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Unintended Consequences: Penalizing Insurers Kills Employer-Based Wellness Programs

I thought everyone knew the major goal of health care reform is to control spending.

Then why are Democratic leaders proposing changes that would outlaw some of the most successful cost-savings programs in the country?

Today’s The Hill reports on the new strategy to attack insurance companies as “villains.”  No doubt, health insurers have a bad reputation and have done plenty to earn it.  As the Hill reports, the message is going to be that the reform plan will lead to “capping what [insurers] can force you to pay in out-of-pocket expenses, co-pays and deductibles.”

But for at least half of Americans – those who work for large and mid-sized companies and their families – their “insurer” is actually their employer.  And many of these employers have been using out-of-pocket expenses, co-pays and deductibles to improve employee health, and reduce the cost of care.  They are creating strong wellness programs and creating financial rewards and penalties, all based on employee participation.

As I wrote in April:

Companies like Safeway, Wal-Mart, Michelin, General Mills, Marriott and so many others have implemented programs to create a “culture” of wellness among their employees and their families.  Leaders at these companies constantly talk about living healthy lifestyles, and are paying to make it happen.  At Michelin, employees get a cash reward for getting a biometric screening and for participating in company-sponsored health improvement programs.  It even started work-site exercise programs, including yoga (although it found that with a workforce that was 82% male it had to call its yoga classes “strengthening and conditioning”).

General Mills published wellness statistics about its different plants and found that the workers in each one competed with the others to get the best scores for BMI and other important health metrics.  Marriott found that by eliminating co-pays on drugs for certain chronic diseases, more employees followed doctors’ orders to take them, and although Mariott’s drug costs went up, overall health expenses went down.  Abbott Labs brings in motivational speakers and set up weigh-in kiosks in its offices that took pictures of employees as they got healthier so they could see the difference.  All of these companies reported on enthusiastic participation, and a sense among employees that their company cared about their well-being.

Safeway has taken this idea even further, and redesigned its entire benefits plan around this concept.  Employees who live unhealthy lifestyles and refuse to participate in wellness programs pay more for their health insurance — just like a bad driver pays more for  auto insurance.  Safeway did this in a highly positive and motivational way, making available a wide array of free services to help employees be more healthy and enjoy lower health premiums.  The results have been dramatic:  Steve Burd, Safeway’s CEO reported at the WHCC that Safeway’s health costs have been flat since 2005.

This Safeway model – creating both soft and hard incentives for employee health – is one of the fastest growing trends in plan design.  The idea is to give employees control over their own health care, including financial  responsibility.  When this happens, employees live healthier, look for value in their health care spending, and overall costs are lower.

And yet the statements from the Congressional leadership suggest they want to severely limit these kinds of innovations.

It may be good politics to demonize the insurers, but we should realize that “insurers” aren’t exactly who we think they are.   Health reform that stifles the innovation that’s working at America’s best companies is no reform at all.

*This blog post was originally published at See First Blog*

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