Who should manage employee health?
If employees were healthier both employers and employees would benefit.
Employees have a direct and obvious interest in improving their own health. For employers, the biggest potential benefits come in the form of reduced labor costs and improved workforce performance. This issue should be a win/win.
So far however, US employers have approached this challenge from a command-and-control, carrot-and-stick standpoint. They have offered employees financial or other incentives in exchange for their health improvement, risk reduction and chronic disease self-management efforts. For example, employees in the US can “earn” extra days off, reductions in their health insurance premiums, cash payments, gift certificates, and similar rewards for participating in health management efforts that make specific health behavior changes (e.g. quitting their tobacco use) or achieving specific health metric changes (lower weight, blood pressure, cholesterol, etc.).
A recently popular form of insurance in the US is “Consumer-Directed Health Plans” (CDHP). However, most CDHP programs also ‘incentivize’ employees by increasing the financial risks of ill health: by increasing the deductibles they must pay before the insurance plan take over. These deductibles are in the $1-2,000 range for individuals, and $2-5,000 for family coverage.
But now there is another, more buyer-centric, approach that could work much better. This is the concept of Employee-Directed Health Management (EDHM).
EDHM looks at the employer/employee contract from a different angle: the angle of the individual. It lets individuals make their own decisions about their health plans, choosing the key elements of the strategy and initiatives they will participate in including how their health will be assessed, improved, and what they will gain thereby. It also broadens the scope of the relationship beyond ‘payment for work done’ to how the employer can help individuals enhance their ‘life assets’ – and how, in turn, individuals’ improved life assets can help the employer reduce costs and improve performance.
The five key life assets involved in employee-directed health management are:
· Health – mental, social, and spiritual, as well as physical – including energy levels, “morale” and related work-affecting dimensions
· Power – reality and perceptions regarding one’s degree of control over work and life demands, plus a degree of autonomy or protection against unwanted control by others
· Talent – reality and perceptions of personal capabilities, self-efficacy, value in the labor market, self-esteem, etc.
· Time – amount of discretionary time available and the degree to which it can be managed. (Because working to improve one’s health requires an investment of time, this is usually a ‘cost’ rather than a benefit of such initiatives.)
· Wealth – income and assets. Employees may receive financial incentives to buy healthier food, exercise equipment or fitness center membership, or to make life style changes that positively their health (e.g. quitting smoking, reducing alcohol or eliminating illegal drug use). They also benefit financially from reduced sickness-related costs. (For example, obesity reduces lifetime earnings)
What’s in it for the employer? Current estimates suggest that improved employee health will improve US employers’ financial performance by two to five times as much as healthcare cost reductions alone.
UK and other European employers do not have as much to gain from EDHM as their US counterparts (because they do not pay health insurance) but they still stand to benefit from the broader effects of improved workforce health: higher productivity and performance and reduced staff turnover.
To find out more, see the full White Paper.