Wellness Programs – A Way to Control Health Plan Costs?

March 7th, 2008

Employers all over the U.S. are facing the hard realities of rising healthcare costs and their impact on the bottom line.  This is not breaking news for employers – they have been struggling with this reality for the last several years. 

In 2007, healthcare costs continued to rise.  According to the National Coalition on Healthcare total spending was $2.3 TRILLION in 2007.  This equates to $7600 per person and 16% of the gross domestic product (GDP).  Employer premiums for their health plans saw an increase of 6.1% and the cost of healthcare premiums for an employer-sponsored plan averaged almost $12,200 for family coverage and $4,400 for single coverage.

These numbers can be staggering for many employers.  As the nation faces a downturn in the economy and the increase in healthcare costs show no sign of slowing down, employers are looking for ways to control their health plan costs. 

One of the solutions many employers are trying is establishing wellness programs for their employees.  These programs can range anywhere from programs that provide a reduction in employee premiums for participation in a health screening program to programs that encourage “healthy behavior” such as programs for smoking cessation programs, weight management programs and company sponsored walking groups.

According the Center for Disease Control and Prevention, 75% of the U.S.’s annual medical costs are directly related to chronic diseases.  A majority of chronic diseases are linked, directly or indirectly, to lifestyle choices, which can be impacted by wellness plans.  

Although there are few statistics available on the actual reduction in health care expenses obtained by employers who have implemented wellness initiatives, experts believe results will be seen in the long run.  Kaiser Permanente believes that although these programs will not reduce claims in the short-term, there will be long-term benefits and believes there will be a reduction in health issues such as diabetes and heart disease. 

And regardless of the statistics available, some employers believe that encouraging healthy behaviors is the right thing to do for their employees.  They say that they are helping their employees lead healthier and happier lives, which in turn makes for a happier and more productive employee.

Additionally, some employers say they have seen to reduction in absenteeism, on-the-job injuries and workers’ compensation costs, and as well as a reduction in disability-management costs.  In a study of a wellness program at Providence General Medical Center, per-capita workers’ comp costs were reduced 83% and as well as savings in reduced sick leave, which was attributed to implementation of a wellness program.

While most of the evidence for wellness programs is anecdotal, employers would be well advised to consider these programs as they evaluate their overall employee benefits programs to determine whether they would be right for their company and employees.  There are many resources available on the internet to help an employer get started setting up a wellness program.  However, there are numerous pitfalls that employers should be wary of when implementing any change in their benefit offerings.  Any program addition, change, or deletion that an employer contemplates should be reviewed with their employee benefits attorney to ensure that the benefit plan changes are in compliance with all current legal requirements.

One Response to “Wellness Programs – A Way to Control Health Plan Costs?”

  1. sdorttuii plmnron 10 Aug 2015 at 1:11 am

    I couldn’t resist commenting

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