Financial Incentives For The Healthy Do Little To reduce Employer Costs
Health insurance plans designed to encourage employees to be better consumers of health care are unlikely to result in significant cost savings for plan sponsors unless employers concentrate their efforts on lowering the costs generated by the small group of participants with chronic or catastrophic illnesses, a study by human resources consulting firm Watson Wyatt concluded.
The analysis of health benefit plan expenditures in 2004 showed the following: 72% of plan participants who were largely healthy accounted for 11% of health benefit spending, the 24% of employees who were in the early stages of chronic conditions or had acute health episodes accounted for 40% of spending, and the 4% of participants with serious health conditions accounted for 49% of expenditures. Researchers noted that people with very serious health problems are unlikely to be motivated by the financial incentives or plan design features of tax-advantaged Health Savings Accounts (HSAs) or other consumer-directed high-deductible plans.
Instead of encouraging all employees to reduce their health care spending—including those who are generally healthy and use few health care services—researchers recommended that employers focus their efforts on bringing down costs among those plan participants likely to consume the most health care. Employers may, for example, use case management to ensure that those participants with chronic conditions who do not need intensive treatment find less expensive forms of care. Plan sponsors may also design health plans that encourage those who are ill to use specified high-quality, cost-effective treatment facilities.
"This analysis makes clear that efforts to create better health care consumers must involve more than high-deductible health plans," said Sylvester J. Schieber, U.S. director of benefits consulting at Watson Wyatt. "It’s up to employers to understand the varying needs of employees and to respond with targeted consumerism—an approach that uses different strategies to engage different segments of the population covered by health benefit plans."
