Wellness Offsets Rising Employee Health Care Costs

In the wake of the economic recession, businesses are becoming more efficient in reducing expenditures and maximizing investments. Employers are weathering the lean times by cutting back. One of the first cutbacks that most firms make relates to employee perks and benefits. For most companies, employee health care is one of their costliest items and is constantly under review. Often times, the only choice that companies can make in order to reduce this cost is to share the burden with their workers. However, employers are also investing in corporate wellness programs to offset higher medical costs that their employees may incur.

According to the 2008 Annual Employer Health Benefits Survey by the Kaiser Family Foundation/Health Research and Education Trust, health care costs for private and public employers and workers increased 119% and 117% respectively, during the period of 1999-2008. The following is a summary of the survey’s findings:

• Increases in the average single and family premiums
• Increases in the percentage of workers enrolled in high-deductible health plans with a savings option
• Increases in cost sharing (insurance deductible)
• Increases in wellness program offerings

In 2008, the average premium for workers with health insurance offer through their employer was $4,704 for single coverage and $12,680 for family coverage – a 5% increase from 2007.

To mitigate the costs, employers are moving towards consumer-driven medical plans. Statistics from this survey show that employees who are covered under their company’s plan with a deductible of at least $1,000 for single coverage increased from 10% to 18% in the past two years and, with small organizations, the rate of covered employees with a deductible of at least $1,000 has increased from 16% to 35%.

Wellness programs were offered to workers as part of their health benefits package in over two-thirds on the respondents surveyed. Over one-half of small companies and almost 90% of large companies offer one or more of the following to workers as a part their health benefits:

• Weight loss program
• Gym membership discounts or on-site exercise facilities
• Smoking cessation program
• Personal health coaching
• Classes in nutrition or healthy living
• Web-based resources for healthy living
• Wellness newsletter

Corporate health management has become pervasive in all industries due to the impact it has on reducing and/or controlling employer and employee medical costs and positively affecting the health of workers. A well planned and managed corporate wellness program can have the following effects for employers and employees:

Decrease medical claims and savings for employer – With its wellness program, the Travelers Corporation claims a $3.40 return for every dollar invested in health promotion, yielding total corporate savings of $146 million in benefits costs.
• Decrease medical costs for employees
-- With lower health care claims, medical costs decreased 16% for City of Mesa (Arizona) employees who participated in the health promotion program.
Decrease employee absenteeism -- Du Pont saw that each dollar invested in workplace health promotion yielded $1.42 over two years in lower absenteeism costs.
Increase productivity, healthier employees -- Union Pacific Railroad employees who participated in the company-sponsored wellness program lowered their risk of high blood pressure by 45% and high cholesterol by 34%; 30% moved out of the at-risk range for weight problems and 21% stopped smoking.

Through the implementation of wellness, organizations and workers are seeing medical cost savings that are measurable and health benefits that are immeasurable.

For 2009 and beyond, the Employer Health Benefits Survey reports that approximately 40-45% of the firms surveyed predicted an increase in their employee’s health care premium contribution, deductible amounts for office visits, insurance cost sharing and/or prescription drugs costs.