As the familiar adage goes: ‘When you have your health, you have everything’. Even the UK’s beloved National Health Service (NHS) highly values employer-paid healthcare — especially speedy access to essential diagnostics. But this benefit has become unsustainable for large organisations, and isn’t a viable option for smaller ones. Arguably, it never was. So it’s time for providers and employers to shift from a price-driven mentality to a more strategic, future-proof outlook.
Thanks to spiralling costs, the increasing difficulty of sustaining employer-paid healthcare — this most desirable of benefits — is a common concern. To be fair, there are a handful of innovative exceptions, such as products that combine some of the best of what the NHS and private sector offer. Or options that use behavioural science to help keep employees engaged with health improvements.
However, they’re vastly outnumbered by the tweaks and add-ons employers make to the traditional, core model that’s barely changed in the last 30 years or so.
PMI plans no longer fit the purpose
When private medical insurance (PMI) came along, it was viewed as a rich benefit — a perk for the fortunate few in the upper echelons of corporate circles. But as its value for recruitment, engagement and retention was better understood, it became more accessible to the average person — or at least those who worked for large companies with deep pockets.
Today these companies find themselves in a daily game of Russian roulette, never knowing when the next huge claim will hit. At the root of this dilemma are advances in the medical field that have increased the financial risk of PMI coverage. Whilst the world has welcomed impressive progress in treatments for cancer and heart disease in recent years, the flipside is the possibility of astronomical healthcare costs. Claims as high as £600,000 to £1 million are rare but not unheard of.
Contributing to this high price tag, many more people are now surviving cancer. Outcomes may even be starting to breach the chronic-acute divide. And it’s common for PMI plans that provide full coverage to foot the bill not only for treatment, but also an indefinite term of ongoing care. The cost associated with a patient can run to several thousands of pounds.
Take an integrated approach for better long-term value
The cost of healthcare benefits is still important, but so are employee wellbeing and productivity, as well as corporate reputation and shareholder value. Sometimes there’s a good business reason for putting cost above all else, but more often than not decisions should focus on the long term.
Faced with a mix of workforce generational expectations, employers need to strategically manage the underlying health risk profile. This involves both the design of the healthcare plan and its integration with other health and wellbeing benefits — anything from occupational health and virtual general practitioners, to employee assistance programmes and beyond.
Single solutions can provide simple fixes
Product design solutions are available to help control costs in the near term, such as sharing health plan costs (an employee excess) or capping employer contributions. The latter is like an excess for employers. Setting a cap limits the funds employers contribute to the healthcare plan, and employees pay for any costs that exceed that amount. Whilst these solutions help tick the cost containment box, they don’t do as much to make the product meaningful and joined up.
There’s always the option of a healthcare trust arrangement, where the stop loss insurance element would help to counter any catastrophic costs. But trusts aren’t for everyone and they’re certainly not viable for mid-sized companies.
However, size-neutral healthcare cash plans are now a promising opportunity, since they’ve debunked the view that they’re a poor relation to PMI and proved their value in managing health and wellbeing. This is particularly the case for providers willing to engage in bespoke designs, and employers that have the right appetite and a wide enough employee base. That said, the plan’s fixed financial limits may be a turn-off for some, and replacing an existing PMI scheme with a health cash plan is not advisable.
In an entirely different category, there are apps and wearables — so many, in fact, that it can be hard to separate the good from the bad. The best apps are generally those that engage with a user’s other devices and wearables, and tangibly reward positive behavioural changes. Some healthcare providers are even integrating apps and wearables into their offering. Besides integration capabilities, they should provide a good communications interface for the user and aggregated data for employers.
Make healthcare more meaningful now and in the future
When providers and employers are able to expand the healthcare focus beyond price, opportunities open up to bring products to life that work harder for better outcomes. This starts with exploring the current approach, and finding inroads to more tangible and meaningful choices.
The latest software helps link existing health and wellbeing solutions to the healthcare scheme. And securing the success of this technology initiative requires the right confidentiality safeguards. Any solution worth its salt will also manage information on employee absences. This may include the number of absences, the reasons for them, the type of employer help provided, the need for extra or different resources, and effective communication that wins employee buy-in.
In order to avoid the possible pitfalls of healthcare trust arrangements without giving up flexibility and cost control, it can pay to take a closer look at insurer risk pricing. Working with the provider to identify specific unknown risks in more detail allows each risk to be quantified. Often, unnecessary pricing can be exposed and removed.
There are many ways for employers to keep healthcare costs in check. Some are right for some. Others are better for others. But separating the two types of measures taken — the standard short-term from the bespoke long-term — will make the competitive difference for all employers.
Healthcare cash plans are now a promising opportunity, since they’ve debunked the view that they’re a poor relation to PMI and proved their value in managing health and wellbeing.