A disproportionately large share of U.S companies' health care costs stem from the treatment of a small group of employees and dependents who have chronic or catastrophic illnesses, according to an analysis by consultancy Watson Wyatt Worldwide.
As a result, focusing on providing financial incentives to encourage workers who are part of a plan to be more healthy and live better is likely to bring only limited cost savings, it has concluded.
Its analysis of health benefit plan expenditures, found that 4 per cent of participants with serious health conditions accounted for nearly half of health benefit spending in any given year.
This group was unlikely to be won over by financial incentives or plan design features, such as high-deductible health plans paired with health savings accounts, which allowed employees to save for health care expenses on a tax-advantaged basis.
Such plans were likely to be attractive only to healthier employees, said Watson Wyatt.
Those who were not as sick – the roughly 25 per cent of participants in the early stages of chronic conditions or with acute health episodes – accounted for 40 percent of spending.
In contrast, those who were healthiest – 72 percent of participants – accounted for just 11 percent of health care spending.
"This analysis makes clear that efforts to create better health care consumers must involve more than high-deductible health plans," said Sylvester J. Schieber, U.S. director of benefits consulting at Watson Wyatt.
"It's up to employers to understand the varying needs of employees and to respond with targeted consumerism – an approach that uses different strategies to engage different segments of the population covered by health benefit plans," he added.
For example, employers can find health care savings among participants with chronic and catastrophic conditions through case management, by ensuring that those who do not need intensive treatment find other care and by designing health plans to encourage use of centres of excellence.
"Rather than using financial incentives to encourage seriously ill hospital patients to reduce plan spending, directing them to high-quality delivery centres will be far more effective in making them better consumers and controlling plan costs," said Ted Nussbaum, director of Watson Wyatt's group and health care consulting services in North America.
"In some areas of the country, using high-quality care centres may cut plan expenditures for the most expensive cases in half," he added.