Stephen Hackett: Health management and wellness: tackling a growing global issue

This article is supplied by Aon.


A combination of factors means health insurance benefits are under increasing financial pressure globally. The cost of health insurance is rising by 3-5% above gross domestic product (GDP) in most countries in the world.

This puts increasing pressure on employers that provide health insurance as part of their benefits offering. So why are premiums rising?

The key reasons are: people are living longer, so social care is under extreme pressure; medical cost inflation continues to rise rapidly in most countries; lifestyle risk factors are growing globally, which means non-communicable disease is now a greater global burden than communicable disease; workforces are ageing in most countries; and employers face competitive pressure to expand the scope of private health benefits.

There is also pressure in many countries for employers to offer retirees access to group health insurance.

It is evident that employers need to radically rethink their approach to health and wellness to counter the rising cost of insurance, as well as to maintain a healthy and productive workforce.

Aon Hewitt’s most recent global Healthcare survey, published in December 2012, demonstrates that employers recognise this. Respondents’ main desired outcome from their health strategy was to ‘improve the health habits of their population’. Of the priority tactics cited by respondents, all the top five were wellness-related. There is a clear appetite for improving employee wellness.

In terms of return on investment, time and money spent on wellness can be well rewarded. Increased employee wellness can lead to improved health metrics, which, in turn, impact positively on insured benefit premiums; improved productivity metrics, leading to direct and indirect cost reduction; and increased employee engagement, which has been proven to increase productivity further.

But what we are seeing is a disconnect between employers’ goals and the actions they are taking to deliver them. When asked about the components of their strategy for improving workforce health, only 12% of survey respondents have a strategy for total wellbeing, and only 23% have an absence management strategy. 

We see these two aspects as crucial to any successful wellness strategy. A robust absence management process that captures and addresses the causes of absence at an early stage can deliver accurate management information on absence and its causes, and can help to bring about early intervention, providing support and advice for employees. A strategy for total wellbeing brings together all elements of an employer’s health and wellness provision and ensures a holistic approach. 

The fact that so few organisations have such a strategy is a cause for concern. Employers could take some relatively straightforward actions here that could deliver significant, easily evidenced change.

A focus on health management is good for employees, in terms of: less sickness absence; decreased reliance on sick pay; fewer long-term disability claims; and lower turnover.

It is also good for employers in terms of: lower retention and recruitment costs; lower temporary staff costs; an improved health and safety record; and good governance.

So where to start? We recommend an audit of employers’ wellness and absence management policies, which should, ideally, work in an integrated way. Once the audit has pinpointed areas for action, employers can devise a strategy focusing on these priority areas.

Implementation would then follow, accompanied by a communication strategy to introduce the new approach to employees and get their buy-in. Ongoing monitoring is then vital to ensure the approach is delivering on its aims, and to make sure new targets are met and achieved as appropriate.

Once employers start to focus on an integrated employee wellness programme, the results will be evident. They will have taken the first steps to tackle a key global issue for employers.

Stephen Hackett is head of health and risk at Aon