Initiating a Wellness Program While Navigating a Health Renewal Increase
Bad Day at the Office
You have been trying to implement a wellness program in your company for a long time. Or perhaps you have implemented one and, like your Flexible Spending and 401(k) plans, you are disappointed at the pitiful participation rate of your employees. "You can lead the horses to water" you mumble once again to yourself. Your CFO is screaming. "When can you show me some ROI for this wellness project?" You know the facts: Embracing a culture of health will eventually decrease utilization and absenteeism/lost productivity.
Targeting risk factors, identifying the unhealthy, and engaging those individuals in health advocacy programs are the logical steps. ROI's of up to 14:1 have been documented. But you also know that success is ultimately a function of voluntary participation. Bouncing your head on the steering wheel as you begin your drive home you ask, "Is there any way to incent employees to enroll and modify their behavior besides carrots (too expensive) and sticks (too illegal)?
Outcomes or standards-based rewards work but require you to walk HIPAA's straight line. Of greater concern is that nothing is a quicker turn-off for employees than the smell of a heavy-handed identification and intervention system. The "Wellness Nazi" is not a title you want.
Worse Day at the Office
You come to work the next day and just when you thought it couldn't get worse, your benefits broker calls with the news that your health renewal came in with a 40% increase. You know the drill here too. Choices include: change carriers/networks, punt another few thousand on the deductible, or pass the increase to the employees - none of which will win you a popularity contest.
You had better come up with something more substantial than positioning and spinning bad news. This would be a good time for your fairy godmother to show up with a magic wand - or better yet - Mr. Spock to beam you up. You remember that one of the risk factors you want to screen for is "stressful lifestyle". No problem to get at least one person to sign up for treatment.
Cat Herding 101
Welcome to the world of cat herding. You can push cats but ask any cat owner - the most docile and faithful will use their claws on their owner if they feel threatened (or sometimes even if inconvenienced). Only two principles really work in cat herding - peer pressure and quid pro quo (that's Latin for creative bribery.) Strong leadership and education are important co-factors for success; but alone, they are viewed as fluff (see any Garfield cartoon for proof.)
What does this have to do with implementing a wellness program in the face of a ghastly health renewal? We recently saw a business owner and broker in a very similar scenario. The employer wanted to introduce a wellness program beginning with free YMCA memberships. To assure that he wouldn't pay for unused memberships, he asked the YMCA to provide him a monthly report check-ins per month for each paid membership.
Unfortunately, he was now faced with how to incent those in the most need of exercise to accept and use the membership. The free membership alone was not likely to do the trick. He could tie it to a second incentive - perhaps a discount on the medical plan employee contribution, but now he is out the cost of the YMCA membership and the difference of the contribution. This, without any assurance that the right people (the 50% of the employees responsible for 95% of the health care costs) would sign up.
Cat Herding 102
Let's say the 40% health insurance renewal translates to $100 more per month for employee-only coverage. The business owner decides he will split that increase with employees who will join the YMCA and pass the entire insurance increase to those that won't. That translates to an $11.54/week more for non-participators. Is that enough incentive to get the oldest, most sedentary employees to radically change behavior? Probably not.
Throwing more money in the deal now looks like the only answer - but even if there were more money to throw, all hope of showing the CFO any ROI is lost.Remember that only two principles really work in cat herding. Quid pro quo is a term in negotiation that speaks of the use of a bartering chip of perceived value to obtain something else (usually of greater actual value.
This explains why some people will pay $200 for a hotel room if they will leave a mint on their pillow at night and push a newspaper under the door in the morning. The operative term is "perceived value" - that is, enough to serve as a good faith measure that communicates your willingness to come halfway to solve a mutual problem.
Enter the Fairy Godmother.
In the midst of this dilemma, the broker gets a phone call from a carrier rep touting a new product - the "Embedded Gap Plan". The broker invites the rep in for a presentation and within a week presents the plan to the business owner. Within another week the carrier rep is invited to the group meeting where the business owner announces the plan. He and the broker took turns eloquently explaining that high utilization has triggered the 40% renewal and that only through exercise diet, and participation in health advocacy programs could they ever expect to see a slow down in spiraling cost trend.
The broker broke the bad news that to prevent a $100/month increase that the group was dropping back from their $1,000 deductible to a $5,000 deductible (the groans could be heard next door.) The owner then came back telling the "good news". He announced that because he had to take this one step backwards, he was now going to take two steps forward by giving two free programs to the employees. Ears suddenly perked up.
He continued to explain the YMCA membership and the embedded gap plan that would pay $3,000 every time they went into the hospital to help pay for the increased deductible. This plan was free to each employee regardless of age or health and carried no health questions, no deductibles, no waiting periods, no pre-existing conditions, and no exclusions. Eyes lit up.
He continued that these two plans were linked together and that if you didn't accept and utilized the YMCA membership that you would not get the gap plan and would be subject to the full brunt of the $5,000 deductible. What happened? Over the next four hours 100% of the employees put their names on the dotted line for both plans. What made the difference?
Fear of loss is a greater motivation than prospect of gain. Avoiding exposure to an additional $3,000 of deductible was a large enough sum to tip the scales of decision to participate. What was the cost of this deal-making "bargaining chip"? Only $32.10/month for most employees - one third that of absorbing the cost of maintaining a low deductible.
Now the question is how to keep the plan moving forward. The second cat herding principle mentioned is peer pressure. Positive pressure is created by publishing the names of those who are successful in improving their health as a result of their YMCA participation and don't mind giving you permission to "brag on them". This can be accomplished in a more subtle way by publishing results without editorial.
In a previous life as a hospital laboratory manager, this author successfully changed physician ordering behavior by providing utilization data to physician department heads without editorial. Those "cats" certainly can't be pushed, but it was amazing to see over-utilizers self-equilibrate when they realized that their peers were seeing their numbers.
Imagine if the business owner posted just the YMCA attendance results. He doesn't have to say a thing but observe the power of the water cooler and break room discussion. Will this sort of plan work for you? Tie incentive programs together. Check out the "embedded gap plan". Start thinking like a cat.