Welcome To The Gates Of Health

By Cyril Tuohy

InsuranceNewsNet

Open enrollment season for health benefits is fast approaching for employers once again, but this year the enrollment process is expected to go more smoothly. No one wants a repeat of the near-fiasco that was healthcare.gov.

There’s a new twist this year, though, and it’s shaping up to be the health care equivalent of the real estate industry’s gated communities.

It’s a system whereby employers may offer a basic health care “floor” to all their employees in the form of a high-deductible plan, for example, but make a “richer,” more comprehensive preferred provider organization (PPO) option available to qualified employees.

Workers who qualify would have to fill out a health risk questionnaire or submit to biometric screens, according to health and benefits experts with Aon Hewitt. The process, in health and benefits world parlance, is known as “gating.”

“Gating strategies are becoming an increasingly attractive incentive technique among employers as they look to improve the health of their employee populations,” said Jim Winkler, chief innovation officer of health and benefits at Aon Hewitt.

In the next three to five years, more than 60 percent of employers plan to “gate” employees to richer plan designs, according to Aon Hewitt’s Health Care Survey of more than 1,230 employers covering 10 million employees.

The idea behind gating approaches is for employers to give workers even more incentive to take action and to improve their health.

“Instead of offering employees lower payroll deduction through the completion of a health assessment or completion of a biometric screening, employers are now considering the option of offering richer benefits as well,” Steve Byrd, a health and welfare consultant with the benefits consultancy Hill, Chesson & Woody in Raleigh, N.C., wrote in a blog post.

Gating strategies have popped up among the more progressive benefit plan designs on the market to encourage employees to lower health care costs through lower utilization rates. Healthier employees use less health care, and lower utilization rates mean lower premiums for employers and employees.

For years, cost-control strategies have consisted of employers shifting a greater burden of health care costs to employees as a way to change their behavior and inject more accountability among employees for the health services they use.

The more employees pay for health services out of their own pocket, the more likely they will opt for a generic drug, schedule a doctor’s visit or drop by a medical clinic instead of electing a more expensive hospital emergency room.

But shifting costs onto employees in the form of higher deductibles, co-payments and co-insurance has proved unpopular with workers. Benefits surveys show a strong correlation between higher cost-shifting and benefits plan dissatisfaction.

Gating health care represents one of the more progressive strategies in vogue with employers on the cutting edge of benefit plan design.

Other strategies include the implementation of a pricing approach whereby employees pay per person, not through an individual versus a family plan. Aon’s health care survey revealed that 52 percent of employers anticipate using this pricing mechanism in the next three to five years.

Many more employers also say they plan to increase the number of pricing and cost tools available to employees, an area known as “decision support.” For example, 24 percent of employers said they plan to use tools to guide decisions in plan selection in the future, up from 19 percent who use them today.

The survey also found that 92 percent of employers plan to offer “cost transparency” tools, up from 49 percent who currently use them.

Tim Nimmer, chief health actuary for Aon Hewitt, said that in the next few years, employers will move to make workers more accountable for health care utilization. Traditional approaches to mitigating cost increases “need to be advanced,” he said.

As employers embark on open enrollment for plans beginning Jan. 1, companies need to reinforce the importance of wellness campaigns and to offer voluntary benefits, according to the health and benefits consultant Mercer.

Voluntary benefits, offered in addition to basic employer-sponsored health care coverage, are paid for by employees. Recent years have seen voluntary benefits increase in popularity as employees buy them to supplement their basic benefits package.

Next year is shaping up to be an important one for employers as new rules required by the Affordable Care Act take effect.

Employers with more than 100 full-time workers will need to offer coverage to 70 percent of their full-time employees, and in 2016, employers with the equivalent of 50 full-time workers will be required to offer coverage to 95 percent of their employees.

Employers who fall short of that percentage risk paying a fine.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.