Employer Sponsored Wellness Programs 1 Employer Sponsored Wellness Programs: Cost Savings and Improved Health Outcomes Gregory Galloway Wrtg 3012 Nona Brown University of Utah
Employer Sponsored Wellness Programs 2 Employer Sponsored Wellness Programs: Cost Savings and Improved Health Outcomes Abstract The majority of insured Americans receive their insurance through employer sponsoredhealth plans. Employers and employees that participate in these insurance plans have seen asteady increase in premiums and costs over the years. As a result, employers are looking forways to control and lower these ever-increasing operational costs. In recent years employersponsored wellness programs have been recognized as an effective long-term strategy forcontrolling these health related costs. For this paper a review was conducted on past literature toanalyze the impact of wellness programs. In general, employers that have implemented worksitehealth promotion programs for their employees have reported increased worker productivity,satisfaction, a reduction in medical claims, health care costs, and health insurance premiums.Moreover, participants of these programs report overall better health and health outcomes. Introduction Almost everyone in the United States has experienced the rising costs of health care.Furthermore, employers that provide health insurance as a benefit to their employees haveexperienced these costs first hand. For instance, as reported in the Kaiser FamilyFoundation/Health Research & Educational Trust Annual Employer Health Benefits Survey(2011), premiums for family coverage under employer health plans have increased 113% since2001. Additionally, Kaiser (2011) reported that the average annual premiums for employer-sponsored health insurance in 2011 are $5,429 for single coverage and $15,073 for family
Employer Sponsored Wellness Programs 3coverage. Compared to 2010, premiums for single coverage are 8% higher and premiums forfamily coverage are 9% higher” (p. 17). These rising costs are increasingly passed down toemployees through higher premiums and other additional cost sharing mechanisms. Obesity and many other lifestyle diseases are serious public health issues that havecontributed to increasing health care costs over the last few decades. Moreover, obesity has beenshown to be one of the major risk factors of many chronic diseases. These chronic diseases arethe leading cause of illness and death not only in the U.S. but in the world. Reducing morbidityassociated with these behavioral and lifestyle choices have become a priority in the United Satesand for many employers. As a direct result of these increasing expenses, employer based health promotions or“Wellness Programs” have become a popular tool for many employers to curtail and reducehealth care costs and to combat alarming rates of morbidity from chronic disease in recent years.Additionally, employers offering wellness programs report an increase in productivity and adecrease in missed days from work, while employee participants in the program report improvedhealth and health outcomes. Furthermore, in a commentary found North Carolina MedicalJournal author Dee Eddington (2006) stated that, “The economic and personal value of a healthyand productive worksite and workforce is indisputable by most measures of success” (p. 425). Ahealthy employee is a valuable resource in any organization. Wellness programs, with their promise of cost containment and positive health outcomeshave fueled recent research on the subject. This paper will examine the effectiveness of employerhealth promotions and wellness programs at reducing cost, producing positive return oninvestments (ROI), and reduction in absenteeism and related costs, and improving employeehealth and health outcomes. Current research and literature indicate that organizations that have
Employer Sponsored Wellness Programs 4implemented successful employee wellness programs have experienced the aforementionedoutcomes. Additionally, this paper will review key design features of successful workplacewellness programs. Beverly Neville (2009), in her research of worksite health promotion, noted that themajority of the adult population in the United States is employed; the worksite is an importanthealth promotion mechanism where a large portion of the population can be educated on healthybehaviors to reduce the prevalence and burden of many chronic diseases and conditions.Moreover, researchers Koffman et al. (2005), in their research that was presented in theAmerican Journal of Preventive Medicine, stated that “because most Americans receive healthcare through employer-sponsored benefits, employers have a vested interest to promoteindividual health behavior” (p. 114). A national disease prevention and health promotions initiative sponsored by the UnitedStates Department of Health and Human Services (USDHHS) titled Healthy People 2010indentified two specific goals for worksite health promotion: “Increase the proportion ofworksites that offer a comprehensive employee health promotions program to their employeesand increase the proportion of employees who participate in employer-sponsored healthpromotions activities” (USDHHS, 2000). This initiative led to an increase in research on theeffectiveness of worksite wellness programs. DiscussionCost Savings In the article “Financial Impact of Health Promotions Programs: A ComprehensiveReview of the literature” found in the American Journal of Health Promotion, Steven Aldana
Employer Sponsored Wellness Programs 5(2001), in reviewing data from employer wellness program approaches, discovered a relationshipbetween high health risks and the related costs of health care and absenteeism. Moreover, after areview of previous studies and literature he reported health promotions programs were effectiveand were associated with lower absenteeism rates and lower health care costs. A review,conducted by Koffman et al. (2005), estimated that employers in the United States paid anaverage of over $18,000 per employee per year in costs associated with lost productivity,medical costs, absenteeism, and workers compensation. Previous research has noted cost savings for employers that have implemented wellnessprograms. For instance, in a survey conducted by the Utah Department of Health (UDOH) in2005 it was estimated that for every dollar spent on a worksite wellness program, an organizationwould see a savings of $6.00 in reduced costs related to heath care (2007). Additionally, inanother study found in the February 2010 issue of Health Affairs, in an article titled “WorkplaceWellness Programs Can Generate Savings” authors Baicker, Cutler, and Song (2010) reportedthat “medical costs fall by about $3.27 for every dollar spent on wellness programs, andabsenteeism costs fall by about $2.73 for every dollar spent”. Employer wellness programs offeran organization a positive ROI in dollars spent on these types of programs. A wellness program benefit provider located in Utah, called Orriant, conducted a multi-company study to examine the impact of a wellness program on the health claims of the majorityof the employee population, healthy and unhealthy. Four different employers: a nationwideautomotive dealer, a regional grocery chain, an industrial equipment supplier, and a countygovernment were selected for the study. They reviewed insurance claims over a four yearperiod; additionally, more than 64 percent of insured adults participated in the wellness program.
Employer Sponsored Wellness Programs 6Moreover, Darrel Moon (2011), in a report of the success of Orriant’s wellness programs foundin Chief Executive.net, reported that the results of the study demonstrated a “significant financialbenefit” to organization bottom line. The total paid claims per wellness participant dropped to$2,269 compared to $6,187 for non-participants. Additionally, in the same article Moon (2011)stated that “Emergency room claims, hospital claims, pharmacy claims all showed a steadydecline among wellness participants versus a steady rise in the claims of non-participants. In addition, an article found in Health Affairs titled “Recent Experience In HealthPromotion At Johnson & Johnson: Lower Health Spending, Strong Return On Investment”,authors Henke, Goetzel, McHugh, and Issac (2011) reported that “Johnson & Johnsonexperienced a 3.7 percent lower average annual growth in medical costs compared to thecomparison group”. Additionally, they also noted that “Johnson &Johnson’s annual averagepercentage increase in medical and drug costs was 1.0 percent, which was lower than the 4.8percent average expected increase in costs, estimated from the experience of the sixteencomparison companies” (p. 494-495). Johnson & Johnson have experienced lower costsassociated with health care as a result of their wellness program.Health Outcomes Research into employer wellness programs has shown a correlation between participationin these programs and improved health habits, health outcomes, and reduced health risks.Researcher Larry Chapman (2004) in his article “Expert Opinions on “Best Practices in WorksiteHealth Promotion” found in the American Journal of Health Promotion called the worksite oneof the most influential places where health behaviors can be improved through health promotionsand education. In addition, authors Koffman et al. (2005) reported that in a study conducted by
Employer Sponsored Wellness Programs 7Heaney and Goetzal, in their review of 47 studies for 35 different programs, concluded that therewere positive health outcomes associated with a comprehensive worksite health-promotions. Research published in the journal Health Affairs, by authors Henke, Goetzel, McHugh,and Issac (2011) reported that “employees [that participated in wellness programs] had a loweraverage predicted probability of being at high risk for six of the nine health risks examined: highblood pressure, high cholesterol, poor nutrition, obesity, physical inactivity, and tobacco use. Themost favorable trends were for tobacco and obesity risks” (p. 495). Employee participation inwellness programs result in better reported health and health outcomes in many disease riskfactors. In a study by researchers in 1996 to review what impact a wellness program for Salt LakeCounty Employees had on health risk factors, researchers Poole, Kumpfer, and Pett (2001),found marked improvements in employees that participated in the program in cholesterol levels,body fat, physical activity, smoking prevalence, blood pressure. A follow up study by Neville(2009) of the same employee wellness program 10 years later also revealed the same nettedresults, she reported that the largest improvements in body mass index (BMI), cholesterol, bloodpressure, and cholesterol were found in those employees with the highest level of obesity, heartdisease compared to normal baseline measures.Key Elements of Successful Employer Health Promotion Early employer health promotions and worksite wellness programs were minimal inintent and focus. With the alarming increase in chronic and lifestyle disease and the increasingcosts employers face as a result of these disease; employer sponsored wellness programs haveevolved and research has been conducted on what components of various programs make themeffective and successful. In 2005 the Utah Department of Health (UDOH) conducted a survey of
Employer Sponsored Wellness Programs 8close to 500 companies in Utah in order to measure their compliance of the program guidelineswith Healthy People 2010. From the survey results it was noted that there are five elementscritical for a successful employer wellness program: 1. Funding for worksite wellness programs should be included in company budgets. 2. Wellness programs should be linked to other health related offerings such as employee assistance programs (EAP), onsite health screenings, and nurse or insurance sponsored health advice lines. 3. Policies should be established by the corporation to institute a physical and social environment that supports and promotes a healthy lifestyle. 4. Programs should include both primary and secondary health education programs. 5. A committee of employees should be created to address the health needs of the employees (Neville, 2009). In another study published by the Wellness Council of America (WELCOA) listed sevenof the most common components of employer health promotion programs: 1. Senior level organizational support 2. Establishing a cohesive wellness team. 3. Data collection 4. Drafting a yearly wellness plan 5. Selecting appropriate health promotion interventions. 6. Creating and supporting and healthy and health promoting environment 7. Careful evaluations and analysis of outcomes (Neville, 2009). The Salt Lake County employee wellness program has resulted in lower costs associatedwith health care and participants have experienced positive health related outcomes. Because ofthe reported positive results, Salt Lake County’s program is an example of a well-establishedemployer wellness program. Neville, in her analysis of previous research and literature ofeffective wellness programs constructed 10 elements for the process evaluation of county’swellness program: 1. Management and environmental support 2. Multiple health issues addressed 3. Communication of health messages 4. Cultural and social factors 5. Health screenings 6. Referrals to other health care services
Employer Sponsored Wellness Programs 9 7. Incentives 8. Individual Focus 9. Planning and evaluation 10. Involvement of partners (Neville, 2009). Neville (2009) reported that the greatest strengths of Salt Lake County wellness programare the financial incentives, annual health screenings, and addressing multiple health issues.Moreover, in the article titled “Heart Healthy and Stroke Free: Successful Business Strategies toPrevent Cardiovascular Disease” found in the American Journal of Preventive Medicine,Koffman et al. (2005) reported that incentives such as: free or subsidized gym memberships,lower health insurance premiums for controlling health risk metrics, and gift cards forcompleting health risk assessments and health improvement classes were effective tools forincreasing program participation and for rewarding health behavior goals. In the same article the importance of medical screenings and health risk assessments as acomponent in an effective wellness program was noted. Additionally, Koffman et al (2005)reported that “one study showed a minimal cost health screening and referral program will likelyreduce blood pressure in about one quarter of high risk” (p. 115). Neville’s (2009) study of SaltLake County’s program also documented this as an effective component of employer wellnessprograms. Furthermore, authors Goetzel et al. (2007) in their article “Promising Practices inEmployer Health and Productivity Management Efforts: Finding from a Benchmarking Study”detailed the importance of addressing multiple health issues in a successful wellness program.Moreover, Goetzel et al. (2007) stated that “promising practice employers based their [healthproductivity management] offerings on data derived from multiple sources…at the same time,addressing certain core behavioral factors such as physical inactivity, poor diet, and smoking wascentral to all HPM (p. 120). In addition, Koffman et al (2005) reported that many studies have
Employer Sponsored Wellness Programs 10shown that individual risk factor follow-up education and screenings have proven to be aneffective intervention in helping participants control various health risk factors. Conclusion Lifestyle and chronic diseases are increasingly prevalent in the United States. Employershave been affected by increasing costs incurred as a result of these diseases. Moreover, in aneffort to control and curtail costs associated with employee medical costs; employers are seekingout programs to help reduce these high costs. Because most of the adult population is employed,worksites present a unique opportunity to combat chronic disease and improve health statuswhile controlling rising health care costs. Many employers, both large and small, are offering employer sponsored wellness andhealth promotion plans as part of benefits plans. Furthermore, the review of the studiesconducted on worksite wellness programs presented strong evidence of costs savings and returnon investment for employers. Additionally, these studies reported improved health and healthoutcomes of program participants when a comprehensive wellness program was implemented. The main findings of this paper are that effective wellness programs contain thefollowing: participation incentives, health screening for participants, and need to addressmultiple health issues and risk. Successful wellness programs in many companies have producedup to a 50% reduction in employee related health care costs. Moreover, there was a positivereturn on investment on costs of the wellness programs and the money saved by the employer inreduces medical costs. Wellness programs are an innovative tool for companies and employeesto reduce health care related costs and improve health. While there are conclusive studies on the
Employer Sponsored Wellness Programs 11benefits of wellness programs, additional research should be conducted to further developeffective wellness programs for participants and employers.
Employer Sponsored Wellness Programs 12 References 2011 Kaiser/HRET Employer Health Benefits Survey (EHBS) (2011, September 27). Employer Health Benefits 2011 Annual Survey. The Kaiser Family Foundation and Health Research & Educational Trust. Retrieved April 29, 2012, from http://ehbs.kff.org/pdf/2011/8225.pdf Aldana, S. (2001). Financial impact of health promotions" A Comprehensive review of the literature. American Journal of Health Promotion, 15(5), 296-319. Baicker, K., Cutler, D., & Song, Z. (2009). Workplace wellness programs can generate savings. Health Affairs, 2009. doi:10.1377/hlthaff.2009.0626 Chapman, L. S. (2004). Expert opinion on "best practices" in worksite health promotions. American Journal of Health Promotion, 18(6), 1-6. Eddington, D. (2006). Who are the intended beneficiaries (Targets) of employee health promotion and wellness programs. North Carolina Medical Journal, 67(6), 425-27. Goetzel, R. Z., Shechter, D., Ozminkowski, R. J., Marmet, P. F., Tabrizi, M. J., & Roemer, E. C. (2007). Promising practice in employer health and productivity management efforts: Findings from a benchmarking study. Journal of Environmental Medicine, 49(2), 111-129. doi:10.1097/jom.obo13e81802ec6a3 Henke, R. M., Goetzel, R. V., McHugh, J., & Isaac, F. (2010). Recent experience in health promotion at Johnson & Johnson: Lower health spending, strong return on investment. Health Affairs, 30(3), 490-99. doi:10.1377/hlthaff.2010.0806 Koffman, D. M., Goetzel, R. R., Anwuril, V. V., Shore, K. K., Orensten, D., & LaPier, T. (2005). Health healthy and stroke free: Successful business strategies to prevent cardiovascular disease. American Journal of Preventive Medicine, 29(5S1), 113-121. doi:10.1016/j.amepre.2005.07.17 Moon, D. (2011, October 24). Can CEOs find relief from skyrocketing health costs. Chief Executive.net. Retrieved April 29, 2012, from http://http://chiefexecutive.net/can- ceos-find-relief-from-skyrocketing-health-costs Neville, B. (2009). Long-Term outcomes of a Wellness Program for Salt Lake County Employees Doctoral Dissertation. University of Utah, Salt Lake City, UT. Poole, K., Kumpfer, K., & Pett, M. (2001). The impact of an incentive-based worksite health promotion program on modifiable health risk factors. American Journal of Health Promotion, 16(1), 21-26. UDOH (2007). Utah Behavioral Risk Factor Surveillance System Small Area Report, 2001- 2005. Utah Department of Health. Retrieved April 29, 2012, from http://health.utah.gov/opha/publications/brfss/SA2001-2005/sa2001-2005.html
Employer Sponsored Wellness Programs 13 USDHHS (2000). Health People 2010: Understanding and improving health, 2nd ed. U.S. Department of Health and Human Services. Washington, DC: US Government Printing Office.