It is not unusual for employers to change health insurance plans. For example, an employer may switch to a plan with lower monthly premiums and a higher deductible or may switch from offering a preferred-provider organization (PPO) to a health maintenance organization (HMO).
Employers may make such changes to achieve cost savings over the previous plan, or they may do so in an attempt to improve employee coverage or benefits utilization. Many health insurance plans are inherently complex and nuanced, such that employers and employees alike may experience unintended positive or negative consequences when changes are made. Given this uncertainty, it is important for organizational decision makers, particularly benefits experts, to do their due diligence when determining what changes to make to a plan; due diligence might include performing a benefits utilization analysis, employee opinion survey, or costbenefit analysis.
Consider an organization that originally used a three-tiered employer costsharing system. Employees who earned the least income were placed in the first income tier and employees who earned the most were placed in the third income tier. Employers in the lowest tier received the highest costsharing contributions to monthly insurance premiums from the organization, whereas those in the highest tier received the lowest. In an attempt to refine the cost-sharing tier system, decision makers subsequently designed and implemented a five-tier system based on the same costsharing principle.
The decision makers in this scenario hoped that this change would make benefits administration fairer. Unfortunately, there was an unintended consequence that adversely affected some of the most vulnerable employees. Specifically, some employees who were originally in the first tier subsequently moved to the second tier based on this change. This resulted in higher monthly premiums for those individuals, leaving them with lower take-home pay after the benefits were deducted from their paychecks. Some of these individuals ended up leaving the organization.
If the organization had applied data analytics to model the potential effects prior to making the decision to implement the new five-tiered system, they might have anticipated the negative impact on certain employees. This example illustrates why it is an organization’s ethical responsibility to identify potential unintended consequences of changes to benefits. By leveraging the available data, an organization can avoid an unfortunate outcome.

Questions 

1. In your opinion, to what extent are organizational decision makers ethically obligated to provide employer-sponsored health insurance for their workers? Give examples to support your answer.
2. In the scenario described, how might the company’s HR administrators have intervened after the new five-tiered system was implemented to prevent employees from leaving due to reduced take-home pay?