States Differ in the Use of Incentive-Based Strategies to Manage Employee Health

New York (1/30/19) — 

Traditionally, like other plan sponsors, states have largely managed persistently rising health costs by increasingly sharing the burden with employees through deductibles, copayments and premium contributions. More recently, states are managing costs with health management programs to provide care more efficiently.

Segal Consulting’s 2018 State Employee Health Benefits Study, which includes data from every state and the District of Columbia, presents an overview of states’ wellness and health management programs. Key findings include:

  • A majority of states (61%) have branded their wellness programs by naming them and creating logos for them, which helps identify the programs with the states’ plans and distinguishes them from programs provided by vendors. Branding is one indicator of states’ commitment to their programs.
  • All states provide at least one incentivized wellness activity. Health-risk assessments are the only activity offered by more than half of states (65%).
  • States tie completion of required wellness activities with a range of incentives. Cash or gift cards are the incentives offered by the most state plans (43%). Premium reductions and plan design incentives are also utilized.
  • The most common way incentives are earned is on an all-or-nothing basis, meaning incentives are only provided when all required activities are completed.
  • Most state tobacco-cessation programs are voluntary (71%), and a majority use a separate vendor (59%).
  • Some states contract with separate specialty vendors for such services as wellness (29%) and telemedicine (25%).
  • Relatively few states sponsor their own wellness clinics (27%). Among those that do, the majority have multiple locations (57%).
  • More than half of states provide telemedicine (55%), which helps promotes more efficient utilization, defined as high-quality and appropriate care in a lower-cost setting.
  • Although one-third of states have transparency tools for medical coverage, only a handful (8%) offer employees an incentive to use them.

“It’s encouraging to see states offering wellness and health management programs. The study reveals opportunities for a greater commitment to those programs through the use of incentives to increase participation,” notes Richard Ward, Segal’s Health Practice Leader for the public sector who oversaw the study. He adds, “The fact that public employees tend to remain with their employers ‘forever’ provides considerable potential for a return on the investment in wellness and health management programs.”

“With ever-increasing pressure on public sector budgets, health plans and employers are increasingly challenged to ‘do more with less,’” observes Andrew Sherman, Segal’s National Director of Public Sector Consulting. “Strategies to promote wellness and improve member health, as well as to ensure efficient utilization and purchasing, are all the more important.”

To speak with Mr. Ward about the State Employee Health Benefits Study and/or Mr. Sherman about how states are addressing fiscal challenges associated with their employee benefit offerings, please contact Erin Burns.

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Segal Consulting (, a member of The Segal Group, is a leading independent firm of benefit, compensation and human resources consultants. Clients include public sector jurisdictions (state, local and federal), boards of trustees administering pension and health and welfare plans under the Taft-Hartley Act.

The Segal Group ( is a privately owned benefits, compensation and investment-consulting firm with more than 1,000 employees throughout the U.S. and Canada. Members of The Segal Group include: Segal Consulting, Sibson Consulting, Segal Select Insurance Services, Inc. and Segal Marco Advisors.

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