Should Health Care Benefits Design Address Employee Financial Status?

I had the great opportunity to attend the 2017 WorldatWork Total Rewards Conference, and go to several of the breakout sessions. One session that I went to was on the subject of population health management, and the impact of employees’ financial status on the access and use of health-care benefits and services. The session was led by Bruce Sherman, MD of Conduent HR Services.

We know that wage stagnation and benefits cost growth are making health care less affordable for all individuals. According to the 2016 Kaiser/HRET Survey of Employer-Sponsored Health Plans, the rise in health-care deductibles has had a very significant impact on this unaffordability. Per the Large Employer’s 2017 Health Plan Design Survey by the National Business Group on Health (NBGH), 49% of respondents offer consumer-driven health plans (CDHP) as a plan option, while 35% offer it as full replacement. Significant to note is the rise in full replacement from 10% in 2010. Growth in CDHP offerings by employers continues.

In the session, it was revealed that, per the Robert Wood Johnson Foundation, an individual’s health status is 40% determined by one’s socioeconomic status. For example, research that was shared indicates that low-wage workers gave the highest prevalence of unhealthy behaviors and chronic conditions, along with a high proportion of health-care costs as a percentage of wages.

However, employee benefits strategy and design rarely takes this into consideration when attempting to both manage costs and improve the health of the workforce. Employer health-plan sponsors typically implement cost-sharing and well-being initiatives using the same approach across the board. 

As Dr. Sherman proposed in the session, if social determinants of health are so important, why aren’t we paying more attention to these factors? If we want to better manage health-care costs, should we be looking only at health-care claims for answers?

To dive deeper into this issue, with the objective of evaluating health-care utilization patterns among workers by wage status, Dr. Sherman and Conduent conducted research, using data of both low-wage and high-wage workers enrolled in the RightOpt private exchange. Dr. Sherman applied wage data, and medical and pharmacy claims data, along with a variety of domains, including demographics, out-of-pocket costs as a percentage of wages; non-use of health-care services, and health-care utilization patterns and costs, in the analysis. Employees were separated into wage quartiles for evaluation.

Key findings from the research were the following:

  • High-wage earners have the highest health-care costs (perhaps due to a relative lack of barriers to care (E.g. money is not an issue for access); low-wage workers are the next highest.
  • Low-wage workers use less health care, and they use it in a more reactive and inefficient pattern, (E.g. emergency room services), with associated comparatively higher expenditures.
  • High-wage workers use the most preventive care services.
  • Low-wage workers use health care differently regardless of cost. Cost of care relative to wages for low-wage workers is a major problem, but not the only problem; other barriers may be even more problematic than cost (E.g. lack of health literacy, access barriers to health-care services, other financial priorities).
  • Low-wage workers seem less likely to use useful services and program and incentives, even when they are provided (E.g. Perhaps, prioritization of personal health concerns takes a back seat, relative to other life (& financial) priorities).
  • Simply subsidizing health benefits for low-wage workers may not be enough to make a difference.

For employers, opportunities exist to rethink benefit designs for low-wage workers, including:

  • Wage-based premium subsidies
  • Wage-based deductibles or out-of-pocket (OOP) maximums
  • Wage-based, value-based benefit design ‒ Incentives for high-value chronic care ‒ Incentives for engagement in lower-cost sites of care
  • Gap plans

Some of the take-aways for me from the session is that claims data (where most employers seem to focus their efforts) only reveals a partial story of health-care utilization (or lack there-of), and that we need to better understand workers’ health barriers and opportunities, especially those of low-wage employees. Low-wage workers use healthcare significantly differently from other benefits enrollees. Claims data (in isolation) doesn’t necessarily indicate where there are barriers to accessing services for certain employees, where there are treatment adherence issues, or even where there might be a disproportionate use of inefficient levels of care.   

In terms of some of the benefits strategies offered above, subsidizing health benefits may not be enough to address the challenges of low-wage earners. In addition to the issues surrounding health-care literacy, and other life priorities for these individuals, tiering employee premiums based on income can create a series of other worker issues.

Although some companies have taken this approach, some questions for considerations include: Where do you place the cut-off for low-wage vs high-wage in your premium structure, and is it more than one break point? How do employee increases/promotions affect this? Do you move the premium structure over time, based on wage growth or other factors? As employees talk with one another, do they know who is above or below that wage line?

Dr. Sherman mentioned only one company that he knew of that has implemented wage-based deductibles, or out-of-pocket (OOP) maximums. 

Of course, both wage-based approaches create their own host of issues, whether that be employee relations, administration, or communications. 

Other questions to consider: How do you address higher-wage earners with income-based utilization of health care? How do you prevent them from over using services? Also, how do you overall improve health literacy for all workers? How should/do employers better support individuals that are the most disadvantaged financially?

The research demonstrates that employers can better quantify current health care and illness-related lost productivity costs for low-wage workers, and should do so prior to taking any actions in re-designing their health plans. The research results have implications for benefits design, communications, and health-care consumerism and engagement efforts.

We certainly know that one size doesn’t fit all. How have you designed your benefits programs to perhaps, address some of these research findings?

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