seen that high-quality benefits actually encourage employees to work harder and result in a more motivated workforce. While health coverage is not surprisingly the most important benefit to employees, it's significant that in today's economic environment American's value health insurance over a sizable salary increase," said Ripperger.
Full results of the 2005 EBRI Health Confidence Survey are published in the November issue of EBRI Notes, which is available on EBRI"s Web site at www.ebri.org. For more on the most recent Principal Financial Well-Being Index, visit www.principal.com/research.
About the EBRI Health Confidence Survey The 2005 Health Confidence Survey was conducted within the United States from June 21 to Aug, 6, through 20 minute telephone interviews with 1,003 individuals age 21 and older. The margin of error is plus or minus 3 percentage points. All questions are available on the EBRI Web site, www.ebri.org. EBRI is a private, nonprofit organization committed exclusively to data dissemination and education on economic security and employee benefits; it does not lobby or take positions on legislation.
About The Principal Financial Group
The Principal Financial Group®
(The Principal®)1
is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $187.8 billion in assets under management2 and serves some 15.2 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
1) "The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.
2) As of June 30, 2005.
