Employers Focus on Targeted Health Care Incentives

In an effort to slow growing health care costs, a small but increasing number of employers are reducing or eliminating drug copayments for workers with chronic conditions, offering medical screenings at work and helping their workers with catastrophic diseases gain admission to clinical trials, the Boston Globe reports. Companies are hoping to encourage workers to take their medications and get regular medical care to decrease the likelihood of expensive hospital admissions or disability payments.

According to Camille Haltom, national practice leader for management health at Hewitt Associates, 38% of employers have implemented targeted incentives or say they plan to do so, up from 20% in 2001. She said the trend is likely to increase, adding, "These programs are very new for a lot of employers. But we are seeing more and more companies putting these incentives in place, including the reduction or total elimination of copayments."

Sylvester Scheiber, U.S. director of benefits consulting at Watson Wyatt Worldwide, noted that a recent survey found that 4% of insured employees with serious medical conditions account for almost half of their employers' health care expenditures. He added, "Those who are not as sick, the roughly 25% of participants in the early stages of chronic conditions or with acute health episodes account for 40% of spending. By contrast, the healthiest employees, about 72% of a firm's employees, account for only 11% of health care costs each year."

Mark Fendrick, director of University of Michigan Center for Value Based Insurance Design, said incentives are more effective than higher deductible plans. Fendrick said, "Right now, this country's No. 1 approach to the high cost of health care is to make employees pay more. But cost sharing is a blunt instrument and the evidence actually shows that if you make people with chronic illnesses pay more, they stop buying the lifesaving things they need, and companies wind up paying more" (Lewis, Boston Globe, 5/4).