Self-Insured Employers and Health System Reform

We Americans cherish the right to carry guns. But what about the right to carry a paunch?

“Waistlines Expand into a Workplace Issue” in yesterday’s New York Times describes early efforts by a small number of U.S. employers to take a public health approach to their employees’ weight status. When PSEG, a New Jersey utility company, recognized that overweight employees were likelier to experience musculoskeletal injuries, it began to offer weight control and nutrition programs, and provided a small financial incentive for employees to fill out a personal health assessment.

Compared to Japan, the PSEG program is public health lite. Japan recently passed a law requiring companies and local governments to measure the waistlines of all people between 40 – 74, to identify those whose girth exceeds the governmental target of 33.5 inches for men and 35.4 inches for women. If those who exceed the limit have not lost weight in three months they will be given diet education, with reevaluation after six more months.

More and more employers are turning to self insurance. This creates the potential for more employee engagement with the issue of health care costs. Better self-management of wellness, health, and medical utilization, are crucial requirements for success in improving quality and cost.

In recent years we have seen significant improvement in the degree to which patients and physicians collaborate in planning care. But the U.S. has had little success in engaging citizens in co-managing the health system itself. U.S. political culture is not going to allow employers to measure our waist size anytime soon. But there is significant potential for steps forward in rational governance of the health system via self insured employers.

The U.S. has moved steadily away from seeing health and health care as community responsibilities. Insurance has gone from being community rated (the same cost for all enterprises) to being experience rated (if my employees cost less, I pay less). Now we are trying to shift financial risk to individuals themselves.

Self-insured employers (the employer takes the financial risk for utilization, with third party administrators handling claims and other backroom insurance functions) are small communities. Whether the employee group is local, as in a utility company, or multinational, employees have a shared interest in the success of the organization. Employees are well-positioned to understand that health costs involve trade offs against other items of importance, such as compensation, benefits, and success of the business itself.

With skillful leadership, self-insured companies could engage employees in co-managing the company's health plan. This is a more promising approach than the individually-focused, "skin-in-the-game" use of deductibles that is currently fashionable. If I have a heart attack, the deductible will not prod me to shop for cost-effective care. But if my employer engages me in considering the cost of insuring me and my fellow employees, and I see that lower cost providers may provide high quality care, I will have a "duh" experience. Why should we - my fellow employees and I - pay more than is required to be well cared for?

If the U.S. was designing a health system from scratch, we would not ask employers to be insurers as well. But that's the way it is. If self insured employers and employees work together to manage the employer's health plan, we can make some local progress in making our cockeyed health system function better.