It’s Easier (and Cheaper) to Stay Well than to Get Well


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The Patient Protection and Affordable Care Act (PPACA) is intended to make health insurance more affordable for Americans. Inherent in this Act is the requirement that preventive care be covered as it is well understood that prevention is key to better treatment options and outcomes and, basically, healthier people. Healthier people mean lower costs, right? Right!

The Act specifically requires that insurance companies and employers offer free preventive services to help people improve their health before they need costly interventions. Most agree that covering preventive health care services now that will eventually lead to lower health care costs over time is a good thing. However, we don’t think the writers of this Act are in on the dirty little secret known by HR professionals and benefits actuaries: providing preventive health care services without any penalty or incentive does not lead to sick or at risk people getting the early diagnosis or treatment they need. In fact, in our experience, when employees are provided with free health screenings, weight loss programs and fitness classes, the people who take advantage of them are those who are already in good health! Not surprisingly, the Act does not require that employees take advantage of preventive screenings, nor does it penalize employees for not taking advantage of them. Furthermore, by removing pre-existing condition limitations, the Act sends the message that it’s ok to not deal with your health until the symptoms are such that you have to.

The idea, though, is that these preventive screenings could lead to lowering health care costs and improving employee productivity. But just as people don’t eat brussels sprouts despite the numerous health benefits, many shy away from utilizing preventive care. And no amount of cajoling will change that. What could change this behavior? How about a “pocket book approach” where incentives and penalties that may reach 50%. That’s a significant cost or benefit, making an otherwise “voluntary” program something that “giveth or taketh away” a significant amount of money based on utilization.

As Michael Booth says in his article for the Denver Post, “Colorado has some pricey choices to make soon on how steep Obamacare penalties should be for smokers, and how sweet the rewards for the healthy and fit.” Andit’s not just in Colorado. Insurance commissions in all fifty states will be looking at how much insurers can increase or reduce rates based on the perceived health (or lifestyle) of the policy holder.

Do “lifestyle-based” incentives and penalties make sense? Perhaps they do. Over the past decade, preventive programs have become “all the rage”.  As Robert Cirkiel said: “Ten years ago companies were concerned that there was no discernible return on investment for preventive programs, today it is clear that there is a measurable and valuable ROI both from an employee productivity perspective and lowered health care costs.” And with the continuing concerns about escalating health care costs in the US, reducing cots or at least slowing the speed of ascent is important.

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