Mon Nov 25, 2013
We Avoided a 2014 Health Insurance Code Blue
News flash — incentives work!! OK. That isn’t necessarily new news but our renewed evidence is fun to mention and consider. The Affordable Care Act and the government foibles in rolling it out have all of us wondering where the health insurance industry is headed. None of us is willing to simply accept growth in our health insurance bill whether that increase comes from the ACA or from other causes.
Traditionally, health insurance cost increases are the direct result of how many employees use how much of the benefits provided in the company’s health insurance program. Benefit usage is, in turn, affected by two primary factors: 1) the number and cost of claims filed and 2) the overall health condition of the work force.
Given the right motivation and direct reward, people make more economical choices regarding their medical assistance. Example: Use a walk-in clinic instead of the hospital’s emergency room when an illness or injury is not a real emergency.
We give each enrolled family that direct reward, through our Health Cost Management Account (HCMA), a $2,500 escrow (proportionately less for singles) that can be used to pay for any health care service whether covered by the company’s insurance plan or not.
The incentive to control expenditures derives from the provision that any balance in the HCMA at year’s end is rolled over into the next year and combined with a new $2,500 deposit by the Company. So a smart decision to avoid the emergency room when a walk-in clinic will do provides a direct reward to the participating employee. Unused funds in each employee’s personal HCMA just keeps accumulating. With some judicial management of their health care expenses, employees could end up with the company’s contributions offsetting their entire deductible. Smart employee decisions are significantly empowering them to manage their current and future health care costs — despite this volatile health insurance era.
Our employees are making smarter use of health care dollars now. That means that the first primary cost factor noted above is addressed. Next, we needed a way of encouraging our 180-plus employees to, on their own, do the things that would make and keep them healthier. Healthier people need less remedial health care (not to mention that they also work more effectively and with much better attendance.)
The answer to getting these results also turned out to be dollars in the pocket: Simply pay employees for maintaining a healthier life style…by reducing their premium for the company’s health insurance program.
The trickier part was selecting a basis for fairly determining who got what reduction. We settled on the two criteria we felt everyone would have the most control over…their weight (and since no two peoples’ “right” weight is the same, we further refined weight to a measurement of body mass) and whether or not they smoked.
There are three categories of employee insurance premium with different annual discounts assigned to each category — $300, $100, and $0. That means that non-smokers with healthy height to weight ratios pay the least premium. Overweight smokers pay the most.
Employees were given the choice to participate; but if you were electing the company’s health insurance there was little to lose but perhaps some minor embarrassment at weigh-in by not signing on. Participants had their body mass measured and declared their smoking status at the outset, and each was placed in an initial discount category. Through periodic re-measurements, a participant’s discount qualification could change, up or down, maintaining the incentive to either stay at a healthy level or move into a healthier one. We also provide professional medical review and guidance to anyone who wished it by contracting the services of a visiting physician. Dr. Bill, as he is affectionately known around the plant, performs minor checkups, blood pressure screenings, etc. and gives advice and encouragement.
Results? Beginning discussions regarding our 2014 health insurance program revealed that the “average” cost increase being quoted to other companies was in the 15% range. Ours? No increase. And that is the 5th year in a row with no increase. While that results in a significant dollar savings to employees and the Company, it is more important that we’ve now had five years during which our employees, more than they might otherwise have been, were concerned about the health impacts of their life style decisions. Most are enjoying the benefits of those choices, in both their wallets and wellness. In addition, we learned valuable lessons that will help us do ever better for ourselves in 2014 and beyond.