The default option is the technical term for arrangements in which people do not have to actively choose to participate in some program – they are automatically enrolled therein, with the option to decline.  This saves the costs of efforts to obtain their participation, and usually results in far higher rates of participation than do arrangements where people have to enroll themselves.  It has a number of applications in healthcare, as well as with employees, such as automatic enrollment in retirement plans. [S. Halpern, et al. “Harnessing the Power of Default Options to Improve Health Care” New England Journal of Medicine 357:13, Sep 27, 2007 1340-1344]

This same concept has also been adopted by some EHM providers.  It has been highly effective in increasing enrollment in EHM programs, compared to those where individuals must actively opt in.  Providers using this approach have reported participation rates in excess of 95%, where rates in most such programs rarely reach even 30% without incentives being offered and paid for enrollment.  But incentives add significantly to costs, and make the achievement of desired ROI ratios much more difficult, though they may help with ROI amounts.

As described earlier - Promoting Success vs. Participation in EHM - incentive costs applied to all participants are automatically multiplied by what can be many times, depending on the success rate among such participants, which can vary from 0% to 100% in theory, and often vary by at least half that amount in fact.  A $100 incentive paid to all participants becomes an added cost of $500 per successful participant in a smoking cessation where only 20% quit.  And since the desired economic gains in a smoking cessation program arise from quitting, it makes it that much more difficult to achieve a positive and satisfying ROI ratio when the ROI denominator increases by $500 per success.

Participation vs. Success

In the evaluation of EHM programs, there has always been the potential for self-selection bias when the healthcare, disability and workers compensation costs, absenteeism and presenteeism rates, and other measures of success among participants are contrasted to non-participants as the basis for gauging the gain made by such programs.  This bias reflects the self-evident possibility, even likelihood, that individuals who voluntarily choose to participate in such programs may be more motivated to make the behavior/lifestyle changes needed for success than are non-participants.

This bias can be identified and used to adjust simple side-by-side comparisons between participants and non-participants by measuring the costs of both in both baseline and participation periods.  If non-participants’ costs were higher to begin with, and declined even though they did not participate, then only the decline in costs among participants between their baseline and participation periods that is greater than the decline among non-participants should be counted as probable effects of their participation.  But if individuals are automatically enrolled, there may be too few people in the non-participant group for statistically significant differences to be found.

It is not the statistical significance that will concern most employers who invest in EHM, however, but the economic significance.  If 95% of all employees targeted for participation enroll, and as a result, the total number who succeed in reducing their costs, improving their productivity and performance, etc. the employer is likely to be well pleased, regardless of whether or not statisticians are.  It is the potential for the success rate being lower in the “default option’ case that should worry them.

If people who voluntarily enroll in a given EHM program are likely to be more motivated and ready to change, and as a result yield a higher success rate, then it follows that people who are automatically “default” enrolled, with the possibility of opting out, will not be as highly motivated as those who make the effort to actively enroll themselves.  In such cases, the success rates of default participants would probably be lower than among those who would have voluntarily enrolled.

For example, those who actively/voluntarily enrolled may involve only 20% of those eligible, but deliver value based on a success rate of 50% among them, while the total of those enrolled by default involve 95% of those eligible but achieve a success rate of only 20%.  This overall rate comes from the 50% success rate among those who would have actively enrolled if given the opportunity, plus a lower success rate among those enrolled by default.  The success rate for those “involuntarily enrolled” can be determined, given these figures.

If the voluntary 20% of participants achieved a success rate of 50%, and the overall success rate for all participants was 20%, then of the total, 50% x 20% = 10% or half the successes came from those who would have voluntarily enrolled.  With an overall success rate of 20%, this means that only 10% or half the successes came from the 75% of participants who would not have voluntarily enrolled, but were enrolled by default.  This means that the success rate for those 75% was only 10% divided by 75% = 13.33%.

On the other hand, it may also be the case that those who are most likely to voluntarily enroll are already healthier than the average member of the population, precisely because they are more motivated and concerned about their health.  In such a case, the success rate among default participants may be lower, while the success gain, the economic benefit to the employer, may be higher.  Since it is the gain due to success, not just the sheer proportion of participants who succeed, that determines the overall economic impact for employers, a higher success gain, even with a lower success rate, may prove to be better than a higher rate and lower value.

In the example used above, if the 20% voluntary participants have a 50% success rate with a $400 average success gain for each, they contribute 50% x $400 = $200 per participant to the total gain.  If the 75% “default” participants, thanks to being at higher risk and more impaired to begin with, contribute as much as $200 divided by their 13.33% success rate = a $1500 average gain per success, their gain per participant will just as great as that for the voluntary group.  In any case, as long as their average gain per participant is greater than their cost per participant, they are adding to the net value of the EHM investment by participating.

As long as the average success gain among default participants is positive, on average, the EHM client is ahead.  By the same token, if the average success gain per voluntary participant happens not to be positive, due to their being “too” healthy in the first place, then their participation can be a drain on the overall gain when a default participation strategy is used.  The only way to discover the effects of the default strategy is to use it and compare its results to that of voluntary enrollment options, both with and without incentives.