A whole new approach to healthcare benefits
- Herman Schoeman, MD of Guardrisk

International trends indicate that rising healthcare costs are among the main factors forcing employers to look for alternative ways to manage their employee benefit (EB) programmes. According to the World Health Organisation, 4,9-million deaths a year can be attributed to smoking, while 7,1-million deaths are directly caused by high blood pressure; high cholesterol kills another 4,4-million. Lack of physical activity, low fruit and vegetable intake and obesity are high risk factors too: 1,9-million deaths are caused by the lack of regular exercise and 3-million people die because of poor nutrition and obesity. Sadly, the incidence of chronic illnesses among younger people is increasing, especially in emerging economies like South Africa.

The international trend to seeking different solutions for EB augurs well for South Africa's life cell captive market as corporates are increasingly looking at alternative ways to explore the flexibility of the alternative risk transfer (ART) market for various employee benefits, in much the same way that many companies are using the ART arena for their own corporate risks. Within an ART structure, the company can pass the benefits of proactive initiatives like wellness programmes onto their employees, creating a win-win situation in which the employer keeps EB costs down and employees get better value for the money spent.

A company's healthcare benefits can be a considerable competitive advantage when it comes to attracting and retaining quality staff. But more and more companies are finding it extremely difficult to manage the cost of providing health care benefits in the face of continuously rising healthcare costs. While there is no doubt that wellness programmes have a role to play in terms of keeping employees healthier, which of course reduces costs, the question that's now being asked is whether they are doing enough.
An American company, Clarian Health, has taken a stand that could forever change the way that healthcare programmes work. In addition to rewarding employees for participating in wellness programmes (as many South African companies do) Clarian Health is now also punishing those who disregard health warnings and risks by charging them more for their health insurance.

Starting in 2009, Clarian's employees will be charged $5 per pay period fee for each of a specified group of high risk behaviours or conditions. This includes tobacco use, body mass index over 29.9, blood pressure over 140/90, blood glucose over 120 and LDL cholesterol over 130.

Clarian decided to go this route because, even with several wellness programmes in operation, its health benefit costs kept climbing; rising by 15.7% in 2007 and 12.9% in 2006. For now, Clarian is breaking new ground, but benefit experts predict that more and more companies will start using both incentives and penalties to ensure that employees become accountable for their own health.

In a way it's just extending the principle of prudent risk management (on which the ART industry is based) all the way down to the way that employees live their every day lives.

For further information please contact:
Herman Schoeman, MD of Guardrisk
Telephone: +27 11 669-1001

Issued by:
Melanie Davis, PR@Work
Telephone: +27 11 615-3309 / +27 83 225 7450