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Changes Coming In Employers' Medical Programs

Many expect to increase employee contributions

By James Limbach
ConsumerAffairs.com

October 8, 2009
As employees flip through their open enrollment packets, they may notice substantial changes to their medical plan for 2010.

According to the 2009 Benefits & Talent Survey by Aon Consulting, the changes are likely to range from increases to employee contributions to introducing a wellness program.

In a survey of 1,313 employers nationwide, Aon found that 41 percent of employers are expecting to make more substantial changes to their 2010 medical program than they did this year. Specifically, 70 percent are planning to increase employee contributions and 67 percent are expecting to raise deductibles, co-pays, coinsurance or out-of-pocket maximums.

In addition, more than half of employers are expecting to introduce or expand a wellness program next year, and 34 percent are planning to introduce or increase financial incentives for wellness programs in 2010.

"As in year's past, many employers are expecting to shift additional health care costs to employees in 2010 to share the burden of double-digit rate increases," said John Zern, U.S. Health & Benefits Practice Director with Aon Consulting. "However, it may be more dramatic next year, as many organizations try to avoid taking other drastic measures such as layoffs or salary freezes. Conversely, the good news is found in that more than half of employers are planning to either introduce or expand wellness programs, in an effort to build a healthier and more productive workforce, and ultimately lower health care costs."

Short-term solutions

To reduce employer and employee health care costs, employers have been implementing various types of audits as a short-term savings solution. According to the survey, 46 percent of organizations conducted a dependent eligibility verification audit in 2009 or earlier, and 20 percent are planning to do so in 2010 or later. These audits are designed to save on health care costs by ensuring only eligible dependents are covered.

"Employers who conduct dependent eligibility audits can see immediate savings ranging from 3 percent to 10 percent in dependent health care costs," said Tom Lerche, U.S. Health Care Practice Leader with Aon Consulting. "Achieving savings from removal of ineligible dependents may reduce the need for further employee layoffs and will ensure program integrity."

Other audits employers are planning to implement in 2010 or later include electronic prescription drug (16 percent of employers); medical claims (13 percent of employers); and prescription rebate (12 percent of employers).

Long-term solutions

Not only are employers taking advantage of short-term cost savings opportunities, they are also offering wellness and disease management initiatives to help improve the health care cost trend in the long-term.

The survey found 67 percent of employers have promoted exercise/physical activity in 2009 or earlier, and another 12 percent are planning to implement this initiative in 2010 or later. Additionally, 63 percent of respondents offer disease management programs and 10 percent plan to do so in 2010 or later.

Wellness programs rely on improved health to lower costs. In order to measure progress, organizations offer employees a health risk appraisal (HRA) and biometric screenings as benchmarks.

In fact, the survey found 52 percent of organizations have already offered both an HRA and biometric screenings. What's more, 20 percent are planning to implement an HRA and 16 percent are planning to implement biometric screenings as early as next year.

"Both the HRA and biometric screenings are important components of a wellness program," said Paul Berger, chief medical officer with Aon Consulting's Health & Benefits Practice. "Based on self-reported data, HRAs provide employees with personalized feedback to help meet their health goals. Biometric screenings, on the other hand, provide employers with objective data based on such tests as cholesterol and blood sugar. This gives employers a better understanding of the health risks in their employee population on an aggregated basis; as a result, they can develop the right wellness and disease management programs for their workforce."

The key to a successful wellness and disease management program depends on participation, and one way to motivate employees to sign-up is by offering incentives, according to Berger.

The survey found 41 percent of employers offer a gift card or merchandise as an incentive, and of those organizations that offer at least one incentive, 39 percent offer between $50 and $249 as the maximum value an employee can earn in one year.

Tracking the status of health measures also is an important component of any wellness or disease management program. According to the survey, some of those measures employers are tracking include:

• Medical costs of chronic conditions (45 percent)

• Participation in corporate wellness/preventive activities (36 percent)

• Participation in corporate disease management programs (32 percent)

• Biometric data (28 percent)

"While these numbers are encouraging, the overwhelming majority of employers are still not tracking the indirect affect of chronic conditions: presenteeism and absenteeism," Berger said. "Only 10 percent of employers are tracking measures of presenteeism, and only 13 percent are tracking absence costs of chronic conditions." Presenteeism is a term used to describe those who are working but who are not productive due to illness, stress, depression, or injury.

"Once employers know the impact chronic conditions have on their employees' productivity and absences from the workforce, they can begin to make greater improvements to their programs to lower health risk factors and build a healthier, more productive workforce," Berger added. "Done right, a wellness program will reduce medical trend, presenteeism, absences from work and the incidence and duration of disability."

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