Heat emergencies, wildfires and extreme weather events are increasing in frequency as global temperatures rise. To mitigate the risk of the change in climate, companies are already “hardening” their physical facilities, reevaluating their insurance and seeking to decrease their carbon footprints. Companies should also carefully consider climate change when designing their human resources policies and benefits. Here are several reasons why this is important.
Worsening health and rising healthcare costs
We don’t know the full impact of global warming on medical cost trends, although we know that a hotter planet will lead to significant adverse impacts on human health. Increased temperatures are likely to lead to more direct heat injuries and worsening air pollution, which will increase respiratory and cardiovascular disease. One analysis suggests that half the residents of Phoenix would need medical attention due to heat injury if a future heat wave coincided with a multi-day electrical outage.
The World Health Organization estimates that 99% of the world’s population already breathes air that exceeds health guidelines. A warmer planet also means an expanded area will be at increased risk from infectious diseases previously limited to tropical climates. Employer-sponsored health insurance should be prepared for unexpected medical costs due to climate change.
Increased mental health needs
Global warming may increase mental health needs, which were already high as anxiety and depression and opioid use disorder rose dramatically during the COVID-19 pandemic. Climate anxiety is especially prevalent among young adults. Mental health access increased during the pandemic as telehealthcare became widely available, although the re-imposition of state regulations with the end of the pandemic emergency could diminish access.
Employers can augment employee assistance programs to increase access to mental health services without cost-sharing. They can evaluate the adequacy of their health plans’ mental health network to meet members’ heightened needs. They can also deploy technology and virtual solutions to increase mental health access.
Disruptions in medical delivery due to climate-related weather events
The medical care delivery system may well be ill-equipped to handle climate change, too. Half of all inpatient beds in California are located less than a mile from a high fire threat zone, and hospitals in California were evacuated during wildfires in 2017 and 2020.
The NYU Langone Hospital evacuated patients using stairwells when generators failed due to flooding in Superstorm Sandy (2012), and the hospital was closed for over two months, with repairs ultimately costing over $1 billion. That storm also led to evacuations of three other hospitals in New York City.
Employers may find that members with plan designs that limit access to selected providers need care from non-preferred providers during climate-related emergencies. Climate change could lead to more employees changing where they live, increasing the importance of access to virtual care.
Financial insecurity due to climate change
Climate change will also increase financial stress on many employees, especially those with lower education and wages. Heating costs in colder climates will decrease, but cooling prices will rise substantially. Some employees will have to relocate temporarily or permanently due to floods or extreme weather events.
Many in cooler climates will have to expend capital for air conditioning systems that were previously not necessary. Those with chronic or severe illness will have higher out-of-pocket costs due to their increased medical expenses.
Employers can establish hardship funds, which should stand ready to make immediate payouts during climate emergencies. They can evaluate their plan benefit design to assess what portion of the population will likely face financial hardship due to medical costs and offer low-wage workers health insurance plans with lower out-of-pocket costs. Lifestyle spending accounts offer employees the flexibility to spend employer deposits on unanticipated needs.
Increased urgency to address disparities
Those who live in poorer communities and communities of color are already in worse health and are at the highest risk of adverse outcomes from climate change. Those who are poorer and non-white are more likely to live in low-lying areas susceptible to flooding and in neighborhoods with fewer trees subject to higher temperatures.
Vulnerable employees can benefit from hardship funds and time away from work. Companies that invest in housing for employees can be sure that this housing is resilient to climate change. As temperature increases, asthma attacks and mental health needs will increase disproportionately in vulnerable communities, increasing the importance of offering excellent access to diverse providers who can best meet the needs of at-risk communities.
Employees need assistance to decrease their carbon footprint and prepare for future climate events
Many employees are considering purchases that would increase their household climate resiliency while decreasing the production of greenhouse gases. Companies can offer charging stations for electric vehicles at the workplace and can encourage the use of public transportation or bikes where possible. They can provide financing and group purchasing for heat pumps and discounts or subsidies to help employees increase their family climate resilience. Companies can offer such subsidies on a sliding-scale basis to provide aid to those most in need while avoiding increasing disparities.
Workplace adaptations to address climate change
In addition to improvements in benefit design, companies can help protect their employees from some of the adverse impacts of climate change at the workplace and during commuting. Better indoor air quality can lead to decreased respiratory disease while increasing productivity. Employees can avoid heat exposure or adverse weather conditions during lengthy commutes if they can work remotely.
Flexible schedules can allow employees to travel and work at times when the temperature or air quality poses less risk. Workplace safety measures such as protective equipment, cooling stations and health checks can reduce injury rates.
Climate change is upon us and is likely to have an enormous impact on our health and our economy. Companies can protect their productivity and be more attractive to talent by proactively adapting benefits and policies to increase employee resilience in the face of climate change.