Flexible Benefits – A False Economy for Healthcare

A recent survey carried out by Mercer has shown that 39% of respondent companies had seen a reduced cost in benefits provision by introducing a flexible benefits programme. That’s all well and good, but if employers think they are managing their health risk by leaving it to the discretion of their employees then,as I have argued before, this is pretty short sighted. It again raises the question as to why some employers treat healthcare as a benefit rather than what it really is,an effective risk management tool to reduce sickness absence and improve productivity.

What these employers fail to recognise is that they are handing over control of employee health to the employees themselves. By asking them to choose between say, extra days holiday or private medical insurance, for those who choose the holiday, their employer has completely lost the opportunity of early intervention and rehabilitation for them when they fall ill.

What’s the business case? Does the perceived cost saving of giving an extra day’s holiday outweigh the benefits of reducing the absence costs associated with employees waiting for treatment on the NHS?  I defy anyone to show me the economic upside of giving employees this kind of discretion.

To my mind, employers who include healthcare in their flexible benefits programme just don’t see the bigger picture. The health and wellbeing of an employee population is a manageable risk. You can’t manage this risk if you lose control of the tools that help you.

It is completely rational to suggest that for some employers, the responsibility for healthcare should not sit with compensation and benefit managers, or if it does, they should look to engage other employee healthcare stakeholders in the organisation to make truly informed and strategic decisions. What do you think?

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