You probably can’t help but notice lately all the reports about the Supreme Court hearings on the Affordable Care Act (healthcare reform). This is a heated topic in the U.S. because the American health care system is almost unique in the extent to which it funnels health spending through employers. While most of the big developed nations use some type of universal single-payer system that socializes health costs across the entire economy, about 60% of U.S. health care spending goes through employers via employer-sponsored medical insurance. So while U.S. employers are heavily impacted by health care expenses, many of those companies’ competitors in the global economy don’t bear those costs.

While I am not commenting either for or against the Affordable Care Act, I wanted to share with you an interesting report about how employers out there feel about it.

The survey, from GfK Custom Research of North America, found that 56% of the 502 privately held companies questioned said they were likely to continue offering their employees health insurance even if the insurance mandate portion of healthcare reform is enacted as planned in 2014. Just 12% said they would be “very” or “somewhat likely” to drop coverage, while about a third said they didn’t know what they’d do.

This is important, because by providing your employees with health insurance, you are privy to much more data about their health (on a macro level, of course, not on an individual level). This provides important information that can guide your investment in employee wellness. After all, if 35% of your employees have diabetes and/or are overweight, you know where you’re going to focus your spending, right?

Also, when you provide the insurance, you also have more control over the quality of that insurance and the care provided. That’s because you can require that health plans and their providers meet certain evidence-based parameters shown to improve health-related outcomes. This, in turn, could keep your costs down by preventing acute exacerbations of chronic conditions like diabetes, asthma, and heart disease that could otherwise be managed.

All is not completely rosy with the employer/healthcare reform dynamic, however. The GfK survey also found that many employers fear that the new law won’t slow cost increases, or might make costs worse. How it will impact U.S. employers will depend partly on the Supreme Court’s Obamacare decision in June. I believe the results could be dramatic for America’s health care system.

Employers’ ability to control costs will depend on two giant decisions. First is the Supreme Court’s ruling on the constitutionality of the individual mandate. If the justices give it a thumbs-down, employers are in a quandary. They like a mandate because it could lower their insurance costs by forcing more people into the risk pool. And in a world where everyone is legally required to maintain insurance, employers may feel less pressure to offer it, and their costs would likely decrease as they encourage more individuals to purchase their own health insurance through the new insurance exchanges. If the mandate is voted down, employers may choose to continue doing what they’ve already been doing—increasing copayments, deductibles, and premiums.

If the mandate is upheld, then everything depends on the second big decision: the voters’ choice in November. A Republican sweep would probably mean Obamacare’s repeal, while a more muddled election result probably wouldn’t.

One part of the law that can help large employers is the medical loss ratio component. This part of the law, which just went into effect, requires that at least 85% of every premium dollar be spent on actual medical or preventive costs, not marketing or administrative costs. Hopefully that will provide some savings. The good news is that if health plans don’t meet the ratios, they are supposed to refund some of the overrun to you, the customer.

So have you figured out your position on healthcare reform yet? Assuming the full force of the Affordable Care Act is implemented, how do you see it affecting your business?

Bob Fabbio
President & CEO
WhiteGlove Health, Inc.

You know what’s behind stratospherically increasing health costs in this country? Not just more expensive equipment, drugs and procedures, but a population—even a working-age population—with one or more chronic health conditions. I’m talking about diabetes, hypertension, cardiovascular disease, arthritis, congestive heart failure, depression, asthma, and more. Manage these medical conditions with lifestyle changes and, where necessary, medication, and we can save billions. But let them get out of control and we’re spending billions on emergency department care, hospitalizations, surgeries, and more intensive acute medical care.

One place where the focus on chronic disease management is particularly important is the workplace. Yet I was disappointed to read a recent report from Towers Watson Consultants on employee wellness, which found that just 59% of the 3,099 employees they surveyed said that managing their health is a top priority, down from 69% in 2008. The survey also found fewer employees participating in lifestyle management programs, with just 59% saying they were taking actions to significantly improve their health, compared to 65% in 2008.

But, and here’s the rub, just a third of employees said their employer offered programs designed to help them live a healthier lifestyle. We know the percentage is far higher. We also know, as you may have read in one of my earlier blogs, large corporations also surveyed by Towers Watson said they were making significant investments in their employees’ health and wellness and reporting good returns on that investment. In fact, nearly 90% of US companies said that health and productivity is a core component of their organizational health strategy. The report also found that spending on health management programs in the US has grown 50% in the past two years.

So what does it take to get employees more interested in their health? Well, increased deductibles and copayments is one option. After all, if it costs a $150 copayment to be seen in the ER for an asthma attack versus a $10 copayment to see your doctor for education and management, which do you think cash-strapped employees will choose?

Your job as an employer is to help them understand the differences and the fact that they have control over the outcome. Staying with the asthma example, show them the potential costs savings over time, how to use maintenance medication, track their lung function, and implement their action plan at the start of any breathing difficulty—not when they are having so much trouble breathing they need to be seen in the ER.

Conversely, offering reduced premiums to employees who meet certain health-related parameters—losing weight, controlling their blood sugar, quitting smoking—provides a “carrot” approach also shown to be quite successful.

Also ask yourself how well you’re marketing your wellness programs. The reality is, these programs should be marketed just as aggressively to your employees as you market services and products to your customers. It really takes employers to be very intentional about changing the behavior of their employees and dependents. If they are not, very little will change with respect to their healthcare spend.

So, how are you marketing your wellness programs, and what kind of participation are you getting? Are you getting the kind of results you would like?

Bob Fabbio
President and CEO
WhiteGlove Health, Inc.

Employers have crunched the numbers and realized that wellness programs can provide a substantial return on investment with healthier, more productive employees. However, we also know that there are numerous companies out there that have yet to embrace these efforts for their employees.

Both groups, those who offer wellness programs and those who don’t, should be interested in a recent report I just read from the National Business Group on Health (NBGH). The nonprofit organization is devoted to representing large employers’ perspective on national health policy issues and providing practical solutions to its members’ most important health care problems.

Every year NGBH commissions a survey from Towers Watson to evaluate employer efforts in the area of employee health. I found the 2011-2012 Staying@Work report just fascinating. As the consultants summed up on the opening page: “This year’s survey results show a strong link between highly effective health and productivity strategies and strong human capital and financial results.”

How strong? Companies that offer highly effective health and productivity programs report industry-adjusted average revenues per employee 40% higher than low-effectiveness strategy companies, a difference of $132,000 per employee.

The survey also found that companies with highly effective health and productivity programs:

• Report they perform better than their top competitors
• Save more than $1,000 per employee in annual health care costs
• Lose fewer days due to unplanned absences and disability. Combined with the health care cost savings, these indirect savings can increase a company’s benefit savings by “considerably more” than 30%.
• Experience employee reductions in at least some health risks (tobacco use and sedentary lifestyles/physical inactivity)
• Have lower voluntary turnover rates

The survey also finds more US employers use penalties as well as rewards to incentivize their employees to participate in wellness programs, while about a third only provide the rewards after employees participate in multiple activities, not just when they enroll.

Rewards pay off, with participation rates averaging 46% in companies that use them vs. 19% in those that don’t.

Room for Improvement

The survey also highlighted several areas ripe for improvement. For instance, average participation rates in disease management programs for chronic conditions hover at just above 14% and are not very responsive to incentives.

One clear message from this year’s survey: Senior management needs to get more involved. Just a quarter of firms surveyed said managers and/or senior leaders volunteer to be “health champions;” less than a fifth have senior leaders who share their own health stories; and fewer than 20% of managers participate in periodic employee health communication.

The survey also found that a key differentiator for high-effectiveness programs was offering easy access to preventive and other health care services, like those that WhiteGlove provides. In fact, WhiteGlove’s clients have made us an integral part of their wellness initiatives and have reaped the rewards of doing so.

In my next blog, I’ll report on some of the specific employee wellness findings. Hint: the biggest opportunity lies in changing employee behavior.

Bob Fabbio
CEO
WhiteGlove Health, Inc.