When employers focus their attention on controlling their healthcare costs directly, through coverage limitations, increasing employees’ share of premiums, increasing deductibles, co-insurance and co-pay levels, their interests pretty much coincide with those of insurers.  Even when insurers and employers look to proactive health management (PHM) to promote wellness, reduce risks and manage existing chronic diseases, their interests are aligned, as long as it is only the reduction of sickness care costs that they are after.

But as more employers adopt “value-based insurance” (VBI) strategies, their interests begin to diverge from those of insurers.  Employers can not only afford to, but are likely to take a longer view on the subject of what is “value” than do insurers.  Since employers often retain their employees for twice or more as long a period as insurers retain their plan members, insurers’ focus in defining may be shorter than makes sense for employers.  This same diversion of interests applies to PHM, as well.

One of the major focuses of VBI strategies is on selectively modifying employees’ share of drugs, preventive treatments, and other medical care that promises to save money in the long run for employers.  But this may cost insurers more, because prevention comes before sickness, even if it prevents such sickness.  And insurers may be stuck paying the up-front costs of prevention or disease management while their members switch to other insurers before the effects of prevention are felt.

The same applies to PHM, in terms of selecting which health risks or chronic diseases deserve priority attention and insurance coverage.  For insurers, the choice is simple – whichever diseases or risk conditions and the members who have them promise the greatest risk- reduction or disease-management sickness care savings, within the time that such patients are likely to remain members, are logically the ones who deserve the most and earliest attention.  This often means that only a small percentage of employees covered under an employer-paid plan will be involved.

But employers have a different perspective, or they are gradually developing one.  It recognizes that employee and dependent illness costs more than the direct costs of medical treatment or management.  It also costs in terms of absenteeism and presenteeism, in worker performance quality and output, in customer satisfaction and retention.  These indirect costs can be as much as ten times as great as medical treatment costs alone in some cases.  If insurers only target conditions that cause the greatest sickness care costs in the short run, they can easily miss other conditions that cause the greatest overall labor cost and negative performance impact for employers.

For example, one of the more common and debilitating conditions that employees suffer from is chronic/migraine headaches.  These cause not only frequent absences, but severe productivity and performance impairment at work.  But they are linked to modest medical care costs, and rarely included in insurance plans’ disease management efforts.  The same is equally true for conditions such as high stress, depression and anxiety, which may have limited coverage as mental conditions.  And behaviors such as smoking and substance abuse have immediate negative impact on employee performance, compared to only long-term impact on medical care costs.

In a study of migraine headaches, 42% of patients surveyed had insurance coverage that did not cover adequate dosage for effective treatment, and 37% of these had forgone filling one or more prescriptions for the drug because of their high costs.  This causes not only significant negative quality of life impact for patients, but significant performance impairment as well. [V. Gerson “Insurance Limitations and Cost of Triptans Negatively Influence Use Patterns, Quality of Life.

While many performance impairment factors may best be dealt with by employers, such as worker hydration levels, job satisfaction, etc. the health risks or chronic conditions that cause such impairment are logically targets for medical management and health insurance.  And unless insurers catch on, perhaps even lead employers to this recognition, they may lose business to rivals that do so. [M. Hogarth “Insurers Scramble to Offer Health Programs” East Bay (CA) Business Times June 8, 2007 (eastbay.bizjournals.com)]

Ideally, insurers and employers should work from the same side of the table to address the health issues that have the greatest negative economic impact on employers, rather than simply negotiate from different sides over reducing medical care expenses.  Until they do, the two major payors in the healthcare system besides government will not be on the same page, and both will suffer as a result.