A letter to employers

Hello all,

It is ebun here from Verifi. My last post was about the sense behind health insurance from an employee perspective but does it make sense economic sense for employers to provide health benefit to their employees? As you know we love data and we are looking at what the data shows but absent original data what does the literature show? Well duh right? Healthy employees are more productive and productive employees are great for the bottom line.

But what does this mean in a Nigerian context. Like I said in my previous post, we employ quite a number of people and there was an occasion last year when one of our team members was sick and she came to us for financial assistance to pay the hospital bill. I know we are not the only employers that have been in this situation before. You are trying to balance the books and make things work and are hit by an unplanned request to fund N500k with the promise to pay back. What do you do? This has happened more than once and at a particular time after a particularly large bill, I told C we had to stop, he pushed back saying we had to look out for the welfare of our team but while I was not saying let them die, he also was not saying let us become a NGO. Something had to give and what gave was health insurance.

Providing health coverage has eliminated all the unplanned health requests expense and has allowed us to predict how much we would spend each year on healthcare for our team (N3500 * X)12.

Looking at our anecdotal evidence, we have not had to give away any money all year or pay for any hospital bill this year. From a pure financial perspective and vs last year, this is a win.

Finally one thing we do have is data on absenteeism. Sickness is the number one cause of absenteeism and that we track well and of course our singular observation does not a pattern make but we found a sharp decline in number of days off in the the 6 months after we started offering health insurance vs the previous 6 months. We are collecting more data but this does not shock us, it is what we suspected we would see. I am a fan of hourly pay, C isn’t, it’s a cultural thing but most employers pay a monthly salary and sick days become very expensive, we suspect the productivity losses are in the high billions.

We already talked about how employees win with health coverage. But employers win big also. Getting your people covered isn’t a cost, it is an investment, it preserves profits, it allows you to plan and it boosts productivity. From a selfish perspective — offer it.

Best

ebun