Commentary
POPULATION HEALTH MANAGEMENT Volume 17, Number 2, 2014 ª Mary Ann Liebert, Inc. DOI: 10.1089/pop.2013.0077
Beyond Incentives: The Impact of Health Care Reform on Employer Population Health Management Strategies Bruce W. Sherman, MD1 and Chris Behling 2
benefits to either a defined contribution plan or opt for public exchanges, this commentary discusses the roles and implications of this decision for employers, population health management vendors, and employees.
Introduction
I
n 2010, the Affordable Care Act paved the way for employers to shift from a defined benefits strategy to either a defined contribution approach or to opt out of providing health benefits. The precedent for this approach was well established 35 years earlier when, in 1978, Congress approved the Revenue Act, which ushered in the 401(k). Following regulatory approval, employers moved swiftly from defined benefit pension plans to defined contribution 401(k) plans. As a result, employers were able eliminate the liability associated with funding their pension plans and shift much of the risk and burden of retirement savings to the employee. In the current scenario, although it remains unclear how many employers will opt out of traditional employee health care benefits offerings and adopt public or private exchanges, it can be argued that employers in large numbers appreciate the need—and the potential opportunity—to protect themselves from rising medical claims costs. Through either participating in the exchanges, or by simply moving from a defined benefit to a defined contribution structure, it appears certain that employers will continue to embrace risk-management approaches by shifting more risk to employees, health plans, and the health care delivery system. Although many employers may believe that changing from defined health benefits relinquishes their strategic responsibility regarding all things health-related, this is not the case. Although medical claims costs may no longer be as much of a concern for employers that move to a defined contribution strategy or that opt out of providing coverage, workforce performance must remain a business priority. Employee health and well-being are widely (if not universally) held as key contributors to workforce performance. Therefore, if employers want to optimize business performance, then they will need to maintain meaningful involvement in management of workforce health and wellbeing. For employers that shift from traditional health 1 2
Workforce Health: An Organizational Cost—or a Strategic Business Investment?
Traditionally, health care expenditures have been perceived as a necessary cost of doing business. Generally, human resources personnel are charged with managing benefits costs as a line item expense, with organizational success generally measured in terms of health care cost trend.1 In recent years, consideration of organizational costs associated with health risks and poor health has been expanded to include absence and presenteeism, which can add significantly to the measured organizational cost of poor health.2–6 Although organizations may appreciate that a healthy workforce may have qualitative organizational value, the tangible nature and magnitude of health care expenditures have effectively constrained leadership attention to address costs as a primary focus. Accordingly, benefits departments have adopted strategies to mitigate health care cost increases, using both ‘‘blunt’’ (cost shifting) and ‘‘sharp’’ (value-based benefit design) instruments. More substantial health plan design changes, including high-deductible health plans, also have been adopted with the understanding that if an individual is spending his or her own funds, inappropriate utilization of health care will be reduced appropriately. More recently, 2 dimensions related to health benefits appear to be undergoing a substantial redefinition. Wellbeing as a broader measure of health seems to be replacing traditional wellness as an employer focus, encompassing not only physical and behavioral health, but also financial, social, and work environment components.7 At the same time, the impact of workforce health and well-being on business performance is receiving greater attention.8 With growing
Employers Health Coalition, Inc., Canton, Ohio and Case Western Reserve University School of Medicine, Cleveland, Ohio. AXA, New York, New York.
67
68
interest in preventive services and a proactive approach to workforce well-being, employer health benefits strategies are increasingly being perceived as strategic investments in human capital. Mounting awareness of these concepts has already begun to impact employer benefits strategic planning, and likely can have a growing influence with respect to employer response to health care reform. For example, some employers have implemented health management strategies that are yielding greater levels of workforce health and well-being, along with improved business performance.9 For these entities, there may well be less inclination to relinquish their role in providing effective health benefits management. On the other hand, if employers limit their focus to the cost impact of continued health benefits as part of a cost-containment strategy, elimination of a substantial organizational expenditure may warrant serious consideration. Future Scenarios
Employers are faced with the decision to continue with current health benefits offerings, opt for a defined contribution approach as afforded by the private exchanges, or opt out of providing health benefits entirely. Each alternative is associated with specific health, productivity, and cost considerations. The differential impact of these different alternatives on workforce health, well-being, and performance likely will be substantial. Each of these components should be taken into consideration as part of the strategic planning process. Implications and Considerations for Employers
Employers that opt out of traditional health insurance may risk decoupling well-being from health benefits. For those that take this step and yet intend to offer programs to improve health, well-being, and productivity, new approaches will be necessary in at least 4 areas: 1) Gathering the data necessary to offer and support these initiatives in the face of likely limited access; 2) Implementing innovative strategies (including incentives) to promote engagement and desired outcomes; 3) Incorporating metrics that meaningfully demonstrate program success in the likely absence of claims data, including measures of participation, individual and aggregate outcomes, and their link to business performance; and 4) Ensuring access to the necessary administrative support to manage these programs. Employers opting for the exchanges may well lose access to aggregate population health data previously obtained via medical claims analysis. Depending on their approach to defined contribution plans, employer ability to identify population health concerns meriting attention may be significantly limited. Even with this limitation, employers may still be interested in well-being programs, recognizing the potential for the associated productivity and/or performance gains. However, the opportunity to utilize financial incentives for plan sponsors opting out of a defined benefits offering also will be significantly changed. Employers opting for defined contribution plans will need to consider using a different incentive approach to promote
SHERMAN AND BEHLING
well-being program participation and outcomes because linking incentives to insurance premiums or account-based health plan contributions will no longer be an option. Instead, employers may consider providing incentives in the form of incremental increases in defined contribution amounts for benefits purchasing. This approach may permit individuals to buy a richer benefit plan or supplemental health and well-being benefit offerings. Paradoxically, individuals who are unable to achieve the target goals for incentives will, in effect, be penalized. Unfortunately, these individuals may be the ones who can least afford to have a more costly benefit.10 The employer approach to measurement of program effectiveness also will need to be reevaluated. In the past, employers have received program data from population health management companies, and typically have controlled the data for differences in population demographics. In the absence of claims data, it may be more challenging to identify and incorporate metrics that reasonably reflect program outcomes or exert any meaningful impact on business performance. Finally, employers interested in maintaining a role in providing employee wellness and well-being programs after adopting a defined contribution strategy or opting out of health care altogether may need to find new sources of administrative support for these offerings. This may be particularly important for employers that utilize private exchanges, where human resources staffing reductions have been identified as part of the value proposition. In an exchange scenario in which multiple health plans provide benefits offerings, a single organization-wide wellness or well-being program may well need to come from either the exchange itself or third-party vendor. If provided by each of the health plan exchange-based offerings, wellness and wellbeing programs will almost certainly vary in effectiveness when applied across the covered employer population. Similarly, stand-alone population health management organizations will need to adopt new strategies and approaches to offer services to employees in a post-exchange world. These considerations and implications are described in the following section. Implications and Considerations for Population Health Management Companies
Population health management companies will need to embrace new business models. For those directly involved in private exchanges, there may be a need to shift from a focus on the employer or third-party administrator as purchasers to the health plans within the exchanges. This will necessitate offering programs directly to consumers, as the business model may shift from a business-to-business to a business-to-consumer transaction. Alternatively, population health and well-being vendors may consider direct sales to accountable care organizations (ACOs) and integrated delivery networks that generally do not have the internal expertise to provide these programs at a population level. This approach will necessitate meaningful integration with the care management approach delivered by these entities. With a redefinition of the customer as purchaser, population health management companies will need to adapt to a changing marketplace.
BEYOND INCENTIVES
69
Population health management vendors also will need to adopt new approaches to incentive designs to promote desired engagement and outcomes for employers who continue to offer programs as a supplement to private or public exchange-based benefits. Given recently articulated concerns about the effectiveness of well-being programs in terms of impacting health care costs, vendors will need to ensure that they are clearly able to demonstrate value, particularly when no health plan claims data are available. It is in precisely this scenario that vendors will need to look to other metrics, including absence, presenteeism, performance evaluations, and other measures of business value, to provide ongoing justification for their continued program implementation. Medical claims costs may well cease to be the key measure for employers who have transitioned from defined benefit strategies. Instead, metrics and measures may need to be focused on tangible improvements in employee performance. Finally, some employers will assuredly minimize their direct sponsorship of health and well-being offerings. For these organizations, population health management vendors will lose the convenience of the worksite as a venue for implementation. This will necessitate the development of innovative vendor approaches to engage participants and achieve desired outcomes. These approaches could include retail settings, community settings, as well as new forms of mobile and electronic interactions.
purchase supplementing core health benefits, it is unclear how many individuals would appreciate the program’s value enough to justify its purchase. Low well-being and condition management participation rates provide testimony to this argument, even when accompanied by employer incentives. Therefore, it may make more sense for employers evaluating private exchange options to select offerings that incorporate meaningful well-being and condition management components as part of their core services, rather than provide them as a supplemental buy-up component. Third, in the setting of high out-of-pocket costs, individuals may not appropriately utilize services. Experience with high-deductible health plans has produced variable results with respect to compliance with preventive care and other recommended services, leading some to express concern that many employees and family members are unprepared to assume responsibility for proactive health management.13 If this pattern continues, and employees and their families fail to make appropriate health care decisions, overall health and productivity could decline, resulting in an increase in overall employer health-related costs. Finally, if employers who opt out of health care benefits or move to defined contribution plans also decide to shift their focus away from well-being programs, then employees and their families may have less support in accessing these services, fewer incentives to do so, and less information available to make informed decisions.
Implications and Considerations for Employees/Family Members
Conclusions
Historically, health insurance has been a product that was provided by employers with little, if any, need for the employee to select the most appropriate coverage. But this is about to change. Health insurers forced to compete for the business of individual employees surely will be advertising in much the same way and with at least the same intensity that they recently have begun marketing Medicare Advantage and Medicare Supplement policies. The result is that employees will be inundated with choices regarding their health care coverage that previously they have not had to make. With limited places to turn, it is most likely that employees will continue to look to their employers for guidance, in which case human resources departments still will bear much of the burden of helping employees navigate either public or private exchanges or decide how to best spend their defined contribution dollars.11 The continuing role of employers in their 401(k) offerings is testimony that employers may not be able to completely wash their hands of support for benefits decision-making responsibility. Behavioral economics presents 3 risks to overall health and well-being when employers transition to either private or public exchanges. First, individuals—particularly those with lower incomes—may opt for less costly health benefits options when given a choice.12 In the setting of a defined contribution offering, there is a risk that individuals may underinsure, preferring to receive a larger paycheck in order to address immediate financial concerns, rather than purchase a richer plan for a future, speculative need. Second, if well-being or condition management programs are offered in the public or private exchanges as a separate line-item
In the absence of a meaningful change in health care cost trend, employers in increasing numbers are likely to transition from traditional defined benefit health insurance, and move to private exchanges with a defined contribution approach, or cease offering benefits and steer employees to public exchanges. Implications of this change are substantial, and relate to concerns regarding worsening health, wellbeing, and business performance. Employers must think carefully about the business implications of their benefits strategic planning and be prepared to define new approaches to monitoring the impact of their programs in this new environment. Population health management vendors will need to develop different models for service delivery that can be decoupled from traditional health benefits. The customer model likely will shift away from employer-sponsored programs toward the individual consumer market, health plans, provider networks, or ACOs. With the shift in customer focus, population health management vendors will need to become better at individual consumer engagement and integration with health care delivery system stakeholders. They will also need to refine their metrics to enhance the focus on individual and business performance outcomes. Finally, employees may be impacted most substantially, with a myriad of new decisions regarding health benefits, less support from employers, and a greater expectation for prudent, self-directed, responsible purchasing of health benefits. Employees and their family members also may lose convenient worksite access to both health and well-being programs and to incentives and information designed to drive engagement. With well-being and other population health management programs effectively decoupled from
70
health benefits purchasing and current employer incentive strategies, a tremendous opportunity exists for innovative population health management companies to meet these evolving market needs. Author Disclosure Statement
Dr. Sherman and Mr. Behling declared no conflicts of interest with respect to the research, authorship, and/or publication of this article. The authors received no financial support for the research, authorship, and/or publication of this article. References
1. Economist Intelligence Unit. CEO perspectives: how HR can take on a bigger role in driving growth. London, UK: The Economist Group, 2012. 2. Goetzel RZ, Anderson DR, Whitmer RW, et al. The relationship between modifiable health risks and health care expenditures: an analysis of the multi-employer HERO health risk and cost database. J Occup Environ Med 1998;40:843–854. 3. Integrated Benefits Institute. More than health promotion: how employers manage health and productivity. San Francisco, CA: Integrated Benefits Institute, 2010. 4. Kowlessar N, Goetzel R, Carls G, Tabrizi M, Guindon A. The relationship between 11 health risks and medical and productivity costs for a large employer. J Occup Environ Med 2011;53:468–477. 5. Goetzel RZ, Long SR, Ozminkowski RJ, Hawkins K, Wang S, Lynch W. Health, absence, disability, and presenteeism cost estimates of certain physical and mental health conditions affecting U.S. employers. J Occup Environ Med 2004;46:398–412. 6. Shi Y, Sears LE, Coberly CR, Pope JE. The association between modifiable well-being risks and productivity: a longitudinal study in pooled employer sample. J Occup Environ Med 2013;55:353–364.
SHERMAN AND BEHLING
7. Stanley R. Moving from wellness to well-being. Available at: < http://www.huffingtonpost.com/rose-stanley/movingfrom-wellness-to-well-being_b_1468460.html > . Accessed July 28, 2013. 8. Carnish E. Healthy Employees, Healthy profits: a stronger business case for employee health management programs. Eden Prairie, MN: OptumHealth, 2012. 9. Pope J, Prochaska JO, Taylor ML. Productive well-being: the Gallup-Healthways well-being index. Available at: < http://www.carecontinuumalliance.org/theforum10/ Presentations/Forum%20Track%202/Productive%20WellBeing.pdf > . Accessed December 20, 2012. 10. Horwitz JR, Kelly BD, DiNardo JE. Wellness incentives in the workplace: cost savings through cost shifting to unhealthy workers. Health Aff (Millwood) 2013;32:468–476. 11. Jost TS. Health insurance exchanges and the Affordable Care Act: eight difficult issues. Available at: < http:// www.commonwealthfund.org/*/media/Files/Publications/ Fund%20Report/2010/Sep/1444_Jost_hlt_ins_exchanges_ ACA_eight_difficult_issues_v2.pdf > . Accessed August 4, 2013. 12. Wilson JS. The smarter healthcare consumer myth. Available at: < http://www.forbes.com/sites/janetnovack/2013/ 03/18/the-smarter-healthcare-consumer-myth/ > . Accessed July 26, 2013. 13. Beeuwkes Buntin M, Haviland AM, McDevitt R, Sood N. Healthcare spending and preventive care in high-deductible and consumer-directed health plans. Am J Manag Care 2011;17(3):222–230.
Address correspondence to: Bruce W. Sherman, MD, FCCP, FACOEM 3175 Belvoir Blvd. Shaker Heights, OH 44122 E-mail: [email protected]
POPULATION HEALTH MANAGEMENT Volume 17, Number 2, 2014 ª Mary Ann Liebert, Inc. DOI: 10.1089/pop.2013.0077
Beyond Incentives: The Impact of Health Care Reform on Employer Population Health Management Strategies Bruce W. Sherman, MD1 and Chris Behling 2
benefits to either a defined contribution plan or opt for public exchanges, this commentary discusses the roles and implications of this decision for employers, population health management vendors, and employees.
Introduction
I
n 2010, the Affordable Care Act paved the way for employers to shift from a defined benefits strategy to either a defined contribution approach or to opt out of providing health benefits. The precedent for this approach was well established 35 years earlier when, in 1978, Congress approved the Revenue Act, which ushered in the 401(k). Following regulatory approval, employers moved swiftly from defined benefit pension plans to defined contribution 401(k) plans. As a result, employers were able eliminate the liability associated with funding their pension plans and shift much of the risk and burden of retirement savings to the employee. In the current scenario, although it remains unclear how many employers will opt out of traditional employee health care benefits offerings and adopt public or private exchanges, it can be argued that employers in large numbers appreciate the need—and the potential opportunity—to protect themselves from rising medical claims costs. Through either participating in the exchanges, or by simply moving from a defined benefit to a defined contribution structure, it appears certain that employers will continue to embrace risk-management approaches by shifting more risk to employees, health plans, and the health care delivery system. Although many employers may believe that changing from defined health benefits relinquishes their strategic responsibility regarding all things health-related, this is not the case. Although medical claims costs may no longer be as much of a concern for employers that move to a defined contribution strategy or that opt out of providing coverage, workforce performance must remain a business priority. Employee health and well-being are widely (if not universally) held as key contributors to workforce performance. Therefore, if employers want to optimize business performance, then they will need to maintain meaningful involvement in management of workforce health and wellbeing. For employers that shift from traditional health 1 2
Workforce Health: An Organizational Cost—or a Strategic Business Investment?
Traditionally, health care expenditures have been perceived as a necessary cost of doing business. Generally, human resources personnel are charged with managing benefits costs as a line item expense, with organizational success generally measured in terms of health care cost trend.1 In recent years, consideration of organizational costs associated with health risks and poor health has been expanded to include absence and presenteeism, which can add significantly to the measured organizational cost of poor health.2–6 Although organizations may appreciate that a healthy workforce may have qualitative organizational value, the tangible nature and magnitude of health care expenditures have effectively constrained leadership attention to address costs as a primary focus. Accordingly, benefits departments have adopted strategies to mitigate health care cost increases, using both ‘‘blunt’’ (cost shifting) and ‘‘sharp’’ (value-based benefit design) instruments. More substantial health plan design changes, including high-deductible health plans, also have been adopted with the understanding that if an individual is spending his or her own funds, inappropriate utilization of health care will be reduced appropriately. More recently, 2 dimensions related to health benefits appear to be undergoing a substantial redefinition. Wellbeing as a broader measure of health seems to be replacing traditional wellness as an employer focus, encompassing not only physical and behavioral health, but also financial, social, and work environment components.7 At the same time, the impact of workforce health and well-being on business performance is receiving greater attention.8 With growing
Employers Health Coalition, Inc., Canton, Ohio and Case Western Reserve University School of Medicine, Cleveland, Ohio. AXA, New York, New York.
67
68
interest in preventive services and a proactive approach to workforce well-being, employer health benefits strategies are increasingly being perceived as strategic investments in human capital. Mounting awareness of these concepts has already begun to impact employer benefits strategic planning, and likely can have a growing influence with respect to employer response to health care reform. For example, some employers have implemented health management strategies that are yielding greater levels of workforce health and well-being, along with improved business performance.9 For these entities, there may well be less inclination to relinquish their role in providing effective health benefits management. On the other hand, if employers limit their focus to the cost impact of continued health benefits as part of a cost-containment strategy, elimination of a substantial organizational expenditure may warrant serious consideration. Future Scenarios
Employers are faced with the decision to continue with current health benefits offerings, opt for a defined contribution approach as afforded by the private exchanges, or opt out of providing health benefits entirely. Each alternative is associated with specific health, productivity, and cost considerations. The differential impact of these different alternatives on workforce health, well-being, and performance likely will be substantial. Each of these components should be taken into consideration as part of the strategic planning process. Implications and Considerations for Employers
Employers that opt out of traditional health insurance may risk decoupling well-being from health benefits. For those that take this step and yet intend to offer programs to improve health, well-being, and productivity, new approaches will be necessary in at least 4 areas: 1) Gathering the data necessary to offer and support these initiatives in the face of likely limited access; 2) Implementing innovative strategies (including incentives) to promote engagement and desired outcomes; 3) Incorporating metrics that meaningfully demonstrate program success in the likely absence of claims data, including measures of participation, individual and aggregate outcomes, and their link to business performance; and 4) Ensuring access to the necessary administrative support to manage these programs. Employers opting for the exchanges may well lose access to aggregate population health data previously obtained via medical claims analysis. Depending on their approach to defined contribution plans, employer ability to identify population health concerns meriting attention may be significantly limited. Even with this limitation, employers may still be interested in well-being programs, recognizing the potential for the associated productivity and/or performance gains. However, the opportunity to utilize financial incentives for plan sponsors opting out of a defined benefits offering also will be significantly changed. Employers opting for defined contribution plans will need to consider using a different incentive approach to promote
SHERMAN AND BEHLING
well-being program participation and outcomes because linking incentives to insurance premiums or account-based health plan contributions will no longer be an option. Instead, employers may consider providing incentives in the form of incremental increases in defined contribution amounts for benefits purchasing. This approach may permit individuals to buy a richer benefit plan or supplemental health and well-being benefit offerings. Paradoxically, individuals who are unable to achieve the target goals for incentives will, in effect, be penalized. Unfortunately, these individuals may be the ones who can least afford to have a more costly benefit.10 The employer approach to measurement of program effectiveness also will need to be reevaluated. In the past, employers have received program data from population health management companies, and typically have controlled the data for differences in population demographics. In the absence of claims data, it may be more challenging to identify and incorporate metrics that reasonably reflect program outcomes or exert any meaningful impact on business performance. Finally, employers interested in maintaining a role in providing employee wellness and well-being programs after adopting a defined contribution strategy or opting out of health care altogether may need to find new sources of administrative support for these offerings. This may be particularly important for employers that utilize private exchanges, where human resources staffing reductions have been identified as part of the value proposition. In an exchange scenario in which multiple health plans provide benefits offerings, a single organization-wide wellness or well-being program may well need to come from either the exchange itself or third-party vendor. If provided by each of the health plan exchange-based offerings, wellness and wellbeing programs will almost certainly vary in effectiveness when applied across the covered employer population. Similarly, stand-alone population health management organizations will need to adopt new strategies and approaches to offer services to employees in a post-exchange world. These considerations and implications are described in the following section. Implications and Considerations for Population Health Management Companies
Population health management companies will need to embrace new business models. For those directly involved in private exchanges, there may be a need to shift from a focus on the employer or third-party administrator as purchasers to the health plans within the exchanges. This will necessitate offering programs directly to consumers, as the business model may shift from a business-to-business to a business-to-consumer transaction. Alternatively, population health and well-being vendors may consider direct sales to accountable care organizations (ACOs) and integrated delivery networks that generally do not have the internal expertise to provide these programs at a population level. This approach will necessitate meaningful integration with the care management approach delivered by these entities. With a redefinition of the customer as purchaser, population health management companies will need to adapt to a changing marketplace.
BEYOND INCENTIVES
69
Population health management vendors also will need to adopt new approaches to incentive designs to promote desired engagement and outcomes for employers who continue to offer programs as a supplement to private or public exchange-based benefits. Given recently articulated concerns about the effectiveness of well-being programs in terms of impacting health care costs, vendors will need to ensure that they are clearly able to demonstrate value, particularly when no health plan claims data are available. It is in precisely this scenario that vendors will need to look to other metrics, including absence, presenteeism, performance evaluations, and other measures of business value, to provide ongoing justification for their continued program implementation. Medical claims costs may well cease to be the key measure for employers who have transitioned from defined benefit strategies. Instead, metrics and measures may need to be focused on tangible improvements in employee performance. Finally, some employers will assuredly minimize their direct sponsorship of health and well-being offerings. For these organizations, population health management vendors will lose the convenience of the worksite as a venue for implementation. This will necessitate the development of innovative vendor approaches to engage participants and achieve desired outcomes. These approaches could include retail settings, community settings, as well as new forms of mobile and electronic interactions.
purchase supplementing core health benefits, it is unclear how many individuals would appreciate the program’s value enough to justify its purchase. Low well-being and condition management participation rates provide testimony to this argument, even when accompanied by employer incentives. Therefore, it may make more sense for employers evaluating private exchange options to select offerings that incorporate meaningful well-being and condition management components as part of their core services, rather than provide them as a supplemental buy-up component. Third, in the setting of high out-of-pocket costs, individuals may not appropriately utilize services. Experience with high-deductible health plans has produced variable results with respect to compliance with preventive care and other recommended services, leading some to express concern that many employees and family members are unprepared to assume responsibility for proactive health management.13 If this pattern continues, and employees and their families fail to make appropriate health care decisions, overall health and productivity could decline, resulting in an increase in overall employer health-related costs. Finally, if employers who opt out of health care benefits or move to defined contribution plans also decide to shift their focus away from well-being programs, then employees and their families may have less support in accessing these services, fewer incentives to do so, and less information available to make informed decisions.
Implications and Considerations for Employees/Family Members
Conclusions
Historically, health insurance has been a product that was provided by employers with little, if any, need for the employee to select the most appropriate coverage. But this is about to change. Health insurers forced to compete for the business of individual employees surely will be advertising in much the same way and with at least the same intensity that they recently have begun marketing Medicare Advantage and Medicare Supplement policies. The result is that employees will be inundated with choices regarding their health care coverage that previously they have not had to make. With limited places to turn, it is most likely that employees will continue to look to their employers for guidance, in which case human resources departments still will bear much of the burden of helping employees navigate either public or private exchanges or decide how to best spend their defined contribution dollars.11 The continuing role of employers in their 401(k) offerings is testimony that employers may not be able to completely wash their hands of support for benefits decision-making responsibility. Behavioral economics presents 3 risks to overall health and well-being when employers transition to either private or public exchanges. First, individuals—particularly those with lower incomes—may opt for less costly health benefits options when given a choice.12 In the setting of a defined contribution offering, there is a risk that individuals may underinsure, preferring to receive a larger paycheck in order to address immediate financial concerns, rather than purchase a richer plan for a future, speculative need. Second, if well-being or condition management programs are offered in the public or private exchanges as a separate line-item
In the absence of a meaningful change in health care cost trend, employers in increasing numbers are likely to transition from traditional defined benefit health insurance, and move to private exchanges with a defined contribution approach, or cease offering benefits and steer employees to public exchanges. Implications of this change are substantial, and relate to concerns regarding worsening health, wellbeing, and business performance. Employers must think carefully about the business implications of their benefits strategic planning and be prepared to define new approaches to monitoring the impact of their programs in this new environment. Population health management vendors will need to develop different models for service delivery that can be decoupled from traditional health benefits. The customer model likely will shift away from employer-sponsored programs toward the individual consumer market, health plans, provider networks, or ACOs. With the shift in customer focus, population health management vendors will need to become better at individual consumer engagement and integration with health care delivery system stakeholders. They will also need to refine their metrics to enhance the focus on individual and business performance outcomes. Finally, employees may be impacted most substantially, with a myriad of new decisions regarding health benefits, less support from employers, and a greater expectation for prudent, self-directed, responsible purchasing of health benefits. Employees and their family members also may lose convenient worksite access to both health and well-being programs and to incentives and information designed to drive engagement. With well-being and other population health management programs effectively decoupled from
70
health benefits purchasing and current employer incentive strategies, a tremendous opportunity exists for innovative population health management companies to meet these evolving market needs. Author Disclosure Statement
Dr. Sherman and Mr. Behling declared no conflicts of interest with respect to the research, authorship, and/or publication of this article. The authors received no financial support for the research, authorship, and/or publication of this article. References
1. Economist Intelligence Unit. CEO perspectives: how HR can take on a bigger role in driving growth. London, UK: The Economist Group, 2012. 2. Goetzel RZ, Anderson DR, Whitmer RW, et al. The relationship between modifiable health risks and health care expenditures: an analysis of the multi-employer HERO health risk and cost database. J Occup Environ Med 1998;40:843–854. 3. Integrated Benefits Institute. More than health promotion: how employers manage health and productivity. San Francisco, CA: Integrated Benefits Institute, 2010. 4. Kowlessar N, Goetzel R, Carls G, Tabrizi M, Guindon A. The relationship between 11 health risks and medical and productivity costs for a large employer. J Occup Environ Med 2011;53:468–477. 5. Goetzel RZ, Long SR, Ozminkowski RJ, Hawkins K, Wang S, Lynch W. Health, absence, disability, and presenteeism cost estimates of certain physical and mental health conditions affecting U.S. employers. J Occup Environ Med 2004;46:398–412. 6. Shi Y, Sears LE, Coberly CR, Pope JE. The association between modifiable well-being risks and productivity: a longitudinal study in pooled employer sample. J Occup Environ Med 2013;55:353–364.
SHERMAN AND BEHLING
7. Stanley R. Moving from wellness to well-being. Available at: < http://www.huffingtonpost.com/rose-stanley/movingfrom-wellness-to-well-being_b_1468460.html > . Accessed July 28, 2013. 8. Carnish E. Healthy Employees, Healthy profits: a stronger business case for employee health management programs. Eden Prairie, MN: OptumHealth, 2012. 9. Pope J, Prochaska JO, Taylor ML. Productive well-being: the Gallup-Healthways well-being index. Available at: < http://www.carecontinuumalliance.org/theforum10/ Presentations/Forum%20Track%202/Productive%20WellBeing.pdf > . Accessed December 20, 2012. 10. Horwitz JR, Kelly BD, DiNardo JE. Wellness incentives in the workplace: cost savings through cost shifting to unhealthy workers. Health Aff (Millwood) 2013;32:468–476. 11. Jost TS. Health insurance exchanges and the Affordable Care Act: eight difficult issues. Available at: < http:// www.commonwealthfund.org/*/media/Files/Publications/ Fund%20Report/2010/Sep/1444_Jost_hlt_ins_exchanges_ ACA_eight_difficult_issues_v2.pdf > . Accessed August 4, 2013. 12. Wilson JS. The smarter healthcare consumer myth. Available at: < http://www.forbes.com/sites/janetnovack/2013/ 03/18/the-smarter-healthcare-consumer-myth/ > . Accessed July 26, 2013. 13. Beeuwkes Buntin M, Haviland AM, McDevitt R, Sood N. Healthcare spending and preventive care in high-deductible and consumer-directed health plans. Am J Manag Care 2011;17(3):222–230.
Address correspondence to: Bruce W. Sherman, MD, FCCP, FACOEM 3175 Belvoir Blvd. Shaker Heights, OH 44122 E-mail: [email protected]
