TABLE 4.2 Sources of Variation in Employment-Based Health Benefits

Corporate Philosophy on Fringe Benefits

Size of Organization

Single State or Multistate Sites

Demographic Structure of Active Work Force and Retirees

Location of Headquarters and Other Major Operations

• Region

• Size, demographics, and other features of community

• Characteristics of local health care delivery system and health insurance market

Nature of Business

• Prevailing benefits and traditions in key lines of business

• Competitiveness in these lines of business

• Competitiveness and other characteristics of relevant labor markets

• Unionization and other work force characteristics (e.g., education, turnover, and age)

• Profitability, stability

• Health care services or supplies as a line of business, or health care organizations as major customers

Legal Environment

• State and federal statutes, regulations, and enforcement

• State and federal case law

expected given the variability of employment-based benefits related to employer size, location, corporate philosophy, and business sector. Table 4.2 summarizes some of the factors that contribute to diversity in employment-based health benefits.

Table 4.3 suggests how just one factor—organizational size—may affect employer options and involvement in managing health benefits. The simplest function is to enroll employees in a health benefit plan; virtually all employers can do this. Even quite small organizations often have automated payroll systems that allow health plan enrollment, premium deductions, and other information to be entered, updated, and conveyed to others with relative ease—although the smaller the organization and the higher its employee turnover, the more of a problem these tasks become. More complex than these simple administrative activities are those that involve analysis of claims data, active oversight of insurers and administrative agents, offering choices among health plans, and direct negotiations with providers.

Larger employers are likely to have specialized staff responsible for health benefits. They are also more likely to work with outside consultants who offer a variety of technical services, such as audit or analysis of health claims data, advice on benefit plan design, development of requests for proposals from insurers or others interested in competing for the account,

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