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'Health is Everyone’s Business’: government recognises how insurance supports employee health but measuring outcomes will be crucial to further progress

This week, the Government published its response to the Health is Everyone’s Business green paper. Focusing on the link between work and health, the response signals increasing recognition of the value of insurance in minimising the risk of ill-health related job loss through better workplace health. The challenge now is for insurers to demonstrate the role of insurance in supporting health outcomes.   

The proposed reforms seek to encourage and support employers to invest in the health and wellbeing of their employees. There is strong evidence that employers recognise the link between health and work and the need for less sickness absence, more productivity, and better workplace retention. To meet this challenge, the package of proposed measures aims to strike the right balance between Government support and employer responsibility.  

Proposed occupational health (OH) reforms have a strong focus on outcomes and suggest a greater role for insurers as an effective route to high quality OH services. The ABI is working with the DHSC's 'Getting it right first time' (GIRFT) team and the DWP to pilot a best-practice methodology to improve service quality and employer choice in the OH market.  

Whilst the response also acknowledges that the majority of employers see statutory sick pay (SSP) as critical to incentivising positive behaviour change, government notes that now is not the time to make changes to SSP that might increase the short term financial burden on employers. Therefore, government proposes to further consider the future of SSP.  

Recognition of how insurance supports employee health  

Stretching cropped.jpgThe green paper response highlights a noticeable shift in the perception of insurance. In addition to the better-understood financial benefits, the Government acknowledges the value of insurance as a model for the delivery of expert-led services.  

As a result, the Government pledges to work towards increasing awareness of the benefits of protection insurance among employers and the self-employed. The Government also outlines their support for a ‘consensus statement’ proposed by GRiD, which will strengthen employers’ understanding of the link between good work and good health. 

Changes to Statutory Sick Pay seem likely – just not yet 

The Government makes clear the important role Statutory Sick Pay (SSP) could play in incentivising positive behaviour among employers. The response shows a desire from the majority of employers for a reformed SSP system. A key theme among respondents is the priority of changes that promote the conditions for good practice, over solutions with limited scope for positive behaviour change.  

However, the Government maintains now is not the right time to make any changes to SSP system, such as extending SSP to employees below the lower earnings limit (supported by 75% of respondents). Far from a wholesale rejection, the Government proposes to give further consideration to the important issues raised and the future of SSP.  

Subsidy for occupational health services to be tested  

Turning attention to occupational health, the Government response begins by setting out an expanded definition of OH services. Absent from the initial proposals, this new definition provides outcome-focused criteria for what counts as OH. This includes any services that help people remain in work, reduce sickness absence, increase productivity, and promote longer, healthier lives.  

The wider definition acknowledges that a narrow focus on traditional OH services does not capture the full spectrum of value. Under the new definition, many services offered through insurance count as OH services. This suggests a recognition from government that insurance provides positive occupational health outcomes and an important route to health services. 

The response sets out plans to test a new OH subsidy. The subsidy will be a financial incentive, aimed at SMEs and the self-employed, to improve access and encourage increased take up of OH. Feedback included in the response indicates that treatment services, advice, and assessment will be prioritised by the subsidy.  

The expanded definition of OH services suggests that insurers providing expert-led OH services will be included in the subsidy scheme. This is supported by the Government’s explicit commitment to continuing discussions with the insurance industry to improve understanding of different routes to OH provision.  

The importance of measuring health outcomes 

The Government also puts forward a strategy to support provider improvement and employer choice in the OH market. The aim is to develop and implement a ‘best-practice methodology’, starting by piloting a set of outcome-linked metrics to measure the quality of OH services. The ABI recently accepted an invitation to sit on the Expert Reference Group for this project, which provides an opportunity for the sector to align our own work to measure health outcomes with the GIRFT project. The ABI will help to shape the project at every stage, by providing insights from the insurance industry. It will need wide-spread support from protection and health insurers to ensure we make the most of the opportunity.  

This strategy suggests a shift away from a system in which OH provider quality is primarily evaluated by accreditation. Instead, we should see a more competitive and democratic system, in which quality is determined by outcomes and measured by improved data. 

On the right path but much more to do to  

The Government response to the consultation demonstrates an improving understanding of the value of insurance. As a result, there is evidence of a greater willingness to utilise and promote the benefits of insurance towards minimising the risk of ill-health related job loss through better workplace health. This is particularly evident in the proposals for defining, measuring and incentivising OH. The new expanded definition of OH services indicates that insurance will be included in the proposed reforms, such as the subsidy to improve access to OH.  

The response should be seen as a positive step for insurers. The improved recognition of the role insurance plays in supporting government objectives to build a healthier workforce is a step in the right direction

But we know positive mood music doesn’t always translate in logical policy making – as highlighted by Dan Gallon’s blog on HMRC’s policy approach to taxation of employee benefits, which is out of step with DWP’s objectives to support a healthy workforce.  

The response also alludes to the challenge of evidencing value. The pandemic has created a dichotomy: employers increasingly see the need to support employee health but the need to see value for money is as important as ever. Even with subsidies or changes to SSP, employers will want to see evidence of how services can tangibly make a difference to their employees’ health before investing.  

Last updated 23/07/2021