Insights into Private Health Insurance
What value can we put on our health?
Like most developed countries, health care is a key issue for Australians. With a rise in chronic illnesses, mental health conditions and an ageing population, the need for appropriate health care is increasingly important. Yet, we are seeing a large proportion of Australians cancelling their private health insurance at an alarming rate. And with legislation a greater risk than disruption, Australian Prudential Regulation Authority are warning Labor Leader Bill Shorten that the proposed 2% cap on premium increases will see 20 of the 34 health funds losing money within 2 years. APRA’s senior manager for policy development, Peter Kohlhagen, last month described the health insurance industry as being "under some duress at present". At the Health Insurance Forum, Peter remarked that “challenges to the industry and sustainability of business models continue to build”.
So, why is this the case and how can organisations assist their employees better manage their health?
We know that most Australians see value in health insurance, however are finding it difficult to justify the increasing costs against a backdrop of flat wage growth. With our ageing population we continue to see claims inflation beyond CPI, essentially making health insurance more expensive every year. The opportunity for employers therefore is to support their employees through the provision of wholly or partially subsidised health insurance for their employees.
In addition to the improving employee engagement through the provision of a valued benefit, organisations will benefit from a healthier and more productive workforce. Most leaders will be all too familiar with the impact that the health of their employees can have on productivity. However, wellbeing is often misunderstood.
Whilst most employers recognise the importance of having a well-defined, well-communicated wellbeing program, they are not employing strategies that best enable these outcomes. Recent statistics show that 36% of organisations offer a variety of health and wellbeing programs, but have no formally articulated wellbeing strategy.
Corporate wellbeing encompasses everything an organisation does to contribute to the overall health of their employees. From health checks and flu shots, to financial wellness and domestic violence support, through to flexibility and benefits that allow employees to bring their whole self to work – employers need to take a full picture of what employee wellbeing looks like to be able to truly impact engagement.
And this is where Private Health Insurance should come into play. Viewing an employees’ health journey as a critical component of their wellbeing journey, employers can make a positive impact on Australia’s health and peace of mind. Beyond driving down absenteeism and mental health improvements, by incorporating a solid Private Health Insurance plan, employers can support their employees while also looking after key scorecard elements such as engagement, productivity and profit levels.
What does the future hold for Private Health Insurance?
With health innovations and technologies emerging every day – from smart phones that hold a user’s medical records and genome, to wearable technology that track diet and movement – the future looks bright for Private Health Insurance. Automatic booking into a dental check-up? Reminder to take a few restorative breaths? Suggestion for an appointment with a local physio after those slower laps of the oval? Technology will undoubtedly result in not only the uptake of valuable extras, but a shift in overall wellbeing suggests nib.
With this focus on holistic health, nib also anticipate the emergence of subscription-based insurance models, where life insurers and health insurers could work together to take a more well-rounded view of health and wellbeing.
However, as executives will be well aware, employers also need to come on the journey to adopt innovations and take action to keep up with the wellbeing expectations of their employees.
As technology advances, as the emergence of telehealth impacts workers, as we inevitably become more connected to work than we ever have been via our agile 24/7 work-lifestyles, whether we like it or not corporate Australia has an opportunity, some say a responsibility, to take the lead on providing access to preventative health and holistic approaches to people risks. Some businesses are surfacing as market leaders on this front.
One organisation taking the wellbeing of their employees seriously is Medibank, who regularly analyse their claims to determine trends in people risks, and introduce preventative wellbeing practices to address key areas of focus. For example, they recently incorporated sit-stand desks into every workstation, and have encouraged every staff member to make a health pledge on their #BeBetter wall. With buy-in from leadership, their wellbeing practices are not just encouraged, but are expected. They subsidised health insurance as their signature benefit and are beginning to promote the proactive use of ancillary services as a preventative health measure. They pride their evolution in this space on a culture that is health-first in its focus. From internal stairwells that increase incidental exercise to a mature Diversity & Inclusion practice, they see wellbeing as the result of many critical elements.
Where do you start?
Understanding where to begin with moving the needle on preventative health and Private Health Insurance can be a challenge, and one that requires in-depth data analysis. At Aon, our experts regularly guide companies through this process.
This generally begins with a procurement of all company and employee claims – across Private Health Insurance, Workers Compensation and Salary Continuance Insurance – which is then merged with a collection of additional softer data-points, including absenteeism rates, engagement scores, and Employee Assistance Program utilisation. With expert analysis and the use of Aon’s Pulse data and analytics system, we uncover the foundational cause of claims, to determine key people risks. Focusing on the areas that can be positively impacted by intervention, a broking strategy is prepared to identify insurance partners who will buy-in to make a tangible impact on your company and your employees’ wellbeing journey.
Working closely with these insurance partners, we take actions to impact the overall health of your organisation. A welcomed result? Improved productivity and profitability along the way. And a refreshing result of this approach is a more sustainable insured benefits program downstream due to improved claims profiles.
If your company would like to begin seeing an improved profile, lower premiums on people risk insurances, a more sustainable insured benefits platform, and most importantly, increased employee wellbeing and satisfaction, please reach out to Aon’s People Risk team.