New Dem Play | Reducing health care costs by encouraging employees to mind their health.
Where It's Working | | King County, WA; Santa Fe Springs, CA; Virginia, Tennessee, and in workplaces across the country
Players | Local officials and business leaders
Over 75 percent of health care costs result from chronic illnesses, which are often preventable. From cancer to heart disease to diabetes, so many health problems could be averted if only Americans opted for healthier lifestyles. Over the last decade or so, employers have begun to realize that chronic illnesses are not just tragic for their employees, but also for their businesses, which endure soaring insurance premiums and the loss of productivity from unhealthy employees. For example, obese workers are two times more likely than others to have a high rate of absenteeism. That's why employers have begun to take a real interest in their workers' health.
Employers around the country have begun devising clever strategies to encourage healthy behavior among employees, and the return on investment has been overwhelmingly positive. According to a report released by the U.S. Department of Health and Human Services, the average return on investment for work-based health promotion and disease management programs is $3.14 for every $1.00 spent. For its ambitious employee health schemes, Motorola sees a $3.93 ROI on the dollar, and Johnson and Johnson reports an average annual savings of $224.66 per employee.
Public and private employers alike have jumped on the health bandwagon, and as of 2004 80 percent of employers with 50 or more employees report offering some kind of workplace health promotion. The State of Virginia's "Healthy Virginians" program, for instance, provides state employees with a free online tool to track their health routines, a 15-minute daily walking break, and informational kits and best practice guides to promote healthy lifestyles. Many employers are also promoting healthy diets by offering wholesome snack options in vending machines and serving fruits and vegetables at meetings. Large employers have begun to install locker rooms and shower facilities so workers can exercise during the day. Of the various health promotion strategies in play, individually tailored disease management programs have proved to be the biggest cost saver for employers.
Some employers are beginning to tie health promotion to financial incentives. This tactic holds the greatest potential for changing unhealthy habits among workers. Already, 40 percent of employers with 1,000 or more employees offer some kind of financial incentive, but the practice is not yet widespread. Perhaps the most common incentive being offered is a rebate on insurance payments for employees who participate in health risk assessments or screenings, but there are more ambitious incentive schemes under way.
In Tennessee, Gov. Phil Bredesen has established the Cover Tennessee initiative that provides affordable basic health insurance for uninsured employees of small businesses based upon participants' lifestyle choices. Health insurance premiums are priced solely on age, tobacco use and the ratio between height and weight. Individuals that are of average-weight and non-smoking pay the lowest premium. Cover Tennessee uses financial incentives in order to get their residents to make healthy lifestyle choices.
Another public employer that has tied health to financial incentives is King County, Wash., led by County Executive Ron Sims. Not only do King County employees have a variety of health promotion options, including healthy snacks, walking breaks, tobacco cessation programs, Weight Watchers at Work, and others, but employees also pay into their health insurance according to their commitment to healthy living. All employees have the option of taking an online wellness assessment. Those who participate in the assessment immediately move from "bronze" status to "silver" status. The assessment generates a health action plan. Those who complete their individualized action plan move to "gold status." Each of these three tiers has its own levels of co-payments, out-of-pocket maximums, and deductibles. King County announced in March 2006 that -- far surpassing its expected 60 percent rate of enrollment for the assessment -- 90 percent of county employees had registered. King County's Healthy Incentives program alone is expected to save taxpayers $18.5 million a year. Executive Ron Sims believes that along with other health reforms, King County will generate $40 million in savings annually.
"Cover Tennessee is practical, down-to-earth health insurance that was developed to offer affordable, portable health coverage to Tennesseans who are living without health insurance today."
-- Gover Phil Bredesen, Tennessee
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With the cost of health care ever rising, individuals must take their own lifestyle choices more seriously. Private as well as public sector employers can encourage healthy living through creative promotion campaigns and financial incentives. Not only will this lead to a healthier America, it will also rein in costs that are so burdensome to employers.
Mary Guiden, "King County nudges workers toward wellness to trim costs," Puget Sound Business Journal, May 12, 2006
http://seattle.bizjournals.com/seattle/stories/
2006/05/15/focus2.html
Jeffrey R. Harris, "Employment-based Chronic Disease Prevention," Powerpoint Presentation, University of Washington
http://depts.washington.edu/rchpol/
docs/st0511/Harris.ppt
The Puget Sound Health Alliance
http://pugetsoundhealthalliance.org
King County Health Reform Initiative
www.metrokc.gov/employees/
Cover Tennessee Initiative
http://www.covertn.gov/
Healthy Virginians, Healthy Employees
www.healthyvirginians.virginia.gov/Employees/index.cfm
Tony Zook, "The ROI of Wellness," Forbes Magazine, April 24, 2006
www.forbes.com/ceonetwork/2006/04/21/
wellness-programs-gold-standards-cx_tz_0424wellness.html
IBM, Employee Well-being
www.ibm.com/ibm/responsibility/people/wellbeing/
promoting-health.shtml
Eitan Hersh and David B. Kendall, "The Puget Sound Health Alliance," Progressive Policy Institute, 2006
www.ppionline.org
"The Power of Prevention: Steps to Healthier U.S." U.S. Department of Health and Human Services, 2003
www.healthierus.gov/STEPS/summit/prevportfolio/
Power_Of_Prevention.pdf
Desiree R. Backman, et al., "Fruits and Vegetables and Physical Activity at the Worksite," California Department of Health Services, 2003, updated 2005
http://www.phi.org/pdf-library/dhs-worksite.pdf
"Prevention Makes Common 'Cents,'" U.S. Department of Health and Human Services, 2003
http://aspe.hhs.gov/health/prevention/
C. Everett Koop National Health Award Winners, Worksite Programs
http://healthproject.stanford.edu/koop/work.html
CEO Cancer Gold Standard
www.cancergoldstandard.org/
American Cancer Society: Active For Life
www.cancer.org/docroot/PED/content/
PED_1_5X_Active_For_Life.asp
America's Walking
www.pbs.org/americaswalking/
Institute for Health and Productivity Management
www.ihpm.org/
Healthier Employees Save Money PPI Health Policy Wire, March 16, 2006
http://www.ppionline.org/ppi_ci.cfm?contentid=253788
&knlgAreaID=111&subsecid=900033#item3
Brooke Bascom
Communications Director
King County's Health Reform Initiative
400 Yesler Way, Room 500
Seattle, WA 98104
206-296-3822
206-263-6694 (fax)
Brooke.bascom@metrokc.gov
Maribel Garcia
Human Resources Analyst
City of Santa Fe Springs
11710 E. Telegraph Road
Santa Fe Springs, CA 90670-3679
562-409-7530
maribelgarcia@santafesprings.org
David Kendall
Senior Fellow for Health Policy
Progressive Policy Institute
4021 Heritage Way
Missoula, MT 59802
(406) 543-2265
(772) 679-0652 (fax)
dkendall@ppionline.org
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