Despite a shaky start, enrollment in health insurance exchanges is up. The White House reported in early April that enrollment has reached 7.5 million people, though the majority of these enrollees were previously insured on other plans.
So, with this short term goal reached, what’s next for health care’s consumer-oriented approach? Covering people with health insurance is the first step; helping them to be healthier and arresting rising health care costs are the next priorities.
Increasingly, employers have become the advanced guard in efforts to hold the line on rising health care costs. To cut back on their own expenses, businesses have become more focused on getting their employees to become better health care consumers. According to a RAND study sponsored by the U.S. Department of Labor and the U.S. Department of Health and Human Services approximately half of U.S. employers offer some form of wellness programs, though participation rates among eligible employees is relatively low. How can employees be motivated to participate? Many employers aren’t sure where to begin—it’s up to the health care industry to provide the resources these willing partners need to change the health care attitudes within their corporate culture.
It’s not just enough that corporations encourage wellness habits, however. To be successful, companies must help employees see a reason to change— and provide the tools they need to actually be better.
For employers, that means helping employees make healthy choices throughout their daily life, including eating right, exercising and quitting smoking. So what can you do to help employers incentivize these healthy behaviors?
It all comes down to helping design the right kind of wellness plan that communicates effectively and incentivizes the right behaviors.
Incentivizing Healthy Behaviors: The Role of Financial Rewards
Employers today pay 36% more for health care than they did five years ago, reports Towers Watson. And while new health care reforms may eventually help lower the costs associated with preventative services (many of which are now free for employees), employers remain concerned that the overall cost for insuring their employees will increase.
Healthier employees not only help hold the line on health care costs, but also may increase company productivity. Studies suggest healthy habits mean fewer sick days and chronic illnesses, which translate into higher productivity.
Behavioral change is generally a slow process, but progress can be incentivized.
Financial rewards for participating in health management programs and healthy activities are one option to encourage the adoption of healthier behaviors. A 2011 survey of mid-size and large U.S. companies found that 54 percent of these employers offered financial rewards to employees who participated in health management programs and activities, according to the National Business Group on Health.
A third of employers with 500 or more workers used financial incentives, like discounts on insurance, to encourage employee participation in wellness programs. For example, at Indiana University Health, a large health system, non-smoking employees who maintain a certain body mass index can receive up to $720 a year off the cost of their insurance, reports the New York Times.
A full 80 percent of employers expect to offer financial incentives in the near future, reports the National Business Group on Health, and your organization can help these businesses reach their goals.
“More Stick, Less Carrot”: Do Financial Penalties Work?
Financial penalties may also an effective, though more unpopular, strategy. Wal-Mart started penalizing employees who smoke $2,000 a year in health care expenses that would have otherwise been covered by the company policy.
To avoid help employees the financial surcharge, Wal-Mart also began offering smoking cessation programs. More than 13,000 employees enrolled in the first year.
A growing numbers of companies, including Home Depot, PepsiCo, Safeway, Lowe’s and General Mills, started following Wal-Mart’s lead in 2011, and began seeking higher premiums from some workers who smoke, according to the New York Times. Policies imposing financial penalties on employees doubled between 2009 and 2011, rising to 19 percent of major companies.
The Affordable Care Act supports this “more stick, less carrot” approach. Previously in 2011, regulations only allowed companies to require workers who failed to meet specific standards to pay up to 20 percent of their insurance costs. In 2014, that amount rose to 30 percent of their policies.
The 2013 c2b Consumer Diagnostic analyzed consumers’ attitudes toward health behavior incentives and penalties, although specifically coming from health insurance companies.
Not surprisingly, 80% of consumers agreed with the idea of health insurance companies providing incentives (e.g., premium or copay reductions, coupons for healthy products) for healthy behaviors. However, only 36% of consumers agreed with penalties (e.g., increased premiums and copays).
Incentives and penalties are not uniformly supported or opposed across consumer types, however. Among the five psychographic segments identified by c2b solutions, Balance Seekers are statistically more likely (95% confidence) than other segments to Completely Agree with health behavior incentives and penalties. If this wellness-oriented segment is a strategic target for health insurance plans, this may be a feature to showcase in advertising and enrollment drives.
The Bottom Line
Incentivizing health behaviors is the next big step in health care consumerism—both within the workforce and in the American public at large.
A combination of financial incentives (and penalties) together with an effective communications plan is key for behavioral change, which not only lowers employer health care costs, but also boost employee productivity – and that’s good for everyone.