Behavioral economics can increase plan participation.

There is much employers can learn from the three principles of behavioral economics — loss aversion, social norms and hyperbolic discounting (a.k.a. procrastination) — when it comes to employee health care.

That was the message at ignite09, a May 27 symposium sponsored by the American Benefits Council, PBM Express Scripts and Hewitt Associates.

So why should benefits professionals care about these principles? By applying them to benefits package designs and wellness programs, you can overcome common obstacles to compliance and participation.

Example: With a goal of 90% employee participation in their wellness program, Nationwide Insurance Co. offered employees a $35 credit for completing an HRA. When that only got 30% participation, they tried adding $10 to the bi-weekly paycheck of participating employees the next year. That got them 60% participation. There was no money to up the incentive, so Nationwide rethought their carrot-only approach — this time invoking the principles of both hyperbolic discounting and loss aversion.

This year, the company "doubled the financial incentive," Jack Towarnicky, Nationwide's associate VP of benefits planning told attendees, by introducing a $260 added contribution for medical coverage that they then waived for wellness program participants. Consequently, participation rose to 85%.

"A lot of other companies who only use carrots, who only use positive incentives, many of them didn't achieve their participation and utilization goals as well," Towarnicky said. "Because using only positive incentives allows non-participants the option to maintain the status quo."

Have you experienced this situation with your wellness initiatives? Share your thoughts below.

Republicans release health reform proposal

After months of Democrats responding to Republican criticism of their health care proposals with, "So where's your plan?" Republicans finally have an answer.

Sens. Tom Coburn, (R-Okla.) and Richard Burr (R-N.C.) and Reps. Paul Ryan (R-Wis.) and Devin Nunes (R-Calif.) released The Patients' Choice Act of 2009 today.

The legislation proposes to create individual state health insurance exchanges that offer a tax credit to families and individuals to cover costs, with no mandates to carry coverage. It also claims employees will be able to keep their current coverage, and even take it with them to a new job.

Here is an excerpt:

"The Patients' Choice Act would give every American the opportunity to choose the health care plan that best meets their individual needs. It will utilize state-driven exchanges to facilitate real competition between private plans and give Americans — for the first time — a choice of health care plans ... unlike the government-driven change being advertised today, it will truly achieve portability so that workers can take benefits with them when they change jobs. Rather than Washington and company CEOs, the Patients' Choice Act puts patients in control."

Take a look at it here and let us know what you think.

June Issue Preview

Take a first look at the June issue of EBA where we tackle Massachusetts brokers' perspective on national health care reform, what's happening with medical tourism and why executives should take another look at their benefits.

AHIP on the record

America's Health Insurance Plan's Robert Zirkelbach sat down with EBA to discuss the organization's role in health care reform. Highlights include when we can expect to see legislative proposals from AHIP and what motivated them to join fellow stakeholders in promising the White House they'd reduce the health care spending growth rate.

Is state-level reform a good idea?

Kathryn Wilber of the American Benefits Council isn't so sure. Watch as she shares her thoughts on how such reform efforts would affect employers, and why legislators need to think about what defines a state reform effort before promoting (or opposing) it.

Obama: I want progress by June

In a follow-up letter to the health care stakeholders who offered to cut the health care spending growth rate by 1.5%, President Barack Obama said yesterday he will hold the groups accountable for their promise — and expects progress to be made by June.

Do you think they'll deliver?

A 'watershed event' for health care reform

In a letter to the President that was followed by a White House meeting May 11, health care organizations pledged to do their part to decrease the annual health care spending growth rate by 1.5% over 10 years —a projected savings of $2 trillion or more.

What "doing their part" means in terms concrete, measurable initiatives remains to be seen, but in prepared remarks delivered after meeting with the organizations, President Barack Obama said called it "a historic day, a watershed event in the long and elusive quest for health care reform."

The Advanced Medical Technology Association, American Medical Association, AHIP, PhRMA, American Hospital Association and Service Employees International Union outlined actions such as focusing on administrative transparency, quality and efficiency incentives, encouraging coordinated care and improving delivery models as ways to cut costs, but did not provide specific details.

Obama was also pleased that the initiative will help him keep a campaign promise to save families an average of $2,500 on their upcoming health care costs. "The steps that are being announced today are significant," he said. "But the only way these steps will have an enduring impact is if they are taken not in isolation, but as part of a broader effort to reform our entire health care system."

Although she has no delusions that this offering will put an end to public plan talks, Janet Trautwein, EVP and CEO of NAHU, believes the stakeholders' proposal "will go a long way towards preventing [a public plan] from becoming a reality."

Carriers hope more regulatory pain will protect them from a public plan

Listen in as Groom Law Group's Bill Sweetnam takes a look back at the week that was in health care reform. Specter's defection, employer divisions, and the carrier community's public relations problem are just some of what we cover. Check it out.

Senator says let the states have a go at health care reform

Right up there with his opposition to a public plan option (unfair playing field, cost shifting, etc.), Senator Orrin Hatch (R-UT) made clear to reporters May 7 his hope that federal health care reform will be flexible to individual state needs.

"There is an enormous reservoir of expertise, experience and field-tested reform," he says. "We should take advantage of that by placing states at the center of efforts tailored to meet coverage and affordability goals so that we can use approaches that best reflect their unique needs and demographic."

While he says "some of the larger states are disasters," others have made strong advances in their own health care reform initiatives. (Not surprisingly, Utah is high on that list.) He'd like to see 50 state laboratories "where we can pick and choose among the best programs."

But what about ERISA? Hatch contends that it's a tricky issue. Even so, "we’ve got to find ways in the states to help us with efficiencies, with quality, with deliverability, with interoperability, with all of those things, and I think that can be done. Now, will some of those states mess it up? Yeah … but most states would run a system a lot better than it could be done here in Washington."

Do you agree? Would you like to see reform happen on a state-by-state basis, or are broad federal regulations in order? Share your thoughts below.

Single pay protesters disrupt Senate health care coverage talk

Before the Senate Finance Committee could get a word in at their health care coverage round table May 5, protesters let the Senators know they wanted a single pay supporter at the table. After the crowd calmed down, Senator Ron Wyden said individual choice is central to reform — and that’s just what employers are lacking.

Wyden referenced testimony by from NFIB's Dan Danner saying small business employees are best served by choosing their own health insurance plans with employer contribution dollars. He then asked big business rep Business Roundtable's John Castellani if there was a way to unify small and big business by following Danner's suggestion, but 1) also allow workers to use their health care dollars on their employer's plan 2) tread softly on ERISA, and 3) continue prevention incentives.

"The answer is in part yes, but in part no," says Castellani. Listen to his reasoning and share your thoughts below.

16 senators back public plan option

In a letter to health care head honchos Senators Max Baucus and Edward Kennedy April 29, 16 democratic Senators urged the chairmen of the Finance and HELP committees, respectively, to include a public plan option in reform legislation.

"There is no reason to believe that private insurers alone will meet the public purpose of ensuring coverage for all Americans at an affordable price for taxpayers," reads the letter.

The Senators cite Medicare Part D's lack of a public plan alternative to private drug plans as an example of "a privately run program that has hiked up drug prices at the expense of patients and taxpayers ..."

The letter goes on to say that "history suggests that the insurance industry will build a model at least in part around pushing government subsidies upward. A public plan option that sets the standard for quality, efficiency and costs will create incentives for healthy competition that will serve the interests of all Americans."

Senators who signed the letter include:
*Sherrod Brown (OH) *Bob Casey (PA) *Dick Durbin (IL) *Kirsten Gillibrand (NY) *Tom Harkin (IA) *Daniel Inouye (HI) *Ted Kaufman (DE) *Carl Levin (MI) *Jeff Merkley (OR) *Jack Reed (RI) *Jay Rockefeller (WV) *Bernie Sanders (VT) *Charles Schumer (NY)*Debbie Stabenow (MI) *Jim Webb (VA) *Sheldon Whitehouse (RI)

Do you agree with these sentiments? Share your thoughts below.