Could employers play a key part in boosting the health of the nation’s ailing workforce?

A report by the Association of British Insurers (ABI) has revealed that the majority of people who used insurance to access vital healthcare services in 2022 did so through workplace schemes. Therefore, could employers play a key role in supporting employee health, providing them with access to vital services and easing the social and economic strain caused by the UK’s ailing workforce?

Britain is currently experiencing record numbers of non-participation due to long-term illness. Recently, the Office for National Statistics (ONS) revealed that an estimated 2.8 million people aged 16- 64, around 6.6% of the working age population, are neither working nor seeking work due to long-term sickness- the highest number recorded since 2012.

Factors thought to have contributed to this crisis of ill-health include a high prevalence of long-Covid and sustained budgetary pressures increasing the strain on an already struggling NHS, resulting in long waiting lists, vital treatment and procedures being delayed, and a public health service unable to meet the growing needs of a nation whose health is rapidly declining.

Such high levels of inactivity have introduced significant social and economic challenges, exacerbating the labour and skills shortage, increasing the risk of rising inflation, and contributing to a stagnant economy. As Jane Gratton, Deputy Director of Public Policy at the British Chambers of Commerce, notes:

“Businesses are growing increasingly concerned about higher levels of inactivity and its economic impact. It is impacting on growth and inflation […] Until we get more people permanently back into the workplace then the upside risks of higher inflation and interest rates will remain.”

However, ABI’s report, Growing demand: increased use of health and protection services in 2022, highlights that employers could play a crucial role by providing employees with access to vital health services, and the importance of insurance to procuring these and providing financial support.

The report highlights substantial increase in employees relying on workplace schemes to access health and protection services, revealing that 1.3 million (75%) of the 1.8 million people who accessed healthcare through health or protection insurance in 2022 did so via workplace schemes.

Data also revealed that insurers arranged 1.2 million mental health counselling and therapy appointments in 2022- 94% of which were accessed through a workplace scheme- with 192,000 of the 200,000 people who used such services using workplace insurance. The take-up of Virtual GP appointments also increased in 2022, with almost 600,000 (87%) who used Virtual GPs having done so via an employer’s scheme.

According to ABI, the increased use of workplace schemes to access health services demonstrates a growing demand for an easier, financially viable route to access vital health services and that by providing health and protection cover, employees could support workers to stay remain in work or return sooner.

For instance, with the UK mental health crisis amongst the working age population a key driver for non-participation, employers could enable employees who are, or will, suffer from mental ill-health to stay well and in work by providing access to support through schemes, which would otherwise be unobtainable via the NHS, or too expensive to seek privately.

The report also refers to the importance of access to primary preventative services to boosting employee health proactively and pre-emptively, revealing that 73% of primary prevention take-up in 2022 was through employee provided insurance schemes. ABI suggests such services could help employees to adopt healthier behaviours, prevent ill-health and remain fit for work.

Overall, the report reiterates that workplace health policies could boost overall workplace health, decrease absence due to long-term ill-health, or aid people in returning to work sooner, by enabling employees to access treatments for a wide range of conditions, fast and at an earlier stage, reducing the chance that conditions will escalate and require more intensive, costly treatments.

The report also outlined the significant economic benefits that could be delivered by workplace health and protection insurance. An analysis by WPI Economics which revealed that, in 2021, the use of health services through insurance increased labour supply by 12,500 full time equivalent workers, prevented around 14 million days of long-term sickness absence, and generated £6.1 billion in financial benefits across businesses, the wider community, and Exchequer.

With businesses suffering disruption and a significant labour shortage due to Britian’s declining health, the latest data may incite more employers to provide health and protection insurance for employees, not only to limit long-term illness and absence, but to incentivise future employees struggling to access vital services to join the workforce.  

Furthermore, as ABI notes in the preface to its report, implementing an insurance model to support workplace health would mutually satisfy the interests of workers, employers, and insurers- all whilst relieving strain on the state. Insurers have an economic incentive to avert long-term sickness and medical treatments, workers want to stay healthy, and employers want to avoid disruption and absenteeism, whilst the state benefits as pressure on the NHS and GP surgeries would be relieved, and fewer people too unwell to work means higher income tax receipt and lower social security payments.

ABI calls on government to incentivise employers to offer health and protection cover in  workplace 

To incentivise more employers to offer health insurance to employees, ABI has urged the government to:

• Increase the rate of statutory sick pay, make it payable from the first day of sickness absence, and available to all workers earning less than the current lower earnings limit.
• Implement ‘phased returns to work’ in the sick pay system to support the rehabilitation of employees after long-term illness.
• Allow SMEs to claim back a proportion of sick pay costs if they have effective systems in place to support workers back into the workplace.

Acknowledging that the tax on buying health and protection insurance may prevent businesses or low-earning workers to afford it, the ABI has further called for the Government to:

• Cut the standard rate of Insurance Premium Tax (12%)
• Remove National Insurance Contributions (13.8%) paid by employers for health insurance
• Exempt health insurance premiums from employee-paid income tax
• Remove the double taxation of Group Income Protection (GIP) purchased through salary sacrifice.