Lowering Employee Health Care Costs can Lower Business Costs

November 11, 2008 (PLANSPONSOR.com) - The Midwest Business Group on Health (MGBH) says value-based benefit design leads to healthier, more productive employees and lower long-term costs to employers.

Value-Based Benefit Design entails reducing the cost of effective health care providers, services, procedures, treatments or drugs to encourage employees to do such things as take their prescribed regular medications or visit better performing, more efficient doctors and hospitals. The payoff comes in the form of healthier employees, with fewer tests, fewer complications from surgery and fewer hospital readmissions, the coalition said in a press release.

To offset the lowered employee costs, employers can raise costs for lower quality, less effective providers, services, procedures, treatments or drugs.

Higher Cost Equals Higher Quality?

However, to implement this value-based benefit design, employers need to reframe employees’ perceptions of the health care marketplace. According to the press release, the findings of employee focus group research by MGBH indicate employees perceive higher quality health care equals higher cost.

In addition, the research found employees want choices in employer-sponsored benefit and wellness programs and are skeptical of employer efforts to steer them either toward or away from a particular program or provider.

MGBH says monetary incentives alone will not get employees to participate in value-based benefit design programs. Programs need to be combined with peer persuasion and management support to encourage both initial and ongoing participation, and employees need to see that incentives are in place because employers really do care about their health and that the incentives make sense.

MBGH has released a white paper on the focus group research, The Employees Readiness to Adopt Value-Based Benefit Design Strategies. The paper can be accessed from http://www.mbgh.org/index.php?t=initiatives/Readiness& .