One man’s stick is another’s carrot
The Obama administration issued proposed regulations for commentary concerning key elements of the Affordable Care Act last week. One of those elements clarifies and cements key wellness provisions in the law. Starting on January 1, 2014, businesses will be able to offer incentives to employees amounting up to 30% of the cost of their insurance premium for participation in wellness plans.
According to recent reports from insurance consultant, Mercer, large businesses are increasing their enthusiasm for what is referred to by insurance practitioners as CDHP, or Consumer Driven Health Plans. The general concept is that consumers (formerly known as employees) should be given incentives to find more cost-effective solutions for both the purchase of healthcare services and participation in prevention strategies.
This rule pertains to that branch of CDHPs that offer incentives to employees for participating in any of a range of qualified prevention plans such as anti-tobacco and weight loss classes, walking and exercise programs, and cooking classes. Other programs incent getting annual health checkups and taking (or at least buying) the prescriptions that are prescribed for chronic diseases such as diabetes and asthma.
Benign efforts such as these don’t tend to turn a lot of heads. But, then they haven’t all been shown to be that effective. Lots of feel good, less measurable savings for businesses. The next step, however, is toward much more interventionist strategies that measure not just participation but outcomes. The 30% incentive can amount to thousands of dollars per year for a family health plan. If the insurance premium savings is only available to participants who achieve targets or progress toward targets like quitting smoking or a lower body mass index, then the carrot can start to feel a bit more like a stick. However, the effectiveness of this level of engagement may prove to be more effective.
About the Author
Phil Edmundson is the Chairman and CEO of William Gallagher Associates (WGA), insurance brokers and consultants for businesses with over 30 years in the insurance industry. He manages strategy, talent acquisition and development, and management / acquisitions at WGA.