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County cuts deductibles for workers in program


In its own version of "pay or play," one Pacific Northwest county government has avoided union resistance to benefit cuts or increased cost-sharing by rewarding workers who participate in wellness programs.

Under the "Health Reform Initiative," King County, Wash., employees--and their spouses if covered by the county's self-funded health benefit plan--who do not complete an annual health risk assessment pay the highest deductibles. Those who take the assessment are responsible for somewhat smaller deductibles, while those who take the assessment and participate in a health promotion program have their deductibles reduced even further.

"The unions did not want premium-sharing, so we had to come up with another plan," said Cindy Lee, manager of benefits and retirement operations for King County. "They liked the idea of people having the choice to either pay or play."

Unionized workers' response was so positive that 17,800--90%--of the county's 19,702 eligible employees and covered spouses took the health risk assessment in 2006, she said. The same percentage of the county's 19,377 eligible employees and spouses took it this year--far above initial expectations.

"Our vendor expected 30% to 65% participation with the incentive," Ms. Lee said.

Perhaps more surprising was how many union workers and their spouses also participated in health promotion programs, such as Weight Watchers at Work, gym discounts and personal health coaching.

"You should have been at our health fair. People were walking around half the size that they were last year. People are walking on their lunch hour, talking about being healthy. We even have 'Salad Days' where everyone brings a salad to share," said Ms. Lee, who herself is a participant in both the Weight Watchers and health coaching programs.

The unions, whose representatives participate in a Joint Labor-Management Insurance Committee, agreed to the wellness incentives--or disincentives, as the case may be--after realizing that, without a change in employees' deteriorating health status, the 17% to 18% annual health care cost increases the county had been experiencing would continue unabated, eventually forcing the public employer to tap workers' paychecks, acknowledged Dustin Frederick, business manager for the Service Employees International Union Local 519 in Seattle.

"The average King County employee is 48 years old. So we have an aging population...and what goes with that is a lot of prescription drug usage and, depending on the overall state of health of that group, you start getting into expensive medical problems," Mr. Frederick said.

"We're not going to do anything to lower the overall cost trend by shifting the cost from employer to employees through premium sharing or by reducing the benefit. The only way we can do something is to change the complexion and the culture and the usage of the medical plan by employees and their dependents. And the only way to do that is to change their overall health," he said.

What also made the program palatable to the unions, which represent 90% of the county's workforce, was that the program is structured so employees in poor health are not penalized, Mr. Frederick said.

As long as an employee and their spouse take the health risk assessment and are willing to participate in a wellness program, they will receive the reduced deductible regardless of their current health status.

"The unions felt that this was logical, reasonable and responsible," Mr. Frederick said.

Although the impact on the county's health care expenses for 2006 is still being calculated, Ms. Lee said she expects the costs to be tempered given that so many employees and/or their spouses demonstrated improvements in health status when completing their 2007 health risk assessments.

Last year, 8,983 employees and spouses were classified as low risk after taking the health risk assessment, 7,983 were labeled high risk and 879 were put in the moderate risk category. But this year, the number of employees and spouses in the low-risk category jumped to 10,186, while those labeled high risk fell to 6,635 and moderate risk to dropped to 635.

"Our analyst is still crunching the numbers. We are very eager to see how claims data matches up with the results," King County's Ms. Lee said.

The Seattle-based county's extraordinary participation rates demonstrate the value of financial incentives in health promotion programs, wellness experts say.

"It is entirely necessary to have structural and financial incentives to make a wellness program work because if you build it and they don't come, you don't get the impact at the other end," said Michael Wood, a senior consultant in health and productivity management at Watson Wyatt Worldwide in Seattle.

Mr. Wood was familiar with the King County initiative even though he was not involved.

"The research is very clear that if you get people to participate, to take health risk appraisals, to participate in telephonic lifestyle coaching, things like that, that they reduce their number of risk factors, and the reduction in health risk factors results in a reduction in health care cost trend," he said.

Ann Clark, chief executive officer of ACI Specialty Benefits, a wellness advisory firm in San Diego that regularly consults public entities, said participation rates generally average about 20% when an employer introduces a wellness program without financial incentives, and participants typically already are their healthiest employees.

But incentives don't have to be as substantial as those used by King County to be effective, she said (see box, page 12).

"I'm always surprised how little you have to offer people. They'll work for a free pedometer. They'll work for a T-shirt," Ms. Clark said. "I myself just participated in walk for charity and we all stood in line for a T-shirt. People will do a lot of work for relatively little payoff. So, I think it's critical that employers provide incentives, and it doesn't have to cost a lot."