Cutting health plans is false economy

Mar 07 2003 by Brian Amble Print This Article

The unstoppable rise in the cost of private healthcare plans, at several times the rate of inflation, has been highlighted in recent surveys.

It is tempting for employers to cut back on these apparently unaffordable benefit schemes, and it is suggested that the next big development in the UK - following the US trend - may well be defined liability plans where employees have a capped amount to spend on private health treatment each year.

According to research by Mercer Human Resource Consulting, a key reason for this cost increase is that more employees are choosing to use private over NHS treatment. This is aided by the private sector's ability to cope with more complex medical conditions - once the sole domain of the NHS.

Steve Clements, European Partner at Mercer said: "For employers, the benefit of this increased use, if targeted correctly, is that employee illness is treated more promptly with the effect of reducing sickness absence and increasing productivity."

He added: "Rather than reducing healthcare treatment through defined liability plans, or other means, employers should consider an alternative approach: that of strategically investing more in employee healthcare and managing this effectively as a way of reducing sickness absence. If they don't, the narrow approach of cutting healthcare benefits will merely increase employment costs elsewhere."

Mercer HR Consulting has been conducting research into employer attitudes and provisions for employee healthcare. The full results of this survey are expected to be released in April.