From corporate America to small business owners, employers of all sizes and means are seeking ways to manage and stem the rapidly rising costs of health insurance. The numbers are sickly:
* Average premiums for employer-sponsored health insurance for family coverage increased 119 percent between 1999 and 2008, according to the Kaiser Foundation’s Employer Health Benefits 2008 Annual Survey.
* Employer costs for health care are higher by a median rate of 6 percent or more each year.
* The median health care cost per employee was $7,173 in 2008, according to a survey by human resources consultants Watson Wyatt and employer coalition National Business Group on Health.
* Each dependent costs employers an average $1,780 a year.
Business leaders understand if the health insurance rate of inflation continues at its current pace there will be dire consequences in the form of budget cuts, layoffs and closings. Many companies already have implemented policies and programs and realized positive results through a healthier work force, higher productivity, reduced absenteeism and greater job satisfaction.
On a broader scale, the Trust for America’s Health reports that an investment of $10 per person annually in community-based disease prevention programs could yield a return of $5.60-to-$1.
The following are examples of how companies are managing the system, assisting employees and lowering health insurance benefits expenses:
Wellness program: A broad term that refers to formal programs designed to promote a healthy lifestyle and provide resources for the prevention and detection of physical conditions through health screenings. These programs include goals that provide direction and facilitate the development of activities to promote their achievement. Wellness programs can be directed by a health care professional or a designated company employee or committee. The programs encompass fitness classes, weight-loss groups, smoking cessation, personal counseling and a number of activities.
Wellness programs are becoming more common. About one-third of the employers surveyed by MetLife said they sponsor a wellness program, up from 25 percent in 2005. For larger companies, approximately 60 percent of employers with more than 10,000 employees have such a program, increasing from 47 percent in 2005.
The average cost to the employer is about $3 to $5 per participating employee per month, according to HR Benefits Alert. It usually takes at least 18 months from the launch of a wellness program for a company to realize reduced health care expenses. However, “significant savings” can be expected within three years.
California-based Con-Way Freight conducted a pilot wellness program in 2007 and realized an 80 percent decrease in workplace injuries and workers compensation costs and a 75 percent reduction in lost work days. Those results prompted the company to expand the program in 2008 to include 6,400 employees in 21 states.
By investing $100 to $150 per employee annually in a wellness program, employers can save $300 to $450 for each employee after a few years, according to Ron Goetzel, director of the Cornell University Institute for Health and Productivity Studies.
Quest Diagnostics, a publicly traded company on the New York Stock Exchange, saves $4.80 for every $1 invested in its wellness program, which is based on the analysis of an independent researcher.
Health screening: Employer-sponsored program in which employees and family members are tested annually for vitals such as blood pressure, cholesterol levels, pulmonary function and mental health. Those tested are given a personalized health report with recommended courses of action to address problem areas.
Highsmith, a distributor of school and library furniture and supplies, pays 75 percent of its employees’ health insurance premiums if they participate in a screening; 60 percent if they don’t.
ScottsMiracle-Gro employees who do not participate in health-risk assessments pay $40 a month more in premiums. Those who don’t comply with their health action plan are charged $67 monthly.
Incentives: Employees are encouraged to participate in wellness programs through financial and other rewards. IBM pioneered the concept of healthy living rebates for its employees in 2004, and currently offers $150 cash incentives for five programs that focus on exercise, nutrition and other healthy behaviors such as sleep habits and stress management. Between 2004 and 2007, IBM invested $79 million in wellness programs and saved about $191 million in health-related costs. An employee can earn as much as $300 annually through wellness participation.
Safeway’s Healthy Measures program offers employees premium discounts based on the results of testing on tobacco usage, healthy weight, blood pressure and cholesterol levels. Individuals can save $780 and families $1,560 on their annual premiums.
Since implementing its program in 2005, Safeway’s health care costs have remained flat while the average U.S. company’s increased 38 percent.
Quest Diagnostics offers $10 bi-weekly to participants in its free program, which includes weight-loss support groups, fitness classes, a smoking cessation program and personal counseling sessions.
Conversely, in 2008 PepsiCo introduced a $600 surcharge for smokers as a deterrent. The extra fee combined with a company-sponsored smoking-cessation program and nicotine-replacement therapy helped account for the quit rate rising from 20 percent to 34 percent in one year.
Safeway CEO Steven A. Burd wrote in the Wall Street Journal: “We believe that well-designed health-care reform, utilizing market-based solutions, can ultimately reduce our nation’s health-care bill by 40 percent. The key to achieving these savings is health-care plans that reward healthy behavior.”
B. Touby Witzky is a Corporate Health Coach and Certified Personal Trainer in Franklin, TN. To help companies promote corporate wellness Touby draws on 12 years of C-suite hospital management experience and a 30 year passion and study of diet, exercise and fitness.
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