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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?