Premera Alaska Innovates to Control Cost, Drive Health In Small Group Market
According to the Alaska Health Commission’s 2011 Annual Report, at $11,926 per employee, Alaska has the highest average annual cost for employee health benefits in the nation.
In practically every conversation I have about Alaska health care, cost is the topic on everyone’s mind – but this is particularly true among small businesses trying to keep their employees covered.
Premera, as the dominant market leader for commercial insurance in Alaska, has developed an innovative product for the small group market that appears to be a first of its kind in the nation. Its target is better health for small business employees, but the consequence of that improved health will be downward pressure on costs.
“Larger employers have been engaging in wellness strategies all over the place,” said Lynn Rust Henderson, Premera Alaska’s Director of Sales. “We know from the large group market that employee incentives can create better employee engagement leading employees to more optimum health. If given a choice – and an incentive – folks will make good health choices.”
It’s those positive health choices that create downward pressure on costs. Benefit plans that have clear incentives can significantly reduce the cost trend line over time, resulting in large savings to employers and employees.
“What I wanted to do was take all of the successful elements of the large group market, and figure out how to offer similar incentives to employees in the small group market,” said Henderson. “We can’t find any precedent in the country for our approach. This is an Alaskan innovation to addressing health care costs.”
The innovation in the model comes by way of cash payments made directly to plan enrolees, working in tandem with credits back to the employer for successful engagement.
“If individuals will spend just one hour of their time on their health care, we’ll send them $150. It’s that simple,” said Henderson. “Even if you have a great job, $150 for an hour of attention on your health is a pretty good deal.”
During that hour, individuals have to do two things: fill out an online questionnaire known as a health risk assessment (HRA), and complete what’s called a “biometric screening.”
“Biometric screening sounds kinda scary to some folks, right? All you have to do is to get your height, your weight, your cholesterol count, your triglyceride count, those sorts of things. So, literally, it takes about 20 minutes,” explained Henderson.
Premera has gone out of its way to reach out to members to drive engagement. They will be holding community forums across the state where members can come in for free to get their screening done. Premera also accepts screenings performed at your doctor’s office or at a community hospital event, for instance.
“If folks don’t have time to get to the doctor, we will send them a home test kit, which allows members to self-report their measures. We’ll mail it to you, and you can complete the test in your living room. The most complicated thing folks have to do is prick their finger to be able to send in a small blood sample.”
A short time later, a debit card from Premera will show up in the mail with $150 pre-loaded on it. The plan will manage the program directly so small employers don’t need to worry about administering the debit card or creating any additional funding for the card.
This model is truly unique for the small group market – offering individuals direct cash incentives funded through premiums. By taking a lesson from larger employers and applying it to smaller businesses, Premera is testing a model that could have broad market impact well beyond Alaska. The benefit plan will be offered effective July 1, 2012.