Productivity.
Lost in the great debate about the role of the employer, the individual, and the government in health care reform is the critical link between health insurance, care, and productivity.
Years ago when I was responsible for the Travelers’ utilization review account management function I met with Bruce Bradley, who was then the head of employee benefits at telecom giant GTE. I was going thru the data, reporting on how well Travelers had done reducing this and cutting that, when he stopped me and asked about the ER and inpatient admissions rate for children with asthma. I didn’t have the data, and asked why he wanted to know.
Bradley proceeded to educate me on GTE’s workforce and their functions. To summarize, they had a lot of employees who were single parents or one parent in a dual-income family. Many of their employees worked in line maintenance, directory assistance, and other blue- and pink-collar jobs.
And when one of these workers was out of work, caring for a child experiencing an acute asthmatic attack, the lines didn’t get fixed and calls didn’t get answered. Bradley wanted to know what the Travelers was doing about this. Truth was, we weren’t doing anything.
GTE is long gone, swallowed up in the telecom mergers in the nineties. But Bradley’s point is as true now as it was then – keeping workers, and their families, healthy and productive is the primary objective of health insurance.
I’ll grant that few policy wonks look at it from this perspective. Perhaps that’s because they didn’t have the pinned-to-the-wall-like-a-butterfly-in-a-display-case experience I went thru. But because they don’t consider the impact of health insurance on employer productivity, they miss the reason employers offer health insurance in the first place – to attract, and keep, good workers.
If employers are removed from the process of vetting and selecting health insurance vendors, individuals would be responsible for choosing their carrier. Insurance companies would ‘win’ based on how cheaply they could provide insurance to individuals and families, and the less care delivered, the lower the premiums. I don’t see what would prevent those vendors from suggesting each and every injured or ill worker or dependent tried bed rest and over the counter drugs for two weeks, then an x-ray or basic lab test, and only then would they get to see a diagnostician.
What does this mean for you?
Health care reform based on an individual market would work against employers’ desires and needs, and over the long term, against the nation’s best interests.
May
28
Great post Joe. As a small business employer who provides health care benefits to my employees, I agree that we need to ensure the longevity of employer-sponsored health care.
Cheers.
Joe– I think you are invoking the ‘narrative fallacy’ here…
and your second to last paragraph goes in contrast to your many posts about efficacy and outcomes…
Joe, Interesting post. We are a small employer, 55 employees, and share the demographic that you describe in the third paragraph. We have gone to an employer funded HSA with accompanying low premium – high deductible plan. Many of our employees could never fully fund an HSA to meet the deductible. I read a recent study that stated the average income of an HSA participant is $139,000/yr. If employers are removed from the party – I think that employees and dependents will be left with high deductible plans that they will reduce usage and probably drive up public services in some communities. Either way – someone will pay.
Eric – I don’t follow your comment re the narrative fallacy. I’d appreciate a little more clarification.
Re the contrast, you’re right – my sense is over the long term, payers would figure out how to best care for medical conditions, and over that long term, the ones who do it right will win. However, that may not be the case over the short term – wherein low price based on denial of care or very conservative care would ‘win’ in the individual market. As one who works in both the group and workers comp industries, it is common to see back injuries handled differently depending on the type of coverage, with more aggressive treatment in work comp. Not necessarily better in terms of outcomes, but use of more expensive technology earlier in the case. My point with the post is there is a link between health insurance, health care, and productivity, and employers who ‘give up’ any role in their workers health care may find there are adverse impacts on productivity.
Paduda
Very good point! Health care (and health insurance) is not only about health expenses. It’s also about expenses created by workforce loss. Employers really should highly motivate their employees to keep fit. But I have the feeling that not every employer understands this idea…
Lorne
http://www.bepress.com/ice/vol3/iss1/art3/
http://www.conversationagent.com/2007/04/the_narrative_f.html
Basic idea– we have an outcome, in this case, the role of employers in health insurance for employees, and we then create a narrative– albeit a very plausible one– about how we got to this point… problem is in the discounting of alternative paths and ‘luck’ and the impact of other forces… it is really an expansion of the association-causation mistakes that are made every day…
Taleb’s book is worth reading… it promotes intellectual humility in all of us…
Eric – thanks for the clarification. I’m not concerned (in this post) about how or why employers got into the health insurance business; what is relevant (again to this post) is that insurance, and health care, affects productivity and therefore should be something of interest to employers. I would contend that the reason that employers offer health insurance is competitive – in order to attract workers they have to.
Joe
Hi Joe – you have an interesting perspective. I believe it is best when the insurers, employers and employees are all aligned to incent the right healthy behavior to keep the workforce well and at work. The employer could also offer additional employee benefits around errand running, on-site fitness centers, on-site medical offices, on-site child care that makes it easier on the employee, especially single parents. The last thing we should incent is high-cost immediate care so that no days of work are missed, eventually someone pays for that high-cost care.
Employers may FEEL they are benefiting their employees by providing health insurance, but the link between employment and health insurance burdens the employer while at the same time restricting workers’ freedom to change jobs or to start new businesses. While I don’t assign malice to any employer, power accrues to those who control something as important as health insruance for which no free alternative market exists. I would like to see a single-payer system financed through general revenues in which the private practice of medicine would be preserved.(I wouldn’t even use an “insurnce” model at all!)The erstwhile insurance company functionaries could administer the system rather than spending all that effort “avoiding the sick” in Marcia Angell’s words. And no multi-million $ CEO salaries!