It’s Time for Behavior-based Health Insurance Rates

Sami Bég, MD

(HealthNewsDigest.com) - Wellness programs are gaining traction as a way to rein in health care costs. If they are to succeed, however, they need to be designed effectively. Too many programs provide a weak return on investment because they are offered only to fill a check box that a program exists. The existence of a wellness program offers no guarantee of results. To achieve real results and ROI, the program must do more than screen and educate; it must motivate people to change their behavior.

In the United States, 80 percent of health care dollars and 70 percent of deaths stem from the same chronic conditions. Most of these can be prevented by following simple guidelines like refraining from smoking, eating healthy foods and exercising regularly. Yet, Americans continue to make unhealthy choices. Whether it’s daily soft drinks, regular junk food or the comfortable couch, bad habits are hard to break. Consequently, diabetes and obesity have reached epidemic proportions.

The United States spends approximately $2.5 trillion, or 17.6 percent of the gross domestic product, on healthcare expenditures. By 2018, experts expect these expenditures to reach $4.4 trillion—more than double 2007 spending—continuing a disturbing trend to our nation’s ability to compete globally. And when General Motors reports spending more on health insurance than on steel, it should make us all pause and ask if we want all of our businesses, no matter what industry, to be in the business of providing health care.

There has never been a more pressing need for widespread behavioral change.

Learning from the Automotive Insurance Industry

For an effective behavioral change model, we need only look at the auto insurance industry. Imagine everyone paid the same for car insurance regardless of their driving record. Would that be fair? Does it make sense for your car insurance to increase if Joe Smith decides to speed down a busy street while texting and eating a sandwich? Overwhelming evidence shows that Joe’s unwise choices make him more likely to cause an accident. Doesn’t it make more sense to charge Joe a rate based on his driving behavior?

Absolutely. In fact, the auto insurance industry has done this for years. Car insurance rates are based on your driving history. Multiple tickets or accidents indicate unwise choices that put people at higher risk. As a society we accept these higher premiums. We adjust rates in the auto insurance, life insurance and homeowners insurance industries based on prevention and proactivity; and no one raises an eyebrow.

Yet, when it comes to health insurance, personal choices do not seem to matter. We just accept that rates will go up universally—131 percent since 1999 according to the 2009 Employer Health Benefits Survey by the Kaiser Family Foundation. While health insurance cannot be simplified to the point of parity with other insurance categories, we can learn important lessons from auto insurance.

Providing Ways to Earn Lower Rates

The auto industry has long understood the solution to driver safety is two-fold: premium differentials and earned discounts. Got a squeaky clean driving record? Discount. Use seatbelts regularly? Discount. Discounts even apply for anti-lock brakes, air bags and day time running lights. Why? Because this equipment reduces accidents and increases driver safety. The auto industry goes even further, offering defensive driving and driver’s education discounts. If someone makes the effort to learn how to drive more carefully, over time that education will lower the chances of bad outcomes. The industry does not wait to see if the education actually impacts the driving record; it assumes in good faith that this education will improve the individual driving behavior.

The health insurance industry employs some rating strategies based on individual profiles. Unfortunately, these are based mostly on illness or expected healthcare utilization. Often they charge high rates for people with chronic conditions without taking a vested interest in people’s health or providing the education, tools and guidance to manage these conditions. The auto industry provided an opportunity for Joe to earn discounts if he became proactive. The health insurance industry should do the same when an individual becomes proactive with his or her health.

The Time for Action is Now

Now is the time for employers and others to promote and support lifestyle based premium discount strategies for health insurance. Employers need to insist that insurance companies provide discounts to people who place prevention at the forefront, making wise choices towards their health and proving it through clear-cut measures. In fact, this movement should be one of the central themes of health care reform. One of the best ways to reverse the trend of chronic diseases in the country is to develop a model that links an individual’s behavior to the discount he or she receives on an insurance rate. Only when unhealthy behaviors start hitting us directly in our pocketbooks will we take notice and begin to stop smoking and maintain healthier weights. Disciplining ourselves to understand our habits, learn best strategies and take care of our bodies—just like we would take care of the car we drive through an oil change or tire rotation—needs to become a societal norm. With the workplace a central part of many people’s lives, employers can play a crucial role in creating a national prevention movement. Our nation’s employers can move in the right direction by working with health insurance companies to promote a paradigm shift from reactive to proactive health care.

How Employers Can Lead the Way

While employers wait for industry-wide reform, they can follow the auto insurance example by linking premium discounts for their portion of health insurance to regular health education and good health choices by employees. Enrollment in educational programs, such as smoking cessation or nutrition classes, and participation in healthy physical activities should provide discounts on health insurance. Likewise, outcomes, as measured through biometrics, need to provide further discounts. This does not refer to health conditions, which are outside of an individual’s immediate control, but to the lifestyle choices and the direct outcomes of those choices (Body Mass Index (BMI), Lipids, Glucose, Blood Pressure and Tobacco use). If we just concentrate on BMI and tobacco use on the assessment side, and provide the lab values as a personal gauge, we can make a real difference in engaging the individual. And all this can be done by creating a proactivity metric that accommodates people with chronic conditions by providing modified parameters based on reasonable expectations for different risk categories. With smoking rates on the decline from even a few decades ago, we know that well structured policies – though seemingly unpalatable initially — can make a real difference.

Redefining Health Insurance Delivery – A Much Needed Paradigm Shift

A properly designed worksite wellness program helps fill the gaps in our health care system. However, these incentives must also satisfy important legal criteria. For example, a premium discount cannot exceed 20 percent of the total cost of single coverage or, if spouses or dependents are included, 20 percent of the total cost of family coverage. This 20 percent limit includes both the employer and employee share of premiums.

Similarly, employers must follow HIPPA and GINA guidelines to ensure no personally identifiable health information is shared and premiums are not based on genetic information. Basing the premium discount on metrics that rate people based on their behavior rather than on factors outside their direct control, such as genetics and chronic conditions, can help address these important concerns. Additionally, by having an independent entity—one that isn’t directly affiliated with the employer or the health insurance company—provide these services further helps build a trustworthy and lasting relationship with members, leading to higher participation and better outcomes.

The auto insurance industry provides a viable blueprint for moving in the direction of real change. To customize premiums to the lifestyle behaviors of individuals rather than blanketing everyone with a high rate just makes sense. Providing real health insurance discounts for people who adopt behaviors that lower risks and produce better outcomes must become the norm for health insurance. Otherwise, wellness will mean no more than checking another check box and throwing our money—and our economy—into a large black hole that gets bigger and bigger as each year passes.

1. Why should we offer our employees an opportunity to be screened at our workplace?

Well besides the warm fuzzy stuff like showing your team that their health is important to you, there are some concrete reasons as well; and it is important to point these out in order to get people to participate.  Research shows that the majority of people don’t know their numbers, (numbers such as cholesterol, glucose, blood pressure, etc) and those that don’t know their numbers are less likely to be proactive about their health.  This is one reason why many people end up treating diseases and disorders after the fact instead of implementing life strategies to stay healthy or catching a potential problem before it becomes life threatening or costly… and the warm fuzzy stuff goes a long way too!

2. What does this do for our employees?

Providing an opportunity to have health screenings at the workplace breaks down the barriers (hours away from work, cost of tests, multiple doctors for different tests, follow-up, etc) to getting the tests done and jumpstarts the path to taking action.

3. How do we get our employees to participate?

Promote Promote Promote!  Begin by having your CEO or most influential person in your company communicate about it first - either in an email, an all company voicemail, or at a meeting.  Emphasize the importance and that the reason you are providing the screenings is because you care about their health and well-being and saving them money on their healthcare expenditures now and down the road.  Hang posters, send emails and get your ‘wellness ambassadors’ to talk it up, include wellness providers and advisors at your event, give away prizes and incentives for participation.

4. What screenings should we offer?

The screenings that you offer are actually less important than how you use the information.  Most of the time, companies are looking for health risks.  Then they single out the people with health risks and nag them to be less of a risk.  This will get some people to change out of fear, but you will have better luck shifting your culture to one of well-being if you focus on maximizing human potential as opposed to looking solely at the risks.  When you focus on human potential and provide the proper support, the health risks will mostly take care of themselves.  So while you will probably want to include blood tests for cholesterol and glucose and blood pressure screenings, or early detection cancer screenings, don’t forget to focus the majority of your testing on well-being measures such as fitness, proper nutrition, spinal health, stress and nervous system function.  And then use your test results to maximize human performance!

5. How do we choose a screening vendor?

Be sure to choose a screening vendor that has the same vision and purpose for the screenings as you do.  This means that you need to have a clear understanding of why you are doing the tests and a defined path of how you will use the results.  Is it important to you that your workers receive their results immediately?  Is it important to you that your workers have instant access to resources and health coaches to help them act on their results?  Do want a vendor that can help you understand the results and develop your wellness program? Whether you want help structuring your program or not, you will definitely want to receive an aggregate report of the information in order to tailor make your wellness initiative around your company’s unique results.  Otherwise, why measure?  Decide what is important for you to get out of the screenings, and tailor your questions to help you find the best fit.

6. How does this help our company?

The most immediate way that providing on-site bio-screenings helps your company is that your employees now know their numbers and you know where your company stands.  Now you are armed with important information that will help you define your organization’s path to well-being.  You can invest your hard-earned dollars with laser-like focus that will give you the best return on your investment by providing workshops and coaching around the interests and issues that your employees and your company find most important.

7. How will we see a return on this investment?

The only way your company will realize a return on this investment is if you use the information now that you have it!  Create a wellness initiative that not only focuses on managing sickness, but more importantly on maximizing wellness.  Healthy, happy employees are more productive, take fewer sick days, have lower health care costs, and perform at higher levels.  Creating a healthier workplace takes time and vigilance, but there is not longer any debate over whether or not investing in wellness will save your company money.

Commit to wellness and boost your bottom line.  Dabble in wellness and take your chances.  You decide.

If you are, then money is probably not the only thing that is running low right now. When cut-backs happen, morale usually follows the money out the door. Now is the perfect time to take little steps to show your employees how very important they are to you and your organization. One of the greatest predictors of employee productivity and performance is knowing that their employer cares about them.  Here are some simple ways to boost employee morale, energy and overall health and well-being:

1. Hold a health and wellness fair and give away prizes donated by community businesses. You’ll be showing your employees that you care, introducing them to resources they might be looking for, and giving away gifts without spending the money on them yourself!

2. Schedule short ’strengths’ meetings with each employee to discuss how their innate gifts can be showcased in their work. Studies completed by the Gallup Organization show that employees who have an opportunity to play to their strengths most of the time are more productive, more likely to stay in their job, and receive higher customer satisfaction scores.  Your employees will leave the meeting feeling invigorated and your company will benefit.

3. Put on a ‘health’ challenge directly from the CEO or most influential person in your company. Challenge employees to walk 30 miles in 30 days.  Start a company walking club and encourage employees to complete the challenge together.  Enter all employees who complete the challenge in a drawing for a free 3 month gym membership.  You will get your employees moving, which increases their level of health and stimulates their brain and natural mood enhancing chemicals, creating healthier, happy, more productive teams.

4. Establish an attitude of gratitude in your organization by leaving your employees quick notes of thanks for a job well done. Recognition, even when free, goes a long way in showing someone you care and increasing productivity.

5. Survey your employees using myWellmetrics online service about their feelings on work related areas such as: sense of team, resources and support, work-life balance, fit with culture, square deal, belief in company, job satisfaction, work growth, feeling energized and work meaning. Once you know where your company stands, you can focus your hard earned dollars in the right direction.  While it might cost you $0.01 - 0.02 per employee per hour, that two cents will save you oodles of dollars in the long run.  And while you’re at it, you’ll be giving your employees an opportunity to engage with and challenge their coworkers, create their own plan for well-being and access a supportive coach to help them make their plan a reality. You’ll be learning clear, concise simple ways to boost the bottom line of your company, and your employees will gain an opportunity to boost the bottom line of their lives.  It’s a win-win situation.

Employees need more than survival and security from their work, the area of their lives that occupies most of their time.  They also need to know that they are accepted, cared about, and respected by their teammates and supervisors and that they have an opportunity to grow in their work.  Showing them you care might be simpler and less expensive than you think.