Your health plan: The next frontier

  @Money July 26, 2013: 4:22 PM ET
health care

To help offset rising health care costs, employers are offering workers incentives to live healthier lifestyles.

(Money Magazine)

Richard Ollis is the boss of the future. Eight years ago the president of a 30-person benefits and insurance company in Springfield, Mo., decided to tackle his workers' deteriorating health.

His firm's insurance premiums were increasing by double digits every year; sick days were on the rise. He started with a newsletter and lunch lectures on healthy habits. Next up: a fitness center and fresh fruit in place of the vending machines. He offered the staff free on-site checkups that measured blood pressure, cholesterol, and more, but only 30% got one that first year. So Ollis raised the stakes.

A roll of the dice
With a high-deductible plan, you're betting on your future health. If you need only preventive care, you'll save $1,829. If you need lots of care, you'll spend an extra $469.
Type of plan Premium Deductible
High-deductible $3,720 $4,068
Traditional PPO $4,410 $1,770
Notes: Average annual costs or family plan; assumes 28% tax bracket and funding HSA up to deductible. Source: KFF

Now employees who do the health assessment and adopt an exercise regimen, among other things, qualify for a health plan with a $250 deductible; the company pays the full premium.

Workers who sit out face a $5,000 deductible and owe 25% of the premium. Every employee has hit the gym, started walking, taken up yoga, or the like.

"I don't think it is unreasonable," says Ollis, "to say if I am going to pay for your health care, I have some expectations for you to be reasonably working on your health."

Working out to save money is only the beginning. Soon you could be sweating over a lot more aspects of your health coverage.

For years, in the face of rising insurance costs, employers have been shifting more of the bill to you by raising your premiums, deductibles, and co-pays. Now businesses are taking a new tack, going after high health care costs at the source and enlisting you in the fight -- whether you want to be in it or not.

Related: Your company's next health plan

From the day you pick a policy to every time you make a doctor's appointment, your employer will push you to stay healthy, use fewer medical services, and patronize those providers who can deliver care more efficiently.

"I have been doing this for 26 years and can't remember another time when so many complex changes were happening," says Edward Kaplan, who oversees the health benefits department for Segal Consulting.

Health reform is giving companies another impetus to pare back. The most generous insurance plans, the thinking goes, drive up health care spending because so much care is covered. So, starting in 2018, those high-end plans will face a steep tax (the so-called Cadillac tax), and firms are acting now to avoid the levy in five years.

Some of those shifts you're already seeing; others are years away. All require more from you: more decisions, more tradeoffs, and potentially more costs to bear. You need to know how to handle what's coming your way.

You may not be able to afford your own doctor

Today you can visit an in- or out-of-network doctor and hospital. You'll spend more to venture to an outsider, yet why bother? In-network choices often include the bulk of providers in town. Soon that freedom may come at a cost.

Even within the same city or the same insurance network, prices vary widely from doctor to doctor, and the most expensive care isn't always deemed best.

Why this doctor won't take insurance

"Consumers associate higher cost with higher quality, and the research shows that isn't always true," says Peter Hussey, a senior policy researcher at the research firm Rand.

To get you to skip certain top-shelf providers, and the ones who are trigger-happy when it comes to prescribing tests, insurers are naming favorites, a list that might include a third to half of your current in-network doctors.

These doctors all meet the insurer's care criteria -- Aetna, for example, rates doctors on how often they provide recommended care and screenings, such as diabetes management, and hospitals on their mistakes and readmission rates. And they do it for less than many of their peers.

Related: Obamacare delay passes insurance burden onto workers

Agree to stick to the narrower list, and you can shave 10% to 20% off your premium. You'll probably still be able to see an outsider, but you might have to pay 40% or more of the bill instead of 20%; with some policies, you'll pay 100%.

A third of large-company plans may have this option by 2014, says benefits consultant Towers Watson, up from just over one in 10 now.

In a variation on this, a few big firms, including Wal-Mart and PepsiCo, are picking up the tab for employees who agree to travel to major medical centers like the Cleveland Clinic, where the firms have negotiated bundled rates, to have complex procedures such as heart surgery.

What you should do

See who you'll miss. Opting for fewer choices may mean saying goodbye to the practitioners you know, though that doesn't mean you've been getting poor care -- quality measures capture only one slice of a doctor's practice.

What's more, local big-name and academic medical centers are often left out, says Andy Marino, who leads the development of the networks for Florida Blue. If you want the freedom to get care at any one of them after a serious diagnosis, this plan isn't for you.

Meet the new folks. To learn more about the providers your insurer deems a good value, start on its website, which often has costs and quality stats. For the hospitals on the list, use the Hospital Compare tool at medicare.gov, which reports on quality measures such as readmissions, complications, mortality rates, and patient satisfaction.

By 2014, Medicare plans to vastly improve a Doctor Compare tool. Until then, you can get a sense of a doctor's bedside manner, at least, through patient reviews at Vitals.com and Healthgrades.com.

More: You'll get a budget to pick your own plan

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