The key to lowering the cost of employee benefits, especially health care, is to increase transparency, provide employees with information, and empower them to make their own decisions and be held accountable for them, according to employer and benefit provider representatives speaking at a July 10 U.S. Chamber event on the future of employee benefits.

"What's wrong with our health care system is that it is consumption-based with no personal accountability," says Wayne Sensor, CEO of Alegent Health, an integrated health care system with facilities and physicians in Nebraska and Iowa. Offering employees financial incentives to make healthy lifestyle changes is important to improving health and lowering costs, Sensor says. Alegent's employees enjoy free preventive care – no co-payments, no deductibles.

Since Alegent implemented a health and wellness-focused benefits plan three years ago, its workforce has become significantly healthier, Sensor maintains. For example, 500 employees have quit smoking. Alegent's health care cost increases are just half the national average, Sensor adds. "Employers should design a benefits plan to change behavior."

Sensor also advises employers to demand from health care providers less variability in treatments and insist on evidence-based protocols. "The amount of variability in health care would not be tolerated in other industries," he says.

The market for tools to increase transparency is growing. For example, St. Louis-based Adjudica's Care Decision System enables employees to track their health care expenditures and compare them with category norms and with the expenditures of other members of their group health plan. Ajudica's program helps employers shift to a health plan with hard spending caps, in which employees bear all the risk and can vote on how to allocate a fixed health care budget, says Blake Ashby, Adjudica president and CEO.

Tools for increasing transparency are not limited to health benefits. For example, BrightScope, Inc., rates 401 (k) plans on how quickly they can get an employee to retirement. The company has rated 2,400 retirement plans so far and says it will have rated 30,000 plans by year's end.
Strong employer communications about benefit plans is important for increasing employees' accountability and their perceived value of the plans, adds Andrea Gordon, vice president of Unum, a disability carrier. She points to research showing that a less than average benefits plan is well received by employees if communication from the employer is strong. Similarly, an above average plan is not well received if communication is poor.