Benefits innovation must strike a balance between convenience and risk

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Innovation in the employee benefits world has historically happened in relatively small increments.

Besides some subtle tweaks, plan design has changed very little. Recent enhancements to the employee experience include the implementation of online claims processing and various apps to communicate information more dynamically. Insurers have invested heavily in both their administration- and claims-paying systems to become more efficient and, generally speaking, make it easier to do business with them. We’re also starting to see some good innovation in the area of drug plan management.

None of it is particularly disruptive. Instead, it’s more evolutionary.

So are we entering a new period of disruption within the employee benefits world? Disruption is happening in virtually every aspect of society, so why can’t it happen to employee benefits? And given the somewhat measured pace of change within the benefits industry and plan sponsors’ cautious approach to embracing significant new developments, what makes today any different from yesterday?

There are many reasons to believe disruptive change will become the norm and not the exception. Plan sponsors that seek out and embrace the changes will have the opportunity to truly differentiate their employee value proposition.

Some of key drivers of disruptive change in the benefits industry include:

1. Changing employment deal.

Traditional views of employment are changing, from how we work to who does the work from where and for how long. In the future, the workforce will include more contract workers brought in for specific projects or time frames. Many people will work remotely and the concept of the office will continue to evolve. Both office and manufacturing jobs will see increased automation. With attraction and retention imperative, the role of employee benefits in the employment equation looks very different.

2. Rising power of the consumer.

Consumer have increasing power over just about everything. Aided by advancements in technology, the consumer has unlimited access to products, services and information from a wide variety of formal and informal sources. They also have opportunities to buy in a way that suits their needs and at a time that’s convenient for them. The rise of consumer empowerment has direct implications for the delivery of benefit plan commitments in the future.

3. Digital technology.

I recently wrote about how technology will dramatically reshape health care and the subsequent implications for plan sponsors. There’s so much happening in the area and the opportunities for plan sponsors are significant. Innovation in digital technology has the potential to dramatically transform health care in the future and the associated vendor landscape.

Disruption is good, right? However, it’s important to approach the changes from a reasoned and centred perspective.

Innovation shouldn’t simply be about convenience. It should focus on how individuals can access their benefits dollars more easily or spend them as quickly and effectively as possible. The user experience is important, but there needs to be a balance.

And what’s the balance? A benefits plan is about managing risk borne by both the employer and the employee. The goal of an employee benefits program should be to ensure the right coverage is available when needed, with appropriate targets in terms of health outcomes at the right price, all while managing risk. That’s the balance all innovation must strike.

Brian Lindenberg is a senior partner and the health and benefits leader at Mercer Canada.. He has more than 30 years of experience in the employee benefits field.
These are the views of the author and not necessarily those of Benefits Canada.

Transcontinental Media G.P.