Survey: Cash Incentives Work Better Than High Deductibles

Paying employees for specific types of healthy behavior may control benefits costs better than increasing all employees’ out-of-pocket costs does.

Researchers at SHPS Inc., Louisville, Ky., a health plan management firm, have published that finding in a summary of results from a survey of 115 large and midsize employers. Each participating employer had at least 1,000 employees who were eligible for health coverage.

The researchers found that use of some popular cost management techniques correlated with increases in employers’ annual health care costs.

Offering employees a choice of health plans with different designs correlated with a 20% increase in premiums per employee eligible for health coverage, and using high deductibles and co-payments as an incentive to make efficient use of health care correlated with a 29% increase.

Simply offering a wellness promotion program correlated with a 17% increase, or a difference of about $1,300 per employee per year, the SHPS researchers estimate.

Using cash payments and other financial incentives, such as gift certificates and ongoing reductions in health insurance premiums to persuade employees to adopt specific behaviors correlated with a 15% decrease in premium costs.

Using a care management program to help employees with catastrophic health problems and serious chronic illnesses cope with the health care maze cut premiums 18%, the researchers report.