As organizations try to hold the line on health care costs, they’re shifting more responsibility to their employees.
Everything from setting up wellness programs to implementing consumer-driven health plans to moving employees to private health exchanges are gaining ground, and that means health insurance providers are charting new territory.
“Employers are looking to really engage their population, educate them and make them smart shoppers,” said Tom Meier, vice president of product development for Health Care Service Corp., a customer-owned health insurer in Chicago.
Now it’s no longer enough for health insurance providers to meet only the expectations of employers. As these health and wellness shifts take place, “the consumer is changing from the employer to the employee,” said Anthony Benevento,senior vice president of regional markets for Highmark Blue Cross Blue Shield, which is based in Pittsburgh.
That’s increasing the demands on health care vendors, said Helen Darling, president of the National Business Group on Health, who is retiring this month. Not only do they have to provide more services, “there’s a renewed interest in having one vendor who does everything, and does everything well.”
No Longer Specialized
Initially, organizations had one health insurance provider, but gradually they moved to having a number of specialized providers, Darling said. Those specialty vendors might have handled things such as employee assistance programs, wellness and fitness programs, and nurse advice hot lines. Now the pendulum has swung back, and “a single vendor has to be better at a lot of things.”
Those single vendors also might be requested to provide more customized service, with a dedicated website and call center employees to handle requests from a particular organization. “It’s much more valuable because it’s customized to the company,” Darling said.
They’re also providing more specialized assistance if an employee contacts his or her health insurance provider because of a serious condition, such as cancer, she said. The employee will be transferred to a nurse or other health care professional with expertise on that condition, and can help the employee navigate the health care maze.
One company that aimed to strengthen its position was Aetna Inc., which last year acquired Coventry Health Care Inc. in a transaction valued at $8.7 billion, including the assumption of $1.8 billion in debt, according to Bloomberg. When the deal closed, Aetna’s chairman, CEO and president, Mark Bertolini, said in a news release that the acquisition “presents new opportunities for Aetna and supports our strategy for growth in the changing health care marketplace. Together, we are well-positioned — competitively, strategically and financially — to meet the evolving needs of the people we serve.”
As they seek out vendors, “employers want sustainable, containable cost savings,” Meier said.
One key step in that direction has been the growing emphasis on employee wellness programs. The trend to add incentives to wellness programs has taken off among large employers, Benevento said, and is now trickling down to companies with 500 to 1,000 employees.
Already, almost two-thirds of employers surveyed by Towers Watson & Co. and the National Business Group on Health offer financial incentives to encourage their employees to take part in wellness programs. While 16 percent of those surveyed tie their rewards to specific biometric targets, an additional 31 percent are considering adopting such a strategyin 2014.
The survey, “Reshaping Health Care: Best Performers Leading the Way,” was released in March 2013, and surveyed 583 employers with at least 1,000 employees. Altogether, the companies employed more than 11 million full-time workers.
By emphasizing wellness, the goal is to manage potential health risks before they develop into full-blown medical conditions, Meier said. Engaging employees is crucial, and many organizations are making use of games and contests so “it doesn’t seem like a chore.”
While most companies focus on rewarding positive behavior, such as maintaining a healthy body weight, others are penalizing certain behaviors, such as smoking.
“Carrots for being healthy tend to go over much better,” Benevento said.
So, for instance, a company might opt to put $100 per month into employees’ health savings accounts if they don’t smoke.
“That’s real money to them,” Benevento says. “By having a meaningful financial impact, you see engagement levels go up dramatically.”
A recent survey by the NBGH and Fidelity Investments found employers planned to spend $598 per employee on wellness incentives this year compared with $521 in 2013.
Employers are “willing to put a substantial amount of money into getting employees engaged,” said Beth Umland, director of research for health and benefits with the consultancy Mercer. And those sums are likely to rise.
“The Affordable Care Act kind of gave its blessing that it’s OK to incentivize employees financially,” Umland said.
Under the Affordable Care Act, the maximum award or penalty an organization can impose was bumped up from 20 to 30 percent of the total annual cost of premiums. For programs designed to prevent or reduce tobacco use, the maximum reward or penalty is now 50 percent of the cost of premiums.
With the emphasis on wellness programs and the diversity of today’s workforce, health insurance providers need to be able to communicate across all groups, from a truck driver who’s on the road all day to a millennial who loves to text. Some employees may prefer receiving emails, others prefer phone calls, while others want face-to-face meetings. “You need to meet them where they are,” Meier said.
Insurance providers also may offer a wide range of classes or provide individual coaches, focusing on everything from stress management to healthy eating to weight loss to smoking cessation, he said.
Along with the need to reach diverse groups of employees, there also is a need to provide diverse means of health care to consumers. In the Towers Watson/NBGH survey, 45 percent of respondents said they expected telemedicine, e-visits and data-enabled kiosks to have an effect on health care provision in the next five years.
“I’m very struck by how much disruptive innovation telehealth represents,” Darling said.
Given the changes in the health care environment, health insurance providers need to be agile enough to keep up with evolving technology and changing demands.
“There’s a big increase in wanting health advocates,” Darling said. In that role, providers are expected to help employees navigate the health care system, make sure they receive the right diagnosis, even if that means seeking a second opinion and then ensuring they receive proper treatment for their condition.
There’s also a push for health insurance vendors to provide detailed information on the quality of doctors, hospitals and other medical service providers, as well as on the cost of care, Meier said. Vendors offer online and mobile tools to help employees find that information, as well as call centers where they can receive guidance.
Employees may need assistance in understanding that the quality of care can vary widely among medical providers. “I don’t think everyone necessarily gets that, especially if they don’t understand how health care works,” Meier said. And paying more for care doesn’t necessarily correlate with receiving better care.
That knowledge and understanding becomes especially important as more of the burden for health care decisions falls into the hands of employees.
That shift is already taking place as increasing numbers of organizations offer consumer-driven health plans.
Already, two-thirds of respondents in the Towers Watson and NBGH survey offer account-based health plans, and that number is expected to soar to 79 percent this year. Median employee enrollment in the account-based plans jumped to nearly 30 percent in 2013 from 15 percent in 2010.
The increasing use of consumer-driven health plans signals organizations’ willingness to shift more health care costs to employees, Umland said. Such plans are intended to help keep insurance premiums low, but they result in higher out-of-pockets expenses for employees. In most cases employers will make a contribution to their employees’ health savings accounts or health reimbursement accounts.
Mercer’s “National Survey of Employer-Sponsored Health Plans” found that the average cost of coverage with a consumer-driven health plan, paired with an HSA, is $8,482, or 17 percent less than coverage in a preferred provider organization and 20 percent less than in an HMO. More than 2,800 employers with at least 10 employees completed the survey in 2013.
With consumer-driven health plans, employees are expected to spend their money wisely, and that’s why health insurance providers have an important role to play in helping them be better consumers of health care, Umland said.
Even today, employees are shouldering a heavier share of their health care. The Towers Watson and NBGH survey found that between 2012 and 2013, employees’ share of premiums jumped nearly 9 percent — to $2,888 from $2,658. Employees are contributing 42 percent more for their health care than they did five years ago, while employers are paying 32 percent more.
While mostorganizations provide health insurance coverage, dental and vision offerings lag. The 2012 Employer Health Benefits survey, conducted by The Kaiser Family Foundation and Health Research & Educational Trust, found that just 54 percent of organizations that offer health insurance benefits also offer or contribute to dental coverage that is separate from any benefits included in their health plans. Only 27 percent offer or contribute to vision benefits.
For health insurance, the next big shift may come in the form of employers moving their workers to private or government-run health exchanges, Benevento said. “That will push the decision on how and what to buy to the individual level. We’re no longer building products for just the large employer; we’re building for what the individual wants.”
For those who already are purchasing insurance on the health exchanges, Highmark has seen that “cost is very important for the individual,” Benevento said. In many instances, consumers will opt for plans with a narrow network of medical service providers to keep their premiums low.
A survey released in February by consultancy Aon Hewitt found that of the more than 1,200 employers surveyed, just 5 percent use private exchanges now, but that’s expected to jump to 33 percent in the next three to five years.
Aon is one of the companies offering private exchanges, along with firms such as Buck Consultants and Mercer. Major employers such as Sears Holdings Corp. and Walgreen Co. have already moved their employees to private exchanges.
As the ACA continues to be implemented, health insurance providers also have a role to play in steering their clients in the right direction. For many smaller organizations, the focus is simply on the day-to-day operation of their business, so they’re looking to their vendors for guidance, Meier said. “The vast majority are trying to figure out what it means and how to respond going forward.”