Employers will steadily be taking a more results-oriented approach to wellness and disease management programs, to demonstrate return on investment and restore confidence in health benefit sponsorship.
That’s one of the big take-aways just-released in the National Business Group on Health/Towers Watson Employer Survey on Purchasing Value in Health Care.
The 15th annual study says the recession, coupled with the uncertainty of pending health reform legislation, has rocked employers’ confidence in their benefit strategies – and their ability to sustain benefits. The share of employers who are very confident they will be able to offer health care a decade from now declined significantly over the past two years, despite a negligible increase in annual cost trend. It was a finding that took analysts a bit by surprise.
“Once you knew what health care cost trends were, you could almost predict the confidence level: it was directly related to trend [for the 15 years that Towers Watson and NBGH have conducted the survey]…Last year, for the first time, with the exact same trend, confidence dropped from 73% to 62%. That was clearly [because] we entered a deep recession,” says Ted Nussbaum, senior consultant at Towers Watson and co-author of the survey.
Now, 57% of companies are very confident that they will continue to offer health care benefits for the next 10 years—a drop caused by the continued recession and the health care reform bill, which employers perceive will increase costs, increase administration expenses and have no effect on employee health status, postulates Nussbaum.
For those not confident about the future, many are changing tactics and plans. In fact, 83% of all companies have changed or plan to change their strategy compared with 59% in 2009. Among the drivers, health care reform may serve as the impetus to more total-replacement consumer-driven health plans, because 69% believe the proposed legislation would increase costs for their health care programs, and the same percentage believe it would increase administrative expenses.
One-third of respondents believe reform would put employer-sponsored plans on the decline. But on a positive note, 34% of employers think reform will increase transparency of provider prices, and 30% say it will increase the transparency of provider quality.
Meantime, two-thirds of respondents report the biggest challenge to managing affordable health care coverage is employees’ poor health habits, and that and the biggest obstacle to changing health behaviors is employees’ lack of interest or reluctance to participate in health and wellness programs.
For these reasons, employers are realigning their incentives around wellness, with some even foregoing the carrot for the stick. Today, 37% of respondents offer incentives only to members who meet the company’s requirements for completion of a health engagement activity, and another 23% plan to do so in 2011.
In addition, 5% of companies default members into a plan, often a high deductible health plan without an employer contribution, for not fulfilling the requirements in a health or disease management program, a number expected to rise to 14% next year. Others are increasing monthly premiums, though this is very uncommon, Nussbaum says he could foresee this picking up in popularity in the future.
Further, “offering incentives and moving along from incentives for [employees] to participate to looking for results is something we’re going to see more of as we move along the curve,” predicts Nussbaum, who suggests that employers may be moving beyond loose objectives, to more concrete metrics like body mass index and blood pressure levels.
With or without incentives, companies continue to invest in the health of their employees, as 93% of employers have no plans to eliminate their health promotion programs, and 83% expect to continue with their existing strategy and will not delay or cancel plans to add new health and productivity program offerings.
They are also resisting cost shifting, as, on average, employees paid 20% of total premium costs in 2009. Employees’ share of premiums will increase slightly to 21% in 2010.
Still, interest in consumer-driven plans continues its upswing. Currently, 54% offer the plan, whereas in 2005 only 21% offered it. Next year the number of companies offering a CDHP will increase to 61%.
Just 7.6% of employers offer CDHPs as a stand-alone health care plan, but the number of those going all-in – introducing it as a total-replacement plan – has increased by more than 40% since last year.
To encourage participation in these plan options, 57% of companies are offering 30% or more of a reduction in premiums. Companies that have 20% or more employees enrolled have increased dramatically from 27% in 2006 to 46% in 2010.
“The notion that [employers] can implement programs based on consumerism as an overall, arching philosophy and add programs that are designed to improve employee health that ultimately has multiple benefits for their companies is a path that they remain committed to,” says Nussbaum.
Median cost trends for the best performing companies approach zero. Over the last two years, median cost trends for employers with the lowest health care cost increases (best performers) was 0.3%, compared with 6.5% for all respondents. The median trend for employers that have maintained cost increases at or below the TW/NBGH median for the past four years (consistent performers) was 2.1%, compared with 6.8% for all respondents.
Nussbaum explains what these top performers are doing things differently than their less fortunate counterparts: “The best performers, through their incentives, through education, through communication, are more successful in getting more employees to participate in their health management and health improvement programs. Many of them adopted CDHPs as a way to offer greater incentives and change employees’ behavior to a greater degree; they’re implementing quality programs and are differentiating between providers that offer quality of care at the low end of the spectrum and at the high end. We’re seeing high performers using their own data to make decisions; they’re not making generic decisions,” he says.
In terms of what plan sponsors can expect from the future, Nussbaum suspects that through enhanced education and communication about quality of care and making qualitative data readily available (such as hospital mortality rates, readmission rates, and infection rates) may help employees make better decisions about where they seek care. There may also be a role for narrower networks and Centers of Excellence.
“I think that the next frontier is going to be about quality [of care]. There is better information on the hospital side than there is on the physician side. So, if we focus on high quality hospitals and the types of procedures they are high quality in that might change the way the way patients select their physicians…It might be a change in mindset, but it’s consistent with the type of behavior change we want from consumers around health care anyway.”
