PricewaterhouseCoopers Issues Report on What Employers Want From Health Insurers

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Small Employers Less Satisfied than Large Employers

Small employers could be the canaries in the coal mine for the employer-based model

New York, October 15, 2008 -A new report entitled What Employers Want From Health Insurers Now (], released today by PricewaterhouseCoopers Health Research Institute, finds mixed satisfaction ratings with insurer-sponsored services and meaningful differences between what small and large companies want.

According to a PricewaterhouseCoopers' survey of 250 small employers (those with fewer than 250 employees) and 100 large multi-national companies (with an average of 8,000 employees), small employers are less satisfied with their insurer-provided health services than larger employers. Small businesses with less than 500 employees represent 99.9 percent of all employers in the United States according to the Small Business Association. Small business respondents reported greater dissatisfaction than big companies in 12 critical areas of service studied by PricewaterhouseCoopers including claims accuracy/timeliness, administration fees, provider discounts, wellness programs and online tools such as personal health records.

The disparity may reflect that larger employers typically receive a wider array of customized plan designs from insurers, and the cost of administering small groups is usually more expensive on a per employee basis.

"Small employers could be the canaries in the coal mine for the employer-based model," said Michael J. Thompson, principal of PricewaterhouseCoopers' human resources services group. "Given that the majority of American workers are employed by small business and that the erosion of health insurance coverage is among small employers, insurers are keenly interested in understanding what all employers want and how they can adapt plan designs and service offerings to better meet their needs."

While both large and small employers rate the basic functions of timeliness and accuracy of claims administration as the most important service offered by health insurers, large employers place almost as much importance on wellness services. Nearly 80 percent of large employers but only 50 percent of small businesses say wellness programs are important to them.

According to the report, the silver lining for American workers is that their employers are increasingly looking to manage costs through wellness and disease management programs rather than further shifting costs. Interestingly, while employers and policy makers are relying heavily on wellness programs as a way to reduce costs, wellness service offerings was an area that both small and large businesses were most dissatisfied with, indicating an opportunity area for health insurers to improve on and differentiate themselves.

PricewaterhouseCoopers found that only one-half of the employers surveyed are satisfied with wellness programs they are getting from health insurers. Employers stated that only 15 percent of employees participate in wellness programs currently being offered and that they need better education tools and incentives. PricewaterhouseCoopers found that workers are two to four times more likely to enroll in wellness programs if they receive incentives such as gift cards or premium reductions.

Other key findings in the PricewaterhouseCoopers report include:

  •     Both big and small companies ranked the basic accuracy and timeliness of claims processing as the most important service offering from health plans. Yet, approximately one in four employers is unsatisfied in this area.
  •     Employers view provider discounts as the most important financial service offering from their health plans, but small employers are far less satisfied than large employers in this area. Nearly one-quarter of small employers are not satisfied with the discounts they receive, compared to 11 percent of large employers.
  •     Employers placed the least importance on technology services provided by insurers. Less than half of employers said that personal health records and debit card interfaces are important service offerings, and a little more than half said consumer online tools are important.

Employers Willing To Accept Less Customization for Reduction in Administrative Fees
Two thirds of all employers surveyed said they would be willing to forgo customized health benefits, such as a wide choice of plan designs, for a significant reduction in administrative fees. Customization of healthcare plans adds to administrative costs, particularly to providers.

The majority of large employers said they would accept less customization for a 3 percent to 10 percent reduction in fees. One way large companies reduce customization is by reducing the number of health plans offered to employees to only one or two instead of a dozen or more. Smaller employers said they would accept less customization but only if they saw a reduction of at least 10 percent.

"We've known all along that less customization of benefits reduces administrative costs," said Paul Veronneau, PricewaterhouseCoopers healthcare payer sector leader. "What's enlightening about this research is just how much of a fee reduction employers want in exchange for the customization they've been demanding."

A full copy of the report is available at

About PricewaterhouseCoopers
PricewaterhouseCoopers ( provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 154,000 people in 153 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

© 2008 PricewaterhouseCoopers LLP. All rights reserved. "PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.

Contacts:    Todd Hall
PricewaterhouseCoopers LLP
(617) 530-4185            

Lisa Stearns
The Hubbell Group, Inc.
(781) 878-8882


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