Debi O’Donovan: Health benefits march to a different tune

“Our show begins in five minutes,” booms the tannoy announcement over the upbeat music ahead of the 8:30am opening session of WorldAtWork’s Total Rewards 2011 conference.

The two thousand-seater ballroom at the San Diego Convention Centre is filling up with coffee-clutching, Blackberry-wielding reward managers ready for two-and-a-half days of inspiration on all things benefits, total rewards (with an ‘s’ here in the USA), executive rewards and work-life (which includes the all-important healthcare benefits).

But how our American reward peers do conferences is not the only striking difference between them and us in the UK.

The first thing that will strike any UK benefits manager when crossing the pond, is that over here when you talk about ‘benefits’ it often refers to, in the first instance, healthcare benefits.

This observation was borne out during a case study presented by the newly merged Fortune 25 banking group Wells Fargo in one of this afternoon’s sessions – I counted 30 health and wellness-related perks listed on a power point slide labelled ‘benefits’ (although, to be fair, one of them was ‘financial wellbeing’, so they were not exclusively healthcare).

Healthcare benefits are to US employers, what pensions are to UK companies.

Speaking to the compensation manager of one of the world’s largest internet domain name firms (not named here, simply because we were talking off the record at the WorldAtWork chairman’s reception last night), she explained that the health package an employee gets is often a bigger draw than the pension that might be on offer.

Her own company is particularly generous with its benefits, offering a fully-paid health plan with no cost sharing required from staff. However, over the past year even this cash-rich privately-owned firm has had to restructure the plan to cap costs after a 29% hike in premiums due to over enthusiastic claiming on chiropratic treatments (these are now limited to just 12 visits a year).

Restructuring healthcare benefits at US companies has not been uncommon in recent years – something many a UK company which offers private medical insurance will be familiar with as we too battle with medical inflation (typically about 12% in the UK).

My dinner companion pointed out that her previous company (which she left 18 months ago), had made several changes to its health benefits in order to cap costs. It had put in restrictions on treatments covered and changed its cost-sharing policy (many US employers share the cost of health benefits on, for example, a 60/40 or 25/75 basis with the employer paying the higher amount).

As many as 90% of US employers claim to have a wellness programme in place. Not surprisingly, their number one objective for such a programme is to control costs, according to the Buck Consultants Global Wellbeing Survey 2010. This state of affairs put this region out of step with the rest of the world. All other regions tend to rank controlling costs much lower down their list of objectives for offering wellbeing programmes with issues such as productivity/presenteeism and morale/engagement taking top spots.

That said, the wellness initiatives being implemented by US employers (no matter the primary driver) are world leading. All those absence management strategies, health fairs, flu jobs, healthy eating campaigns, and so on and on, are bearing fruit in a business health sense.

Analysis by Buck Consultants shows that the cost of health benefits is merely 20% of the total cost of employee health. The big cost (80%) of employee ill health relates to the impact on productivity and engagement if employers do not tackle wellbeing.

So our US cousins might do things slightly differently and perhaps with a little more fanfare that the average Brit is comfortable with, but they can teach us a thing or two about employee (and therefore business) health and wellbeing.

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