Medical Savings Accounts Study: Case Studies Quaker Oats Company
Coverage: 70% in Indemnity Plan; some managed care plans
Number of employees: 11,000
Summary: Company Health Plan costs: $2900 per employee in 1992. Since 1983 to the present, average annual increase in costs - 7%
Though not defined as a Medical Savings Account program, Quaker Oats has managed its employee health benefits costs effectively over the last 10 years.24
The Quaker Oats employee health benefit plan consists of three major connecting elements:
Corporate Wellness:"Live Well, Be Well"
Consumer Education : "Informed Choices"
Flexible Plan Design: Employee incentive plan
These elements form the core of an overall health benefits plan designed specifically to enhance employee/family well being and stabilize company health costs. The flexible plan design is coupled with health life-style cash incentives and worksite health risk appraisals. This latter has been validated as important for employers who wish to identify employees who are most at risk and predict those who incur over time the greatest health expenditures and claims.25
Corporate Wellness
Employees who pledge to pursue health improvement activities receive up to $140 annually of flexible benefit credits. The activities eligible for credits include "aerobic exercise 3 times weekly, use of seat belts while in automobiles, no tobacco, no alcohol abuse, and no drug abuse." All flexible benefit credits are granted under the honor system. There are no "life-style credit police."
Employees who take the company Health Risk Appraisal and whose scores fall at or above accepted levels receive an additional $110 in flexible benefit credits. Employees whose scores fall short of accepted levels can still receive full credit. They do so by positive demonstration they are following measures designed to improve their Health Risk Assessment scores up to acceptable levels.
"The flexible plan design is coupled with health life-style cash incentives and worksite health risk appraisals."
Employees who sign up for the "Be Well, Live Well" plan are rewarded financially for their participation. Those who choose not to participate pay out of their own pockets for the privilege of declining. Once again, the economic adage holds—incentives matter!26
Consumer Education
Since 1983 the company has provided a consumer education program to help constrain health care spending. "Informed choices" is an active educational program that enables employees to participate more directly and assertively in medical decision-making transactions. Helping employees learn to ask questions about their health and related care makes a difference. Quaker Oats finds this strategy reduces passive and unchallenged acceptance of provider recommendations. Timely questions asked of providers often results in treatment alternatives more suited to the needs, wants, and preferences of the employee.27
Flexible Plan Design
The flexible earned credit plan is voluntary thus it is the employee's choice to participate. Earned flexible credits are used dollar for dollar to reduce payroll contributions to health benefits made by that employee. Such earned credits in effect put more cash income into employee paychecks. Employees who decline to participate contribute more money out of their wages to help fund health benefit plans.
Melanie Pheatt at Quaker Oats is quick to confirm their overall plan does not fit the classical Medical Savings Account program model. However, the Quaker Oats approach puts to work one of the central objectives of MSAs. Positive incentives linked with cash rewards place employees and their families in active roles as managers and keepers of their own best interests and health. Over a recent ten-year period hospital admissions and days per 1000 covered lives declined by almost 50%. With annual increases in company costs held to 7% per year, the results speak for themselves.28
At a March 23, 2005, House Appropriations hearing on a bill to gut the voter-approved I-601 spending limit, Rep. Jim McIntire (D) asked a supporter of I-601’s two-third supermajority requirement for the legislature to raise taxes the following question:
"Can you name a time when we [legislators] have actually not just set it [supermajority requirement] aside by majority vote? I mean, this is in many respects a procedural motion that has no bearing. It’s a statutory constraint that cannot constrain any legislature that chooses as a majority to set it aside . . . have we ever used a supermajority [to raise taxes]?"
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