Lowering Health Care Costs: Employers Struggle to Change Employee Behavior

Employers are putting the onus on employees to help curb rising health care costs, and the inability to motivate and change employee habits is prompting concern, according to Aon Hewitt, a global human resource consulting and outsourcing business of Aon Corp.

“As employers wrestle with the reality of continued increasing costs, they are ramping up efforts to ensure cost efficiency, including negotiations with insurers, elimination of ineffective programs, and pursuit of new approaches to motivate employees to use cost effective, high quality providers,” Jim Winkler, Large Employer Segment leader in the Health & Benefits Practice with Aon Hewitt, tells INN.

In its 2011 Health Care Survey, Aon Hewitt surveyed 1,028 employers nationwide, and discovered that the top health care outcomes that organizations would like to achieve this year are improving employee health habits (56%), lowering the health care cost trend (49%), decreasing worker health risk (44%), increasing participant awareness of health issues (37%) and enhancing participation in health improvement/disease management programs (37%). This survey suggests that success may be difficult, as 56% of respondents say motivating participants to change unhealthy behaviors is the most significant challenge to accomplishing 2011 health care program goals. This was followed by issues involving reluctance to change (26%), unpredictability of costs (23%), government regulations/compliance (22%) and managing the health of an aging workforce (21%).

Both companies and health insurers have a vested interest in taking a proactive approach to wellness. In particular, the survey revealed that many companies offer disease management (70%), health and wellness improvement (64%) and behavioral health (60%) as key components to health care strategies. In an acknowledgement that more needs to happen to achieve success, many organizations are looking to expand efforts during the next three to five years and implement strategies that focus on total well being to improve physical and mental health (60%), absence management (53%), and integrated safety and health improvement efforts (50%).

"Despite reform, organizations still face rising costs and worsening population health," says John Zern, Americas Health & Benefits Practice leader with Aon Hewitt. "It's clear that traditional annual trend mitigation tactics alone won't work. As a result, leading employers are implementing a 'house money, house rules' environment, using a mix of incentives, penalties and targeted messaging to reward healthy behaviors."

While some companies are budgeting for a medical trend increase during the next four years, many do not have a long-term increase built into their budgets as of yet. Nearly one-third of respondents (30%) have budgeted an annual medical trend increase between 4% and 7% from 2011 to 2015, and 22% have budgeted an increase of more than 8% during that time. Meanwhile, 42% have not built an annual long-term increase into their budget at this point.

"Employers are spending millions of dollars annually on health care, and yet many report they do not have a specific plan for how best to manage that investment," Winkler says. "Given the risks and opportunities presented by health care reform, it is imperative that employers develop a written strategy for controlling cost and improving health."

REWARDING & PENALIZING PARTICIPANTS

The Aon Hewitt survey also showed that 22% of employers will have programs in place by the end of 2011 to reward participants for achieving specific health outcomes, and 10% will have similar programs to penalize participants for exhibiting unhealthy behavior. However, by 2016, 64% of organizations said they will add programs that reward for good health, while 46% said they will add programs that penalize for unhealthy outcomes.

Respondents currently offer incentives to employees for participation in key initiatives, such as biometric screenings (33%), health risk assessments (33%), wellness programs (31%) and tobacco cessation programs (27%). Conversely, some employers are imposing a penalty for non-participation in biometric screenings (5%), health risk assessments (5%), wellness programs (2%) and tobacco cessation programs (6%).

Money serves as the primary incentive and penalty these employers use to promote employee participation in key programs, including health risk assessments (66% have a monetary incentive; 9% have a monetary penalty); biometric screenings (65% have a monetary incentive; 8% have a monetary penalty); disease/condition management (54% have a monetary incentive; 9% have a monetary penalty); and wellness programs (59% have a monetary incentive; 6% have a monetary penalty).

"In a challenging economy, organizations are using financial incentives, as a mix of rewards and penalties, to motivate behavior change," says Jennifer Boehm, principal in the Aon Hewitt Health & Benefits Practice, and a project leader for the survey. "However, leading employers also recognize that success requires more than just dollars; those organizations also focus on marketing health improvement services, eliminating barriers to needed care and measuring the impact of specific interventions."

Insurers have long sponsored employers’ use of wellness programs to reduce health care costs. But these workplace health care programs have a downside, reports wellnessprograms.com. At issue from a company’s perspective, notes the site, is an insurance carrier’s ability to use information gathered during a wellness program as justification for increasing an employer’s rates at renewal. (Aon Hewitt contributed to this story.)

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