Innovation & Technology October 22, 2009, 5:00PM EST

Tough Love, Lower Health Costs

(page 2 of 2)

Browse Issues

Story Tools

It's not as extensive as United's offering because it's merely a discount program rather than a comprehensive plan design with strict monitoring. Dr. Edmund Pezalla, Aetna's national medical director for pharmacy management, says it's too early to say if such programs are working, but he's optimistic. "We know people are filling more prescriptions," he says.

United is offering the Diabetes Health Plan only to large companies that are self-insured, meaning the employers bear the entire risk while the insurer administers the plan. What does United gain? For one, it can better compete with its rivals by offering a wider menu of innovative services. More important, the insurer protects itself over the long run: Diabetic patients who don't control the disease could become liabilities down the road, if they change jobs and end up working for a company that's fully insured by United. "Insurers always benefit from healthier members," says Sheryl R. Skolnick, a managing director at Pali Capital who specializes in health care. "It's cheaper to give up co-pays and premiums rather than pay for a diabetic in full-blown distress," regardless of when the patient runs into trouble, she adds.

PRIVACY HURDLES

Plans such as United's haven't always been greeted with applause, however. GE's Galvin says a couple of non-diabetic employees complained that they had more out-of-pocket costs than did those who were eligible for the diabetes plan. And Peter L. Ebb, a partner at the law firm Ropes & Gray, says he was recently hired by a hospital that wanted to implement a plan similar to United's but was getting hassled by its labor union. "Employees were initially suspicious," Ebb says. "They worried, 'Is the information I disclose going to be passed along to my manager? Is there a risk I'm going to get fired?'" Ebb convinced the union that there were enough privacy firewalls built into the program to shield employees' identities, but he suspects similar worries will arise in other workplaces. "This idea can be successful if employers can overcome those concerns," he says.

United is now designing studies that will help it quantify the diabetes plan's impact on health outcomes and expenses. If the insurer can prove the plan reduces costs, it may consider rolling out similar programs for a host of chronic but manageable diseases. Says Vojta: "We can see it moving to other conditions where patient behavior drives outcomes."

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic network

Rewarding Good Health Habits

In August the advocacy organization Bipartisan Policy Center released a report called "Improving Quality and Value in the U.S. Health Care System." Among other things, the group recommends that insurers and their corporate customers use "high-performance networks" of hospitals and physicians with proven track records of providing quality, efficient care. And employers should reward workers who pick these preferred providers with discounts on their co-payments. Such programs would also spur providers to invest in efficiency improvements, since "delivering high-value care is more likely to pay off," the group surmises.

For this and related stories, go to http://bx.businessweek.com/us-healthcare-system/reference/

Join a debate about consumer-driven health plans and health savings accounts.

Weintraub is a senior writer for BusinessWeek's Science & Technology department.