The Carrot-Flavored Stick

A while back I posted a blog about Mr. Stick, the mean, older brother of the carrot.  It was in reference to the fact that benefits managers are somewhat hamstrung when it comes to cost cutting measures related to healthcare.  They can only tweak so many plan designs before they need to resort to the stick approach.

Mr. Stick is the bully in the playground who demands your lunch money. And you give it to him because you don’t have much of an option.

I began thinking a bit more about the challenges a benefits manager faces.  And I have a few thoughts and ideas to share…

Why is healthcare so expensive?  Well, there are so many reasons…fragmented care, enhanced technology, our payment system, medical waste, mis-aligned incentives, disparate systems, over-utilization, etc.

But there is another piece to this which is a huge component of the cost puzzle – the consumer.  Or the patient. Or the employee.  He/she goes by many different names.

Fact is that people complain about healthcare costs as they sit around eating ice cream by the pint and drinking “diet” soda while going to the world’s most expensive hospital’s emergency room for a hang nail.

Yes, I’m over-exaggerating.  But the scary fact is that people don’t realize the role that they play in contributing to healthcare costs.

Now, this blog post isn’t going to be about health and wellness. But it is going to be on utilization and education.  Some would consider this to be a “stick” approach.  But the carrot can be added to the stick to create…well, I guess it would be a carrot-flavored stick.

So how does the benefits manager play a role in utilization and education?  How does an employer help impact behaviors enough to curb the wanton utilization that isn’t needed? How does the benefits manager create the carrot-flavored stick?

Education.

This requires some explanation, doesn’t it…

Benefits managers have only so much power to change benefits, raise co-pays, raise deductible levels, change health plans, offer incentives and promote healthy behaviors.  But the fact still remains – most people have no clue how our healthcare system works or the downstream effects of their choices.

Therefore, benefits managers need to find a way to educate and empower their employees about healthcare.

I’m sure you’re picturing what I’m picturing – a room…no wait, a HALL…full of eager employees, salivating, just waiting to learn about healthcare.  And no, I did not forget to take my meds today. It’s purposely sarcastic.

Employees probably won’t care about something like this…unless there’s something in it for them.

Today, many employers are using some form of carrots and sticks.  Carrots can be in the form of incentives when someone completes a health risk assessment or takes part in a wellness program.  Sticks can be in the form of a tobacco surcharge or more cost sharing.

My thought to create the carrot-flavored stick is this:  put together programs that educate employees on how the healthcare system works – how hospitals are paid, how doctors are reimbursed, why some hospitals cost more than others, how insurance companies operate, the value of generic vs. brand medicine, how more healthcare doesn’t equate to better outcomes – the topics go on and on.

For each “course” completed, the employee gets money into their employer-funded health reimbursement account (HRA).

The fancy pants benefits managers will go even further.  They will have levels of “courses” and will designate healthcare “champions” for those who achieve high levels of education.  They’ll test employees and create competitions around these programs. Winners get special things like days off or gift cards.  And as the employees become more engaged in this, the stakes can be raised.  Education on things like employer-direct healthcare will help educate employees as to the value of such a “drastic” measure. However, the employee buy-in is likely to be greater because they now have a much better understanding of the system and why something like this is a chance for the company to save big money resulting in lower premiums for themselves and their families.

The question becomes this: who will offer these trainings?

I’ve got my own thoughts on this.  One is brokers/consultants, just as Gary Fradin suggests – see my author’s note below.

In my post about the Broker (R)Evolution, I discuss how brokers need to evolve. This is one of the ways to evolve.  The other idea would be for the entrepreneurs out there – create a company that does this sort of education.  I suppose it’s also possible that the employer trains someone internally on these topics, but that is not as likely. The last idea would be for the federal government to offer it.  Picture the state exchanges in 2014, complete with patient/member education programs that offer lower premiums if you complete training/education classes.

Good idea?  I think so.  Because a carrot-flavored stick is better than just a plain old stick, right?

Now, if we can begin working on the ice cream flavored stick…low-fat, of course…

[Author’s note: I attended a continuing education class today, well after I drafted most of this blog. The teacher of the class, Gary Fradin of Health Insurance CE, LLC suggested that brokers be the ones who educate employers on topics such as over-utilization and the harm of un-needed healthcare.  Well, since he stole my thunder a bit, I figured it was time to complete writing this blog tonight.  Thanks, Gary! ;)]

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