Big Picture Healthcare Articles

America's workplace is aging, and many experts have suggested this is a problem. With aging workers, healthcare costs can be significantly higher than for younger workers.

Healthcare costs are rated by age, and by claims experience. While older workers tend not to have more claims than younger workers, when they do get sick or injured, they do not bounce back as quickly. When a company's average age rises, their healthcare costs rise as a consequence.

It has been suggested by benefit consultants that these high healthcare costs can:

Obviously, no CFO or VP of HR would be interested in contributing to any of these dire predictions.

Yet these predictions look at benefits in a vacuum. They suggest that other elements of the talent picture are fixed, which of course, they are not.

In most cases, older workers:

And while older, more experienced workers tend to earn more than newer workers, often the differential is small. Sometimes older workers who have not been promoted rapidly actually make less than their younger counterparts doing the same job function.

All of these attributes tend to mean that older workers are a good talent value for their salary dollar.

If an older worker is more productive and more effective, per dollar, if the healthcare costs are somewhat more, it may still be a good deal. In fact it usually is. That means that rather than eating into the bottom line, the older worker is contributing to it faster than his newer, greener counterpart. Older workers need to only be 8% more productive than their newer counterparts to justify the increased cost of the benefits.

In some cases older workers are 50% more productive than their newer counterparts, simply because they know the people to help them get the job done faster.

So, when you hear benefit consultants lamenting the cost of older workers' benefits, and suggesting that older workers are costly, you may choose to think again. In many cases they are a bargain, in spite of their benefit costs.


Consider the following before taking any drastic workforce measures.

Predictions of widespread worker shortages as a result of baby boomers retiring are overstated. Many baby boomers will continue working past the age of 65. Some will work because they do not have enough resources to comfortably retire. This may be because they did not plan well, or because downsizing, outsourcing or divorce put a hole in their best laid plans. Others will continue to work, or create new careers after retiring from their primary career, because they love work so much, they cannot imagine a life without contributing something and cannot imagine a life without the stimulation a working environment provides.

The outsourcing trend will continue. We have a global market for labor. Any skill that can be taught that goes into any product or service which can be exported, will be exported. Both the labor and the product. Outsourced jobs will not come back to this country. This means that the projected labor shortage may not be as large as predicted either. This also will mean that our labor needs to be incredibly productive, and sometimes older workers are just that.

Age discrimination is unfortunately high in the workplace. As a result, aging baby boomers are very loyal to employers who work with them in creating flexible ways to continue to work, as they age. Older workers tend to fall into two groups. The first group has risen quickly in the organization or industry to executive positions. The second group has not. The first group can call their own shots. The second group is more vulnerable to age discrimination and downsizing.

This second group will be extremely loyal to employers that give the opportunity to contribute their skills in a position they enjoy doing. They may not be ambitious, but they want to contribute. When there is a crisis, and an effort above and beyond the call of duty is required, these loyal employees not only do the majority of the ordinary daily tasks of the business, but they also go the extra mile, because they are loyal. Newer ambitious workers will jump ship for a better opportunity quickly, wasting your investment in their development.

Older workers acutely aware of age discrimination may tend to be more tolerant of less aggressive career paths of flatter organizations, in exchange for respect and that all so coveted group health insurance. Because they are more aware than their younger counterparts of the costs of purchasing individual coverage, which is often twice the cost of group coverage, even if the individual would pay the entire costs, simply because groups have negotiating power and group underwriting. Individuals have neither, so pay a premium.

With potential shortages of certain groups of skilled labor, as baby boomers retire, it is effective HR practice to work with aging baby boomers rather than attempting to get rid of them because of their healthcare costs. One of the areas of shortage will be management expertise. Over the past 20 years, many of the middle management jobs which provided hands-on management skill growth have been eliminated. Much of the management expertise today resides with specialty consulting and IT companies. Ironically, older workers tend to have the maturity to have developed management expertise just by living and trial and error. Their expertise can be put to good work. They can quickly fill management worker shortages especially in companies with which they are already familiar. Part-time work can be a win-win, with the ability to leverage industry and leadership expertise, while allowing them to work less, as their energy is no longer up for 24/7 schedules. Jobs can be shared and benefit costs split, or benefits can be voluntary, contribution based.

So, the next time you see a report from a benefits consultant suggesting that older workers are not cost efficient because their benefit costs are too high, think again. Next time you see a report suggesting that older workers should be outsourced because benefit costs are too high, reconsider. And next time you get a bill from your health insurer, where the annual cost of the group has gone up by 10, 20, 30, maybe even 40%, allegedly because of the group make-up with too many workers who graduated from 30s to 40s, or from 40s to 50s (since insurers tend to age rate in bands of years) consider that even if healthcare costs are rising, what other productivity are you losing if you abandon your older workers. Even if healthcare costs are 15% of your organization's total P & L, and went up 40% in the past period, there are still many other elements of productivity that even that cost out. . Leverage your older workers. They are one of the best bargains you have.