“This isn’t about big brother telling people what to do,” says John Rice, GE’s vice-chairman, “but helping them make better choices.”
The Economist reviews large employers efforts to improve employee health and thus decrease their own health care costs. Some of these efforts include:
- Prohibiting smoking on company premises
- Handing our healthy recipes
- Building on-site gym
- Bonuses for healthier living
Take these examples from Fortune 500 companies:
“At IBM, employees receive a $150 bonus for exercising, eating nutritious meals and so on. One such bonus is designed not just for an employee but for his entire family. According to IBM’s own data, caring for a diabetic child is six times costlier than caring for a healthy one.”
Kevin Volpp, the director of the Centre for Health Incentives at the University of Pennsylvania, found that GE’s anti-smoking incentives prompted 9.4% of smokers to remain smoke-free after 18 months. Without incentives, only 3.6% of those who tried to quit succeeded. A review published in Health Affairs last year found that firms saved $3.27 for every dollar they spent on health programmes.”
Is this a good thing? Health insurance should account for random health risks. Health risks due to individual employee behavioral choices, however, should be internalized by the individual. Since the premium prices are basically the same (free) for most employees in large firms, they have a smaller incentive to maintain a healthy behavior than would be the case if employers used individual underwriting in pricing policies. Thus, efforts to give bonuses for healthier behavior by employees and their families is, in essence, an effort to increase net premiums for those who do not engage in healthy behaviors. With health care costs consuming a larger and larger portion of employer’s budgets, these efforts to control costs will be increasingly important over time.
Flushed
November 21, 2008 in Books, Health Care in Developing Nations | 1 comment
I just finished reading an interesting book on plumbing. I can just see that I lost half my readers with that last sentence. How can plumbing be interesting?
It turns out that if you are interested in health, you must be interested in plumbing. Disposing of human waste is one of the biggest health problems, especially for individuals living in cramped urban areas. In Flushed: How the plumber Saved Civilization, W. Hodding Carter takes the reader on an enjoyable, not-too-serious journey through wonderful world of plumbing. This book is not written by an expert, but what is lacking in in-depth reporting is made up for with personal experiences and lighthearted commentary. Mr. Carter gives the reader interesting historical information, technical details on sewage, and describes his tourist trips to visit plumbing systems of the past and present from around the world. Even included are Mr. Carter’s own attempts at fixing the plumbing system in his house and his eventual purchase of a toilet with a heated seat [I am told by my brother that this is popular in Japan].
One of the most interesting anecdotes relates Mr. Carter’s trip to India to visit Sulabh International. India lacks the wastewater treatment infrastructure to keep its waterways clean.
“As a result, India’s produce teems with bacteria and infectious diseases. The country has an infant mortality rate of sixty deaths in a thousand births and two million Indian children die every year of diseases due in part to poor sewage disposal.
Sewage is the scourge of India”
Sulabh International is an NGO who’s goal is to improve the sanitation and human waste disposal across India. The NGO has developed a flush toilet which uses little water and where human waste is organically compounded to later be used for fertilizer.
After you have a glass of wine with dinner and hear nature’s call, be thankful for modern plumbing.
Tags: Plumbing, Public Health, Sewage