Evidence-based benefit design: toward a sustainable health care future for employers

Health care costs for employers are rising much faster than inflation. The common approach to health benefit design of increasing cost sharing has failed to contain costs. Some employers, however, have been successful at mitigating the cost trend or actually reducing health care costs. These employers have in common a dedication to data analysis, a search for cost drivers, and a willingness to adjust their approach to health benefit design to address these cost drivers. This approach has much in common with the movement in clinical practice toward evidence-based medicine. We propose that employers adopt a similar approach toward health benefits termed evidence-based benefit design, which is based on a health and productivity framework focused on direct and indirect costs. Evidence-based benefit design incorporates the relevant literature and employer-specific data that are integrated and regularly analyzed.     

Private health purchasing practices in the public sector: a comparison of state employers and the Fortune 500

State governments are influential purchasers of health benefits but have not been studied extensively. In a recent survey of senior benefit managers, we examine the extent to which states have followed the private-sector approach to purchasing health care. We found that states have adopted "industrial purchasing" practices similar to those of large private employers but offer greater choice of carriers and pay a higher percentage of premiums. Unions continue to influence health care purchasing in both the public and private sectors. Double-digit increases in health costs and the current budget crisis may force states to align their purchasing practices with the private sector to cut costs.     

An employer's guide to controlling health care costs

Employers are facing difficult times with respect to controlling costs associated with health care benefits provided to employees. Current trends in employer health care costs are unsustainable. Moreover, public policy changes in the form of the Patient Protection and Affordable Care Act are tied up in legal review, and the results are uncertain. This article provides a brief background on health care benefits and costs, discusses consumer-driven and traditional models of health care plans, and reviews cost-control tactics that employers should consider. It concludes with a review of the current situation with recommendations to employers for moderating future health care costs.     

How to present the business case for healthcare quality to employers

Many employers in the US are investing in new programmes to improve the quality of medical care and simultaneously shifting more of the healthcare costs to their employees without understanding the implications on the amount and type of care their employees will receive. These seemingly contradictory actions reflect an inability by employers to accurately assess how their health benefit decisions affect their profits. This paper proposes a practical method that employers can use to determine how much they should invest in the health of their workers and to identify the best benefit designs to encourage appropriate healthcare delivery and use. This method could also be of value to employers in other countries who are considering implementing programmes to improve employee health. The method allows a programme that improves workers' health to generate four financial benefits for an employer - reduced medical costs, reduced absences, improved on-the-job productivity, and reduced turnover - and uses accurate estimates of the benefits of reducing absences and improving productivity.     

Health Care Coverage and Costs in Small Business: An Exploratory Study

Health coverage and health care costs continue to frustrate employers, employees, and public policy makers. Controlling escalating health costs, improving coverage for the uninsured, and providing retiree health care are all important to the small employer. This study was undertaken to investigate the availability and extent of health care coverage and to assess the effects of health care costs on small firms. The results revealed that the percentage of small firms offering health benefits totaled 58 percent. The availability of group health insurance increases as firm size increases. Small employers cited insufficient profits, high insurance costs, and unavailable group coverage as the primary reasons for not offering health benefits. The results also indicated that the vast majority of small firms opposed a mandated employer-provided health coverage and suggested that small businesses should pool together to form groups to reduce the cost of health care coverage for small firms.     

Health care coverage and costs in small business: an exploratory study

Health coverage and health care costs continue to frustrate employers, employees, and public policy makers. Controlling escalating health costs, improving coverage for the uninsured, and providing retiree health care are all important to the small employer. This study was undertaken to investigate the availability and extent of health care coverage and to assess the effects of health care costs on small firms. The results revealed that the percentage of small firms offering health benefits totaled 58 percent. The availability of group health insurance increases as firm size increases. Small employers cited insufficient profits, high insurance costs, and unavailable group coverage as the primary reasons for not offering health benefits. The results also indicated that the vast majority of small firms opposed a mandated employer-provided health coverage and suggested that small businesses should pool together to form groups to reduce the cost of health care coverage for small firms.     

Employer-sponsored health insurance: pressing problems, incremental changes

Despite large premium increases, employers made only modest changes to health benefits in the past two years. By increasing copayments and deductibles and changing their pharmacy benefits, employers shifted costs to those who use services. Employers recognize these changes as short-term fixes, but most have not developed strategies for the future. Although interested in "defined-contribution" benefits, employers do not agree about what this entails and have no plans for moving to defined contributions in the near future. While dramatic changes in health benefits are unlikely in the short term, policymakers may want to watch for future erosions in health coverage.     

Employers are using "episodes of care" to improve benefits

Employers are turning to claims analysis models developed by consultants to streamline health benefits and to contain the cost of care. Measuring episodes of care is supposed to give employers a more precise picture of what health care costs.     

Employers' views on incremental measures to expand health coverage

This paper examines employers' views on the importance of health benefits and their perspective on policies aimed at expanding health coverage, reducing administrative expenses, and improving the quality of care. Employers of all sizes hold a positive view of the value of health benefits in attracting and retaining workers and in improving workers' health and productivity. Small employers support strategies that would make coverage more affordable; large employers support policies that reduce administrative costs and improve quality. Both support policies that would require additional administrative action as opposed to greater financial commitment on the part of firms in expanding coverage.     

Managing health care costs: strategies available to small businesses

Although health care costs continue to rise at an alarming rate, small businesses can take steps to help moderate these costs. First, business firms must restructure benefits so that needless surgery is eliminated and inpatient hospital care is minimized. Next, small firms should investigate the feasibility of partial self-insurance options such as risk pooling and purchasing preferred premium plans. Finally, small firms should investigate the cost savings that can be realized through the use of alternative health care delivery systems such as HMOs and PPOs. Today, competition is reshaping the health care industry by creating more options and rewarding efficiency. The prospect of steadily rising prices and more choices makes it essential that small employers become prudent purchasers of employee health benefits. For American businesses, the issue is crucial. Unless firms can control health care costs, they will have to keep boosting the prices of their goods and services and thus become less competitive in the global marketplace. In that event, many workers will face a prospect even more grim than rising medical premiums: losing their jobs.     

Health Insurance Premium Increases for the 5 Largest School Districts in the United States, 2004–2008

Background

Local school districts are often one of the largest, if not the largest, employers in their respective communities. Like many large employers, school districts offer health insurance to their employees. There is a lack of information about the rate of health insurance premiums in US school districts relative to other employers.

Objective

To assess the change in the costs of healthcare insurance in the 5 largest public school districts in the United States, between 2004 and 2008, as representative of large public employers in the country.

Methods

Data for this study were drawn exclusively from a survey sent to the 5 largest public school districts in the United States. The survey requested responses on 3 data elements for each benefit plan offered from 2004 through 2008; these included enrollment, employee costs, and employer costs.

Results

The premium growth for the 5 largest school districts has slowed down and is consistent with other purchasers—Kaiser/Health Research & Educational Trust and the Federal Employee Health Benefit Program. The average increase in health insurance premium for the schools was 5.9% in 2008, and the average annual growth rate over the study period was 7.5%. For family coverage, these schools provide the most generous employer contribution (80.8%) compared with the employer contribution reported by other employers (73.5%) for 2008.

Conclusions

Often the largest employers in their communities, school districts demonstrate a commitment to provide choice of benefits and affordability for employees and their families. Despite constraints typical of public employers, the 5 largest school districts in the United States have decelerated in premium growth consistent with other purchasers, albeit at a slower pace.Local school districts are one of the largest employers in the United States, employing roughly 8 million employees in 2008.1 Locally, they are often one of the largest (if not the largest) employers in the communities they serve. Like many large employers, school districts offer an array of benefits to their employees, including health insurance. Employee benefits comprise 34.3% of total compensation for public-sector employees,2 with health insurance representing 10.9% of total compensation.2     

Population-based worksite obesity management interventions: a qualitative case study

Due to the increased prevalence of obesity and associated direct and indirect costs to employers, weight management programs have become an integral component of employer and insurer benefits plans. The programs vary in foci, scope, breadth, and implementation. The aim of this study was to explore promising employer-sponsored population-based obesity management programs. A case study that utilized a telephonic semi-structured questionnaire was conducted with small and large organizations located in different regions of the United States that had been recruited to participate. Eight employers and 1 health care advocacy coalition who met the inclusion criteria were interviewed about features of their weight management programs. The case study revealed a number of themes consistent with reports in the literature and reflecting cited best practices. Key findings include confirmation that weight management is a significant component of the wellness strategy in all participating organizations because employers are invested in population health programs and cost savings. Based upon their experience and knowledge, occupational health specialists are responsible for designing, implementing, managing, and evaluating employee health programs. Almost all employers utilize electronic media as a prominent component of wellness and disease management initiatives. Experience has shown that incentives-both financial and nonmonetary-are effective motivators for employee engagement and outcomes. However, while employers report success, favorable outcomes have been difficult to quantify.     

Employer coverage of clinical preventive services in the United States

PURPOSE: To characterize employers' coverage of clinical preventive services. DESIGN: Mercer Human Resource Consulting Inc. included questions on clinical preventive services as part of its National Survey of Employer-Sponsored Health Plans, 2001. SETTING: A national sample of employers of a large, medium, and small number of employees, including governments. SUBJECTS: Respondents self-identified as most knowledgeable about the organization's health benefits. MEASURES: Weighted analyses of responses to eight survey questions on health promotion. RESULTS: The survey was completed by 2180 employers, and the response rate was 21%. More than 90% of employers included increased productivity and decreased health care costs among their most important reasons for coverage of clinical preventive services. Within health insurance, coverage of physical examinations, immunizations, and screenings generally exceeded 50%, but coverage of lifestyle modification services was less than 20%. Only 20% of employers covered tobacco cessation services, and only 4% of employers provided an "optimal" benefit. We compared employers' offerings with a published ranking, by impact and value, of clinical preventive services. We found the biggest discrepancy in tobacco cessation services and alcohol problem prevention, which ranked high in terms of impact and value but are offered by only 20% and 18% of employers, respectively. CONCLUSIONS: Employers seek financial return from their offerings of clinical preventive services to employees, but they are least likely to offer the services most likely to provide this return.     

The Cost of Unintended Pregnancies for Employer-Sponsored Health Insurance Plans

Background

Pregnancy is associated with a significant cost for employers providing health insurance benefits to their employees. The latest study on the topic was published in 2002, estimating the unintended pregnancy rate for women covered by employer-sponsored insurance benefits to be approximately 29%.

Objectives

The primary objective of this study was to update the cost of unintended pregnancy to employer-sponsored health insurance plans with current data. The secondary objective was to develop a regression model to identify the factors and associated magnitude that contribute to unintended pregnancies in the employee benefits population.

Methods

We developed stepwise multinomial logistic regression models using data from a national survey on maternal attitudes about pregnancy before and shortly after giving birth. The survey was conducted by the Centers for Disease Control and Prevention through mail and via telephone interviews between 2009 and 2011 of women who had had a live birth. The regression models were then applied to a large commercial health claims database from the Truven Health MarketScan to retrospectively assign the probability of pregnancy intention to each delivery.

Results

Based on the MarketScan database, we estimate that among employer-sponsored health insurance plans, 28.8% of pregnancies are unintended, which is consistent with national findings of 29% in a survey by the Centers for Disease Control and Prevention. These unintended pregnancies account for 27.4% of the annual delivery costs to employers in the United States, or approximately 1% of the typical employer''s health benefits spending for 1 year. Using these findings, we present a regression model that employers could apply to their claims data to identify the risk for unintended pregnancies in their health insurance population.

Conclusion

The availability of coverage for contraception without employee cost-sharing, as was required by the Affordable Care Act in 2012, combined with the ability to identify women who are at high risk for an unintended pregnancy, can help employers address the costs of unintended pregnancies in their employee benefits population. This can also help to bring contraception efforts into the mainstream of other preventive and wellness programs, such as smoking cessation, obesity management, and diabetes control programs.     

Separate spheres and indirect benefits

On any plausible account of the basis for health care resource prioritization, the benefits and costs of different alternative resource uses are relevant considerations in the prioritization process. Consequentialists hold that the maximization of benefits with available resources is the only relevant consideration. Non-consequentialists do not reject the relevance of consequences of benefits and costs, but insist that other considerations, and in particular the distribution of benefits and costs, are morally important as well. Whatever one's particular account of morally justified standards for the prioritization of different health interventions, we must be able to measure those interventions' benefits and costs.There are many theoretical and practical difficulties in that measurement, such as how to weigh extending life against improving health and quality of life as well as how different quality of life improvements should be valued, but they are not my concern here. This paper addresses two related issues in assessing benefits and costs for health resource prioritization. First, should benefits be restricted only to health benefits, or include as well other non health benefits such as economic benefits to employers from reducing the lost work time due to illness of their employees? I shall call this the Separate Spheres problem. Second, should only the direct benefits, such as extending life or reducing disability, and direct costs, such as costs of medical personnel and supplies, of health interventions be counted, or should other indirect benefits and costs be counted as well? I shall call this the Indirect Benefits problem. These two issues can have great importance for a ranking of different health interventions by either a cost/benefit or cost effectiveness analysis (CEA) standard.     

Estimating workers' marginal valuation of employer health benefits: would insured workers prefer more health insurance or higher wages?

In recent years the cost of health insurance has been increasing much faster than wages. In the face of these rising costs, many employers will have to make difficult decisions about whether to cut back health benefits or to compensate workers with lower wages or lower wage growth. In this paper, we ask the question, "Which do workers value more -- one additional dollar's worth of health benefits or one more dollar in their pockets?" Using a new approach to obtaining estimates of insured workers' marginal valuation of health benefits this paper estimates how much, on average, employees value the marginal dollar paid by employers for their workers' health insurance. We find that insured workers value the marginal health premium dollar at significantly less than the marginal wage dollar. However, workers value insurance generosity very highly. The marginal dollar spent on health insurance that adds an additional dollar's worth of observable dimensions of plan generosity, such as lower deductibles or coverage of additional services, is valued at significantly more than one dollar.     

Movement toward individual health benefit accounts

There are strong pressures for employers to pursue defined contribution health benefits with individual health benefit accounts such as Medical Savings Accounts (MSAs), Health Care Reimbursement Accounts (HCRAs), and Comprehensive Individual Medical Accounts (CIMAs). Health care consumers are becoming more assertive. The political backlash against managed care is eroding provider-based cost control mechanisms. Health insurance premium inflation is intensifying. Advocates of the movement toward individual health benefit accounts view them as a means of restoring autonomy to the physician-patient relationship and controlling costs. Opponents are concerned that individual health benefit accounts of any type will segment insurance markets, benefiting the healthy and wealthy at the expense of the chronically ill and the poor. Can these accounts be designed so as to achieve their positive effects and minimize negative effects?     

Work with area employers to improve cost-efficiency

Employers are becoming more active in affecting health care delivery systems and developing new health care coalitions and systems. Hospitals will benefit from building a dialog with the employers and industry groups in their service areas. By sharing information and working together, hospitals and employers have the opportunity to check rising costs, avoid duplication of services and maximize utilization of health care resources.