Firm Controls Costs While Maintaining Employee Preventive Health Care

Differential cost-sharing approaches in employee health benefits encourage use of preventive care services while controlling a firm’s overall health-care costs, according to a study published recently in Health Affairs by researchers at Yale School of Medicine.

The study, titled “Effects of a Cost-sharing Exemption on Use of Preventive Services at One Large Employer,” evaluated how Alcoa, a world leader in aluminum production, implemented a new benefit plan for some employees and their families in 2004.

As a way to keep employees healthy and to reduce future health care costs, the plan provided employees incentives to use preventive care services by completely covering the expenses. For these services, employees and their dependents did not have a co-payment, co-insurance, or deductible. At the same time, the company increased cost sharing, or the amount employees would have to pay out-of-pocket, for many outpatient services.

“Our study suggests that if employers would like to maintain rates of preventive health care use while increasing cost sharing, exempting preventive care services from cost sharing may help,” according to lead author Susan H. Busch, associate professor of public health in the Division of Health Policy and Administration in the Department of Epidemiology and Public Health at the Yale School of Medicine. Busch explains that the results of the study may encourage more firms to exempt preventive care services from cost sharing.

The researchers examined claims data from 2003 to 2004 and compared the rates of preventive care use among 30,000 employees before and after this benefit change. Due to multi-year union contracts, only some Alcoa employees were subject to the new benefit design allowing the researchers to compare preventive care use among employees with different benefit plans at the same company. The preventive services studied include cervical and colorectal cancer screening, well-child visits and adolescent well care.

“After this benefit change, Alcoa maintained rates of preventive care use, suggesting that exempting high-value services from cost-sharing can preserve the use of important health benefits,” said Busch, who notes that the trend in employee health coverage has been to increase deductibles, co-payments or coinsurance, resulting in higher out-of-pocket expenses for employees.

A concern about increased cost-sharing is that it could lead to declines in the use of services that have been shown to cost-effectively reduce the burden of disease, including preventive care. “This study indicates one way employers can maintain use of preventive services, while increasing cost-sharing on other services,” said Busch.

The study was funded in part by the John D. and Catherine T. MacArthur Foundation Network on Socioeconomic Status and Health. Study co-author Mark R. Cullen, M.D., serves as Medical Director of Alcoa.

Other authors on the study include Colleen L. Barry, Sally J. Vegso and Jody L. Sindelar.