The Future of Benefits

What lessons will C-Suites, human resources professionals, benefit and pension consultants, and the insurance industry learn from 2020 and what might be much of 2021? What did we all miss learning from SARS in 2003 and can’t afford to do post COVID-19? What will the future of benefits, pension (retirement savings), and “wellness” be post COVID-19?

We think that answer is a simple three-part strategy—Prevent, Manage and Insure. Some might say this is just common sense. 1. Do everything within reason to avoid the event from happening in the first place. 2. Manage costs during and in recovery from the event to the employee and employer’s benefit. 3. Insure against the financial risk if the event does happen.

Prevent and manage.

According to The Burden of Chronic Diseases in Ontario, July 2019, it’s estimated that the top four chronic diseases (cancers, cardiovascular disease, chronic lower respiratory diseases, diabetes) have a direct healthcare cost of $10.5 billion a year. Yet, Ontario only spent $192 million on prevention in 2016-2017. (What happened to an ounce of prevention being worth a pound of cure?)

The 2020 Sanofi Canada Healthcare Survey reported that 48% of plan members were at work with chronic pain, and 70% had both chronic pain and a chronic condition. Surprisingly, 63% of plan members between 18 and 34 who had either chronic pain and/or a chronic condition missed work or found it harder to do their jobs; this compares to 47% of plan members 55 years of age and older.

The medical definition of chronic disease suggests persistent, treatable, but not curable conditions. Another definition is an illness that lasts for an extended time. Some of the biological factors leading to chronic disease can not be changed, but many behavioural factors can. Prevent and manage.

The Public Health Agency of Canada’s Canadian Best Practices Portal for chronic diseases highlights cancer, cardiovascular disease (CVD), chronic respiratory diseases, type 2 diabetes and neurological conditions. Focusing on cancer, CVD and type 2 diabetes, the common risk factors are diet, obesity, and lack of exercise. All these risk factors are avoidable, controllable, and modifiable, and all three are intertwined.

Another health condition sometimes kept separate from others in the chronic disease discussion is mental health. The three conditions noted above all have a connection to mental health. Mental health, or poor health, should be considered a chronic condition within the employee benefits world. Anxiety disorder is a chronic condition. Depression can be a chronic condition. Insomnia stemming from a mental health condition can become chronic. All these things have an impact in and outside of the workplace. Not a day goes by without additional reports on the state of employee mental health, school-age children’s dependent health, and dire warnings about the pandemic’s impact on both long-term. No discussion on chronic disease should avoid including mental health. Put a spotlight on your Employee/Family Assistance Program and the mental health resources within the paramedical coverage. There is a mental health wellness bundle of resources waiting to be fully utilized. As a wise human resources professional that I’ve known for a while would say, “don’t set it and forget it.”

In the future, employers of choice will pay more attention to the preventative aspects of an employee benefit plan rather than to cost control. Less need for benefit claims produces less cost long term. Arguably, we don’t have data to support this belief fully. Not in Canada anyway, and some might say elsewhere too. If an employer needs a “what is in it for me?” they should focus on the investment value. How will employees perceive the value of an employer who helps them to stay healthy? What if an employer used ESG (environmental, social, and governance) philosophies on employee health? What message does your current wellness, health, benefits, and retirement savings plan send to employees and recruits?

Does your employee benefit plan provide coverage to help an employee, spouse, or dependent with diet, managing obesity? Don’t forget that the rule of thumb is 50% of your healthcare spend is from your employee and the other from spouses and dependents. Are dietitians covered under paramedical practitioners? Have you removed the “lifestyle” exclusions for prescription drugs, allowing for current and effective anti-obesity medications to be eligible? What disease state assistance is available within your Employee/Family Assistance Plan? Prevent and manage.

Insure.

The Insure part of the answer on extended health benefits in particular, and on dental too, is easy and not so easy. The math is the easy part. Having $50,000 in extended health claims last year suggests there will be $50,000 again next year, plus inflation—healthcare inflation, not CPI inflation. There will always be a healthy debate between insurance carriers and consultants they partner with about quantifying inflation as part of the negotiation process. Regardless, the spread between a carrier’s and consultant’s opinion on inflation isn’t overly wide. After the inflation level has been resolved, the cost of managing the plan expenses is added, producing this equation when setting rates/contributions: last year’s claims + inflation + expenses = next year’s cost.

The not-so-easy part is what carriers will deliver for the plan expenses they charge. The carrier of the future will bring resources to plan members, spouses, and dependents that assist in the prevention and better manage towards positive outcomes.

Years from now, but not too far off, the future carrier will hopefully be a data mining engine of prevention and managing. What claims information is locked away in a carrier’s database that could be used to identify a future chronic disease for a plan member, spouse/dependent, helping to avoid it altogether? How will AI help prevent a first-time statin (cholesterol) claim from becoming a type 2 diabetes claim in the future? How will the carrier of the future nudge, motivate, compel, and influence a plan member, spouse or dependent to better health? We know there are carriers already heading in this direction. We welcome the changes and look forward to partnering with those who deliver.

Plan sponsors of the future will be looking for assistance. So, what now? Prevent, manage, insure.

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