Can The Auto Insurance Model Work For Employer-Sponsored Health Insurance?

With most people with employer-sponsored insurance plans, an employee who never visits the doctor pays the same premium as her co-worker who is a regular in his doctor’s waiting room. But what about plans that either reward an employee’s healthy behavior or penalize those with risky lifestyles?

Marketwatch.com takes a look at some plans being offered by Fortune 500 businesses like IBM, JetBlue and Caterpillar that take an approach to group health plans that resembles what you see in auto insurance policies.

Much like safe driving is often rewarded by auto insurers (and things like speeding tickets and accidents result in higher premiums), some of these plans are using this carrot/stick approach to encourage members to refrain from smoking, keep their cholesterol levels manageable, and maintain their treatments for chronic conditions.

The folks at IBM say their rewards plan, which has been in effect for years, has benefited both employees and employer. Workers who participate in exercise and nutrition programs can get up to $300/year in rebates. Between just 2005 and 2007, the company says it saved $190 million in health care costs, while the National Business Coalition on Health says IBM-ers pay upwards of 60% less on health care than the industry average.

JetBlue recently began a similar program that rewards employees (up to $400 for an individual and $800 for a family) who take part in wellness programs. Airline staffers with certain chronic conditions who enroll in care-management programs can slash even more off their premiums ($250 for an individual; $500 for a family).

Meanwhile, Dell is one of a growing number of companies that have eliminated employee co-pays for some medications and services. It also deducts $800 from insurance premiums for employees who take a health survey and check in with a health counselor once a quarter over the phone.

Experts say these attempts at encouraging employees to live healthier lifestyles are an improvement over previous efforts by businesses to simply reward workers who didn’t visit the doctor. Those rewards, often in the form of bonuses, incentivized the notion of not seeking care, even when needed.

“By and large, that approach fell into disrepute because employees or their families were not getting the treatment they needed,” an Aon Hewitt rep tells Marketwatch. “Employees and families were just denying themselves care they needed so they could get a little cash.”

If you have a group health insurance plan that rewards healthy behavior (or penalizes unhealthy behavior), we’d like to know whether you feel like it’s worse or better than what you had before. So if you want to share your thoughts, write up at tips@consumerist.com.