CFOs need to prepare for the ‘upper tail’ of medical inflation – Even if headline inflation declines in the near future, Tim StawickicActuary, Health and Benefits in North America From Willis Towers Watson (WTWTell CFO Dive.
with the Consumer Price Index (CPI) It rose to 8.5% in July and the recent rise in the core producer price index (PPI), The Fed is likely to seek to raise interest rates even further.
“CFOS needs to be prepared for the situation that if overall inflation eases, there may be another two or three years where they need to think about how they manage the costs of health care plans,” he said in an interview.
Inflation, which can directly affect consumer prices, works somewhat differently when it comes to Medicare costs. “Employers pay for health care based on the contracts their insurance company has with providers, which span several years. So if an agreement with the hospital or contract is not reached until 2023, that provider will have the opportunity to renegotiate higher rates. for three years “. Stawicki.
Recent best practices in healthcare surveying by WTW consist of 455 employers found in the United States who – which Employers expect their healthcare costs to jump 6.0% next year compared to the average 5.0% increase expected by the end of this year.
Moreover, employers see little relief on the horizon – Seven in 10 (71%) expect moderate to significant cost increases over the next three years. In addition, more than half (54%) of respondents expect their costs to be more than budgeted this year.
Balancing talent retention and healthcare costs
He also kept talent steadfast challenge For CFOs over recent months it still holds the top spot in our minds.
With inflationary pressures and a potential recession looming, employers are having a hard time finding the workers they need to run their businesses. The rising costs of health care will make this more difficult, Stawicki said. “Employers look around and say ‘I need to find talent to help me run my business and I can’t do that if I have an ineffective health care benefits program,'” he said.
There is a direct link between business results, especially employee productivity, and employees’ ability to manage their health and financial environment, according to WTW. Global position survey benefits. “The loss of the ability to provide programs and benefits that meet employee needs affects the business,” Stawicki said.
He said it was about finding a balance between managing cost in an environment where talent was hard to come by. In order for CFOs to successfully fund benefit programs, they need to consider finding ways to partner with their HR counterparts, Stawicki said.
Sixty-seven percent of employers said managing company costs was a top priority in the August survey of company best practices in healthcare, compared to 42 percent who said achieving employee affordability was a top priority. In the immediate future, Stawicki said, CFOs need to establish a relationship with their HR counterparts that can facilitate “ways to manage company costs without shifting them to employees.”
Ultimately, company costs remain of paramount importance to employers, but running a successful business will also require keeping employees’ affordability first.
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