15 Jan Cost-Shifting or Aligning Interests?

cost shifting

In their recently published proposed amendments to the Americans With Disabilities Act (ADA), the Equal Employment Opportunity Commission (EEOC) noted that wellness incentive plans must be “reasonably designed” and “not merely cost-shifting schemes.” Similar language was used by the Department of Labor (DOL)/Internal Revenue Service (IRS)/Health and Human Services (HHS) when they published the ACA wellness regulations. I suppose the world will always have “schemers” but when it comes to wellness programs and incentive designs, I’ve yet to meet anyone who set out on a mission to disguise a cost-shift as a wellness incentive.

In fact, most employers and health plans I meet with feel like all they have been doing for the past few decades is shifting a higher percentage – of a larger cost – to their employees who participate in their employer sponsored health plan. The most recent Towers Watson-National Business Group on Health annual report states, “Employers anticipate total medical and drug costs paid by their plan will reach an average of $12,535 per active employee in 2014 – up from $11,938 in 2013 – a 5.0% increase in total costs.  The average employer share of these costs continues to climb at a greater rate than the Consumer Price Index (CPI) and wages – to $9,560 in 2014, compared to $9,157 in 2013, up 4.4%.  That’s nearly 28% more than employers paid just five years ago. During the same period, however, employee costs have risen 32%.”

That sounds like cost-shifting to me! The only difference is that the brunt of the increase has been equally spread among the employees who are choosing to place themselves at high risk for a lifestyle-related and largely preventable condition and among those who take proactive steps to minimize their risk like eating well, taking their medication and getting some exercise.

When I was 16, I was confident that I was a good driver since I was extremely attentive to the speed limit because I didn’t want to get a ticket, pay a fine and risk losing my license. Now in my 40’s, I’m more confident in my driving skills than ever but I’m still afraid of fines, tickets and losing my driving privileges. Financial consequences work. We are seeing it in case after case. If a company uses a small financial incentive or penalty – it’s virtually meaningless. If it’s a substantial amount, there is immediate and sustained health improvement. I can typically look at a client’s data analysis, see where the most health improvement is, and accurately guess where they have set their goals for financial incentives.

Many of the public comments posted to the EEOC regarding their proposed regulations dealt with fairness concerns. “Wellness incentives discriminate against those with disabilities.”; “BMI is not a fair measure of obesity-related risk.”; “Some people have genetic issues that make these goals unrealistic for them.”; “Some people have mental health issues or eating disorders and are under the care of a physician. Participating in these programs could be harmful to them.” The reality is that all of these situations are already addressed in the ACA wellness regulations as waivers and exceptions are required. It’s critically important to accommodate these and similar situations but let’s not assume that every chain smoking couch potato is helpless or unable to improve their health. We see quite the contrary. One employee recently shared “this was the kick in the pants I needed – I’ve never felt better.”

Will your outcomes-based program help you win the “most popular wellness program” or increase employee happiness scores? Perhaps not. That’s the same reason the substitute teachers who follow the lesson plans are liked less than the subs who always give recess. Don’t lose sight of the goal. Some call it tough love. Many site the saying “if it isn’t measured it doesn’t matter.” The same training, habits, positive thinking and initiatives organizations spend millions of dollars on trying to help employees excel in their careers can be applied to them taking a personal and proactive role in their health. As they earn rewards or avoid penalties there is a sense of pride or disappointment associated with their accomplishments or lack thereof.

So let’s stop this cost-shifting trend that’s been happening for decades and align the interest of the beneficiaries of employer-sponsored health insurance. Outcomes-based (aka results-based, progress-based or Improvement-based) incentives have their place in today’s health plan design and culture of excellence. Thank you for your support and for being part of the proof that’s changing minds across the nation.

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