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Use Research, Not Wishful Thinking, to Limit Expenses

One-size-fits-all approach has not worked — it's time to try something different

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October 29, 2013

This article originally appeared in the Chicago Tribune on Oct. 27, 2013.

By Joel Shalowitz

Companies are trying new and sometimes controversial ways to control medical costs, with the Affordable Care Act, the new health law, adding to the pressure. Here, experts weigh in on two of the cost-saving methods employers are using — disease management and wellness programs.

Employers are more aggressive than ever about trying to lower their medical expenses. One of the reasons is the Affordable Care Act's requirement to offer a more comprehensive set of basic health benefits.

The tactics that businesses are using to limit payments often come from wishful thinking rather than good research. The two most prominent examples are so-called disease-management and wellness incentives.

Disease-management companies market themselves to health insurance firms, promising to care for chronically ill patients (usually those with diabetes, heart failure and asthma) at a lower cost. Disease managers prod patients to go to the doctor and take their medicine, supposedly resulting in better health and lower costs. However, there is little evidence to support the effectiveness of these schemes.
In a large study, RAND researchers found that "although disease management seems to improve quality of care, its effect on cost is uncertain." I have asked insurance executives why they offer such services. They uniformly reply that they do not know if these programs work, but their customers (businesses) request them. Further, many patients find that it is hard to opt out of these programs and that they are intrusive.

At the other end of the spectrum are wellness programs, which offer lower premiums or other incentives to workers. The idea is to induce employees to stop harmful activities (such as smoking) and to engage in healthy behaviors (such as eating a balanced diet and exercising regularly). Some programs have caused a backlash.

Employees of Penn State University rebelled when the school told them to pay an annual surcharge of $1,200 unless they submitted to physical exams and questionnaires that included queries about whether employees planned to get pregnant. These programs' results are inconsistent. It is not known why some firms succeed and others fail.

A novel idea is to ask employees what they would be willing to do to lower premiums. Perhaps a portfolio of choices tailored to the individual would be more successful. It is time to try something different.

- Joel Shalowitz is a clinical professor of health industry management and a profoessor of preventive medicine at Northwestern University.