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The pandemic’s impact on healthcare and risk benefits

The pandemic’s impact on healthcare and risk benefits

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With the private hospital sector cooperating with the NHS to manage the pandemic, what does private healthcare provision look like for the remainder of 2020 and beyond? Should employers continue to provide healthcare insurance and, if so, what changes can we expect to see, given healthcare priorities? Will Group Risk benefits (often the bedrock of an employee benefits programme, but with design in large part unchanged over the last 20 years) now have a renaissance or will an employee agenda of freedom and choice remove the need for employers to provide these benefits? Should employers now look to reduce their long-term provision with a design more suited to the dynamics of the modern-day workforce, where few stay with one company until retirement?

Private medical insurance – what can we expect?
The inevitable impact of the private hospital sector’s secondment to the NHS was an initial, substantial reduction in private treatment, and therefore claims.  However, some claims have still been going through, albeit on a much-reduced scale, and with non-essential and non-urgent elective surgery mainly being postponed.  We believe that this is just a deferment of claims, not a true reduction; if treatment was required 2 months ago, it is still likely to be needed post COVID-19.  With NHS England now gradually releasing private hospitals, and allowing them to resume routine work, we expect claims to start increasing again. The sector is, however, engaged in a rolling contract with the NHS, and their ability to undertake routine treatment will depend on COVID-19 related cases continuing to decrease.

The inability to offer services as usual also meant that private hospitals had to innovate in how they would deliver their normal day to day activities.  In part, this was driven by one of the market-leading private medical insurance (PMI) providers, who undertook to offer their members access to consultations remotely via telephone or virtual face to face meetings.  In many cases, these remote consultations allowed patients access to diagnosis in the comfort of their home and, if urgent, onward referral to treatment.  While not suitable for every specialty (or, indeed, every individual), we anticipate that remote access to healthcare will continue throughout 2020 and beyond.

Now more than ever, the importance of access to health and wellbeing services cannot be underestimated, particularly with regards to mental health.  With so many employees working from home, access to support, information or counselling can be crucial to maintaining a healthy and engaged workforce.  Recent years have already seen an increased focus on mental health issues, and we expect the emphasis on these types of services to continue and grow beyond 2020.

Insurers overall have reacted well to the pandemic, and are now providing more proactive information and help for their members to look after not only their physical needs, but also their emotional needs, and we believe this trend will continue as we move past this pandemic. A move towards ‘total healthcare,’ with an increased focus on preventative and proactive approaches, is expected.

With the need for infection control measures reducing capacity, and funding for the NHS still presenting challenges, in our view, the value of having PMI cover over the next 12-18 months will not reduce – for either employers or employees.  Employee surveys consistently show that PMI is considered to be the second most valued benefit (after pensions), and removing cover at this time may cause employee loyalty issues, as well as potential reputational risk, as well as increased absence due to longer waiting periods for NHS services. Never has an employer’s duty of care been so important.

Group Risk benefits – what can we expect?
With the uncertainty of the pandemic impacting all of us, benefits such as Group Life Assurance (GLA) and Group Income Protection (GIP) are coming into their own right now.  These benefits provide reassurance to employees on their financial wellbeing; an integral aspect of mental wellbeing.  In our view, the role of Group Risk providers in the overall health and wellbeing of employees needs to increase, and indeed could potentially fill some of the gaps that healthcare benefits don’t currently offer.

Greater choice may also be something that Group Risk providers, currently

often reluctant to provide, will need to consider.  With an ever-changing workforce, some of the ‘old norms’ will inevitably need altering, while being ever mindful that not every employee wants complete flexibility, but rather the comfort of being looked after.  Employees are looking for more from their reward package, with tangible benefits that offer real value, and we expect to see the provision of added value benefits expand throughout 2020 and in the longer term.

Group Risk benefits can also provide support to employees who are dealing with stress and anxiety as a result of the pandemic – many providers offer fast-track access to professional mental health support, and often at a lower cost than the same or similar provision under a PMI scheme. With the addition of more embedded value-add benefits being introduced in the Group Risk market, we are starting to see a move away from a commodity-based view on Group Risk, to an approach much more aligned to a more robust Wellbeing solution.  Integration and communication are also key in ensuring that employees have a care pathway which is fast, convenient, clinically effective, and delivered at a reasonable cost.

In summary
Companies in industries which have been more significantly impacted by the pandemic, and must further cut costs, will certainly be assessing how much is spent on benefits and where possible cost savings could be made.

This may tie in with embedded benefits being provided by their current providers.  It is important to ensure that there is no overlap in benefits and that they are providing value.  Benefit premiums aren’t the only consideration, however, and the impact of these programmes on wellbeing, absence, productivity and engagement should also be considered when assessing the cost.

Broadly speaking, our expectations in the short to medium term are:

  • Traditional healthcare and risk benefits will continue to be a core part of employee benefits programmes, though the scale and value of the benefits may be reviewed;
  • Increased focus will be given to mental health as an integrated part of overall wellbeing;
  • A more proactive approach to wellbeing will take the place of the traditional ‘if it breaks, pay to fix it’ provision;
  • More choice and flexibility of benefits will be required to fulfil employees’ expectations and needs; and
  • Communication will be key to employee engagement and wellbeing.

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