Survey Reveals Shift to value-Based Health Benefit Design

By Stephen Miller May 9, 2008
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As the U.S. economy struggles, value-based health benefit designs and consumer engagement strategies are gaining in popularity. These are among the findings in a nationwide survey of U.S. employers' views on value-based benefit strategies, announced by the nonprofit Midwest Business Group on Health (MBGH) at its 28th Annual Conference in Chicago in May 2008.

value-based health benefit strategies include providing financial incentives to motivate healthy behavior changes and improving access to proven, clinically beneficial care.

"We've found that employers are shifting their view of health benefits from that of a necessary expense to a critical investment in the health management of their employees," says Larry Boress, president and CEO of MBGH. This includes "a growing trend toward the use of value-based benefit strategies.

"Employers are focusing on preventive care and the use of incentives to get people engaged, as opposed to the cost shifting we've seen in recent years," Boress adds.

Employer Priorities

The MBGH survey was disseminated to more than 60 business coalitions to distribute to their employer members throughout the country. Surveys were received from 114 employers representing a wide variety of industries. Among respondents, 72 percent have more than 1,000 employees and most were based in the eastern and mid-western United States.

The respondents' key health benefit priorities include:

  • Getting employees more engaged in maintaining their health.
  • Improving chronic disease management.
  • Reducing the cost of benefits.
  • Improving use of preventive services.
  • Incorporating incentive programs to increase use of wellness/health promotion programs.
  • Increasing education efforts to help employees manage their health care finances.

Key Findings

Among other highlights, the MBGH survey found that:

value-based benefit designs are gaining in popularity, and there is an increasing trend to provide incentives for participation in wellness, disease management and adherence programs. Employers are reducing cost share to employees. For example:

  • 62 percent of employers will waive co-pays or reduce costs for certain drugs to get employees to participate in disease management programs.
  • 72 percent agree that using drugs proven effective for a condition will reduce other services for that condition.

Quality information is still lacking despite its growing importance to employers and consumers. For example:

  • 85 percent of employers want health plans to provide members with the cost of physician and hospital services.
  • A majority agree that not enough information is available for employees to make informed choices on quality of physicians (64 percent), effectiveness of drugs (56 percent) and quality of safety of hospitals (54 percent).
  • 59 percent believe employees would change to better performing providers if they understood how quality varies and affects outcomes.

Employers see value in collecting productivity data, yet few are doing so. For example:

  • While 66 percent of employers see value in surveying employees on how their health impacts their performance at work, only 12 percent of employers surveyed collect productivity data.
  • 64 percent of these employers collect productivity data through a health risk assessment.
  • 95 percent say company data and experience are the No. 1 influencer of benefit design strategy.

Benefit Design Philosophy

Employers were asked to rate their organizations' self-perception of benefit design philosophy as leading edge (18 percent), careful watcher (63 percent) or conservative (19 percent).

The employers that defined themselves as leading edge shrunk from 21 percent in 2007, while companies that considered themselves careful watchers and conservative grew by 9 and 6 percentage points, respectively.

Stephen Miller is manager of SHRM Online’s Compensation & Benefits Focus Area.

Related Articles:

Value-Based Insurance Design Sparks Increased Interest, SHRM Online Benefits Discipline, February 2009

CDHPs Help To Slow Health Cost Inflation, SHRM Online Compensation & Benefits Focus Area, April 2008

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