By Rose Hoban
Beginning later this year, state employees are going to see some changes when they sign up for health insurance through the State Employees Health Plan. Number one among them is going to be a new insurance card.
In the past, the card looked like a typical insurance card issued by Blue Cross Blue Shield of North Carolina, which has been administering the plan for decades. But the next time state employees get their cards, the front will note that the State Health Plan is “A Division of the Department of State Treasurer” will also say, “Paid by YOU and other NC Taxpayers.”
Another change coming is a newly designed explanation of benefits, that document you receive after you go to the doctor that tells what the doctor did, what the insurance company covered, and what you, as a patient, need to pay.
“Our internal design team did that,” said Frank Lester, who heads communications for the state treasurer’s office. “Blue Cross Blue Shield liked what we did so much, they’re gonna put it across their other book of business.”
The changes are small tweaks designed to help state employees get a better sense of what they’re spending, as taxpayers, on their health plan, said Folwell. He’s betting that with the changes, state employees will change their behavior and spend less money when they make health care decisions.
But research on how to spur changes in people’s behavior shows the odds may be against Folwell, and he may need something stronger to get people to change their habits when they go to the doctor.
Biggest buyer
The State Health Plan (SHP) covers more than 730,000 state workers and retirees and their family members. Folwell has expressed concern that those state workers don’t realize that it’s the state of North Carolina, not Blue Cross, that provides the health care. Blue Cross is only the administrator of a plan that the state pays for.
Hence the changes on the insurance card, intended to remind people the state is paying, not Blue Cross.
“Most people think ‘Blue Cross is my insurer,’” he said, holding up a mockup of the new card. “Because their trademark had been on the front of this card for 40-something years. And it’s not anymore.”
He also recounted about how when he met with BCBSNC head Patrick Conway, he had him close his eyes and envision what would have happened if the company had not won the contract to administer the plan for the next five years. That contract for processing claims was worth $78 million to Blue Cross in 2017, but that’s been whittled down from previous years as the Treasurer’s office looks to other vendors to provide employee benefits.
“That’s us taking advantage of our largeness… we are already doing that,” he said.
“Almost no one in the budget & appropriation processes have seriously tried to address [the state’s liability] over these decades and now staggering amounts governments face are an ‘inconvenient truth,’” emailed Allen Feezor, who was a policy advisor for the state’s Department of Health and Human Services before moving to California to run CalPERS the country’s largest pension system. “Dale is about [the] only elected official to make it an issue.”
During a monthly phone call with reporters on Tuesday, Folwell said he’s hoping to cut as much as 10 percent, or some $300 million, from the cost of the health plan. The changes on the cards and the EOBs are baby steps toward getting plan members to change their habits, but right now they’re the only changes Folwell has made.
Old habits die hard
“There’s a long history of failed behavior change interventions that give people information,” emailed Wendy Wood, a researcher in behavior change who is now at the University of Southern California. “Even if people read the information and understood it, hard to translate that into any specific behavior.”
When Wood was still at Duke University, she wrote about the ways to break and create consumer habits and found that “information campaigns that successfully convey information do not necessarily change consumers’ behaviors.”
[sponsor]“If changing behavior was simply about making common sense simple changes and good choices then we would all be able to make whatever changes we wanted whenever we wanted,” she wrote. “But we do not.”
In short, getting people to change their behavior requires more than just telling them something. Research on the science of behavior change finds that changes that seem to be “common sense” fail more often than not.
“With a little blurb on your insurance card, unless you’re pulling out your card and reading it right before you are making that decision, even if they wrote the best thing in the world on the insurance card, you can’t really imagine that it would make much difference,” said Dave Nussbaum, a researcher at the University of Chicago who works with the Behavioral Science and Policy Association.
Nussbaum and Wood are practitioners in the burgeoning field of behavioral economics, which probes how people make decisions, and how to encourage them towards better decision-making.
The research recognizes that people’s habits are pretty well ingrained and people subconsciously resist information that conflicts with what they want. Instead, they go for decisions that are easier, or more convenient, even if they’re not the “best solution.”
Nudges needed
“People make all sorts of bad decisions with their own money, let alone the state’s money,” Nussbaum said. “They click on the first thing they see on Amazon, rather than doing a bunch of price comparisons.”
The current thinking about changing people’s behavior is that instead of attempting grand gestures to move the needle, little “nudges” work better. In fact, last year’s Nobel Prize in Economics recognized research around this idea.
That philosophy has been behind the thinking in places such as Singapore, which famously, has some of the lowest health care costs in the world, in part because the government there consistently provides little carrots and sticks to nudge people toward better choices. For example, the government subsidizes healthier choices at food courts in order to make those choices cheaper.
Nussbaum said that if Folwell wants participants in the State Health Plan to choose cheaper options, he may have to spell it out for them by thinking about “what’s in front of people when they’re making a decision.
“For example, if the state has a website that people go to to make this decision that could be a place where you could create… a little nudge that sort of gets people thinking and keeps their options free and gets them thinking in the direction you want them thinking,” he said.
He also doubted that Folwell would see much change in the amount spent by plan members as a result of this particular intervention. Nussbaum did point out that some of the premier thinkers in the U.S. on this topic are here at Duke University’s Institute for Advanced Hindsight (People there were unavailable to comment for this story).
“My sense is that they’d be well served to spend a little bit of that money that they hope to save and get some insight from people who actually do research on this,” Nussbaum said.
Correction: The original version of this story misidentified the head of BCBSNC as Brian Conway.
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I have tried to explain to Treasuer Folwell that managing a Health plan is unlike managing a plant or a store. The plan needs a major over haul. You must move from a system that rewards increasing services to one that manages populations of services with incentives that reward changing behaviors. Until you change the model of payment it will be garbage in garbage out philosophy. The only real options he has under the broken model that exist is to raise premiums or decrease benefits. Both are unpopular