aon hewitt predicts “house rules” for “house money” when it comes to benefits

June 15, 2011

in health care,wellness

there’s been a lot of coverage of aon hewitt’s 2011 benefits survey. you can find great summaries and analyses by TLNT and jane sarasohn-kahn (health populi) here and here. below are my thoughts on some of the report’s key findings.

we’ll see more high-deductible health plans

PPOs are still the most prevalent plan type, but high-deductible health plans are on the rise. employers offering PPOs dropped by 11% over two years, while those offering HDHPs rose by the same—in one year. aon hewitt reports that the number of employers offering only HDHPs could reach 47% by 2015 if all employers follow through on their stated plans.

challenge: in tight economic times, these plans seem attractive initially because of the lower premium payment. but employees may be missing or misunderstanding the fine print. some research on HDHPs shows lower utilization of benefits by members, something that could lead to worrisome health situations. employers will need to invest in personalized, “plain english” communications to ensure that there’s no buyer’s remorse—for anyone.

employers may say, “play by our rules or pay up”

the report outlines four paths employers can consider when it comes to health care reform post-2014. two involve companies no longer providing health care benefits and two involve those that do. of the latter, one path is the “house money, house rules” path, which loosely translates to “play by our rules or pay up.” with this option, employers continue to cover the bulk of health costs and in exchange they require greater use of preventive care benefits, case management for chronic conditions and wellness services.

challenge: motivating employees to use programs and services meant to keep or get them healthier has been the biggest obstacle for most employers. this approach may be a logical extension of my wedding analogy: when mom and dad pay, they get to add to the guest list. here, instead of a guest list, they get to tell employees what actions to take. in the report, aon hewitt foretells of a system that’s even more “complex, expensive, and unwelcoming” for those who don’t follow them. will this approach elicit the intended response? and if employees opt out and are unable to cover even more expensive health care, will it benefit anyone long term when you consider the ramifications?

incentives and penalties for all

aon hewitt confirms what we’ve heard elsewhere. in the coming years, we’ll see more employers evaluating the use of incentives and penalties for employees and their families. the report finds that 49% may add incentives for employees, spouses and domestic partners in the next three to five years, and 57% report they may include the entire family. a nearly equal amount are considering penalties: 40% for employees, spouses and domestic partners and 39% for the entire family. one form these health plans may take is the outcomes-based wellness approach where individuals receive an incentive or penalty for reaching (or missing) certain biometric targets.

challenge: in a conversation with paul hebert following a #co_health chat on incentive design for wellness, he raised a cautionary note about outcomes-based wellness approaches. as he put it, “outcomes are not always behaviorally based.” with outcomes-based approaches and more penalties in general, employees may feel pressure to achieve the outcome, and they may not do it in the best possible or most sustainable way.

employers need more employee input to guide decisions

aon hewitt’s a little more generous than i’d be in saying that the “use of company-specific data to drive health strategy and employee engagement in managing health is gaining momentum.” there’s still staggeringly little use of data to guide decisions. the majority (24%) report significant use of employee input to guide benefit design features such as copays and deductibles. the numbers fall from there, all the way down to 7% who report significant use for designing their change management approach.

challenge: if employers move to the “house money, house rules” approach and start to employ more penalties, they’ll have a major change effort on their hands. they’ll need to pull out all the stops to understand employees’ potential reactions to design, messaging and much more.

this is a limited slice from a very rich, detailed report. you can download the full report here.

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{ 3 comments… read them below or add one }

Carol Harnett June 16, 2011 at 10:58 am

Another great summary and personal analysis, Fran.

Back in 2004, Health Affairs had an issue dedicated to the early results from CDHP and HDHP. One article compared the results to the experiments done in the 1970’s and 80’s by the RAND Corporation. RAND found that consumer participation decreased costs, but often through reduced utilization.

I, too, am concerned about how employers are structuring incentives and disincentives. One of the things I’m most worried about are penalties structured around prevention guidelines utilizing tests like mammographies and colonoscopies and compliance with statins for high cholesterol / high LDLs. There is a difference between relative risk and absolute risk.

Large employers may be very interested in relative risk in their population, however, individuals may be more interested in understanding their absolute risk. For example, if you test high for cholesterol and LDL levels but have no history of cardiac disease, you may achieve little to no benefit from taking a statin. In fact, your risk of dying from a cardiac event may have a relative risk ratio improvement of 50% but the absolute risk underneath that decreases from 2/1000 to 1/1000. If your PCP explained your absolute risk improvement from taking a statin, you might choose to not take it.

Again, great discussion piece.
Carol

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fran June 17, 2011 at 10:25 am

carol, i know companies are including allowances for employees who can’t reach prescribed metrics tied to incentives. i haven’t heard whether it extends to situations like you describe above, but taking into account absolute risk would make good sense.

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Denisha October 10, 2016 at 7:24 am

Ya learn soinmhteg new everyday. It’s true I guess!

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