by Luke Prankard, senior health and wellbeing consultant, Thomsons Online Benefits
For employers, health and risk insurance is like placing a bet against the probability of a claim occurring. The problem is the rules, odds and pricing are set to enable insurers to control their risk and stay in business and as with gambling, the house always wins.
Employers can feel compelled to keep renewing their scheme – even when the decision is outmoded or no longer best for the business.
Change is on the cards
The Competition and Markets Authority investigated the competition in the PMI provider market, and found several barriers to entry. While a series of remedies have been proposed, a question mark hangs over how effective these will be in reducing costs.
The declining number of healthcare providers, combined with decreasing scheme take-up since the recession, means that healthcare costs have continued to rise. As a result, we’re seeing the uptake of PMI decreasing among the young and healthy members of the workforce.
Welfare reform is driving costs up and with Insurance premium tax rising again, at 10%, it sits below other insurance premium taxes in the UK and Europe. We are also seeing shifts in illness type, with more and more cases of diabetes, heart disease and cancer–diseases closely linked to our lifestyle and the amount of time many spend sitting at their desks.
With so much change afoot employers cannot afford to carry on rolling the dice with their health and wellbeing spend.
Three steps to stop gambling with your health and wellbeing programme
- Make it personal: The health and wellbeing strategy in many organisations is built from legacy benefits, and is based on policies and procedures that have been built to deal with specific crises. This needs to change. You need to start by looking at your business, asking questions such as: How does the strategy impact your employees’ health? And how is this impacting your company’s ability to deliver its wellness strategy against objectives? You can then move forward and look at policies and procedures, and assess which tactics, tools and technology will aid these objectives.
- Knowledge is power – use insights to guide you: Take the time to analyse your workforce profile. Look at common claims and review what aspects of heath you can support to avoid these. Also consider the value versus engagement balance. You need to spend on what employees want, while keeping in mind what is effective. Finally, think long term. It makes business sense to align what you buy now with your organisations’ future needs in mind.
- Simplify with technology: Health hubs are simple mechanisms for displaying, communicating and engaging employees in the products and services you already provide. Simple versions of these can be built quickly, but we’re also creating increasingly complex and interactive platforms, which provide HR and reward professionals with valuable insight into benefits take-up and help determine ROI.
It’s clear that change is afoot in the way organisations approach the health and wellbeing of their employees. Tired of gambling with their benefits spend, they are re-thinking benefits that are limited to aiding already sick employees, and instead channelling funds into encouraging employees to take responsibility for their own health. In future, we’ll see more of this, and an explosion in flex pots and reimbursement accounts as a result. Technology will provide the final piece in the wellness puzzle. Taking a tech-enabled approach to wellness, employers will not only be able to better understand ROI for their business through targeted spending. But also aid and engage employees through targeted communications and improved access to advice, meeting their healthcare needs now and in the future.