By Brian Schilling
In 2006, after several years of health care cost increases averaging in the double digits, the leadership of Illinois-based Council 31 of the American Federation of State, County and Municipal Employees (AFSCME) knew it needed to look at creative approaches to providing affordable health benefits for its 400 staff employees, retirees, and dependents. The unlikely answer? A novel contract with employees that required them to get engaged in their own health care.
"Financial reality was on a collision course with the status quo," said Ray Werntz, senior consultant with population health management consulting firm HPN Worldwide. "Council 31, like nearly every other employer in the country, needed to reign in health care costs," said Werntz, who worked with the labor union to redesign its benefit plan.
Werntz and his firm weren't content to simply abandon the status quo and recommend cost increases to employees or constraints on benefits. Health benefits are hard fought in a union environment and he realized that any attempt to trim benefits would meet with stiff resistance and could compromise the health of plan participants. So Council 31 management sat down with Werntz and decided to do just the opposite.
Werntz' plan for the AFSCME staff was to offer two different benefit options. The first actually was the status quo: the organization's existing benefit package was renamed the Health Improvement Plan (HIP) with no changes except a small contribution hike for dependents. But there was a catch: anyone who enrolled had to sign a formal contract. In it, they had to agree, according to Werntz, to "do whatever we ask in terms of trying to improve their health and their use of effective health care." The staff union president referred to the program to essentially mandate patient engagement as a form of health benefits "shock therapy."
Signing on was not a requirement. Those who didn't agree to the contract were still eligible for the Council's Standard Plan, which was significantly more costly and offered less-generous benefits.
The contract was based on the idea that if employees could be counted on to become more engaged in their health and more judicious in their use of health care, they would become healthier, have better outcomes, and, in the long run, save the Council money. Werntz explained that the contract requires employees to:
- fill out a health risk assessment;
- participate in comprehensive care management programs;
- establish relationships with primary care doctors;
- undergo regular biometric screenings; and
- take regular online lessons and become more adept in using health information technology.
The contract is somewhat open ended. "We didn't really know what we would want or expect employees to do in the future as new research and educational tools became available. So we left some wiggle room. We wanted to have the opportunity to follow the latest science and use the best information to engage people in managing their health aggressively. It's our top priority," said Werntz.
Anyone who signed the contract but decided not to participate in the screening, monitoring, or health management required was removed from HIP and entered into the Standard Plan.
No one knew how many employees and adult dependents would choose the more demanding HIP but in the end, more than 90 percent of AFSCME's adult employees and covered dependents chose HIP. The vast majority, said Werntz, really like it. "They appreciate that it's necessary and they've seen the results in aggregate and, in many cases, personally."
Those aggregate results have made many observers look twice. Since 2006, AFSCME's overall average monthly medical costs have actually decreased by about 10 percent. In contrast, health care costs nationally have risen about 40 percent over the same period.1 Perhaps even more important—the overall health of the participant population is steadily improving. Aggregate measures of smoking, blood pressure, and cholesterol are all declining and patient-reported health status has improved. Last year, 100 percent of HIP participants not only completed an HRA, but received all indicated biometric screening.
Werntz is optimistic that aggressive efforts to engage employees in their own health will continue. He expects that such efforts will become the norm in the years ahead.
"The potential upside in terms of realizing savings through better health and health care outcomes is just too large for most employers to ignore for much longer," he said. "There are all sorts of ways to get employees more involved in their health care, whether through incentives or just by changing the culture. No matter how you approach it, when you get employees more involved, everybody wins—most of all, the employee and his or her family."
1 Based on a reported 7 percent increase in health care costs for 2007, as reported by Towers Perrin in the 2007 Health Care Cost Survey and increases in 2008 (9.9%), 2009 (9.2%), and 2010 (9%) as reported by PriceWaterhouseCoopers in Behind the Numbers: Medical Cost Trends 2010.