An employer’s health care expenditures are greatly impacted by the overall health of their workforce. In fact, the March 2011 Thomson Reuters Workforce Wellness Index found that the unhealthy behaviors of employees cost their employer an average of $670 per year, per employee.
The Thomson Reuters Workforce Wellness Index tracked the collective health of American workers with an employer-sponsored health insurance plan by considering six risk factors – blood pressure, cholesterol levels, blood glucose levels, and alcohol and tobacco usage. The costs associated with less-than-optimal health was also gauged.
The index declined two percentage points to 84.4% between 2005 and 2009. An ideal state of health, whereby there aren’t any behavioral risk factors or risk-related additional health care costs within a certain population present, is represented by a score of 100. The decline in ideal health is a major contributing factor when it comes to the rising health care costs for U.S. employers.
The index found that the six behavioral risk factors mentioned above were associated with 14% of the direct health care costs among the working, privately insured population. And, of the average $670 per employee that unhealthy behaviors cost the employer, $400 is attributed to high BMIs and $150 is attributed to elevated blood glucose levels. A separate study by Duke University also showed a clear relationship between how much is spent on a worker’s Workers Compensation claim and their BMI, which uses height and weight to measure body fat. The Duke study estimated that Workers Compensation claims for obese workers averaged $51,000 and those for workers of a normal/average weight averaged $7,500 dollars.
Given the research, it would be prudent for any employer trying to find ways to reduce their health care costs to confront the behavioral risks among their workforce. Experts recommend that employers and insurance providers compare their beneficiaries against the national norms, as this will help begin identifying and addressing any specific problem areas. What else can you, the employer, do?
Employee Wellness Programs. According to statistics from the CDC, employee lifestyle choices are attributed to 75% of an employer’s productivity losses and health care costs. Workplace wellness programs have been proven to improve employee health and therefore improve a company’s financial bottom line. In fact, the Wellness Council of America found that three dollars in health care costs are saved for each dollar invested in a wellness program.
Although the benefits to employer and employee alike are clear in writing, studies have shown that employee participation in wellness programs only averages 5% when an employer doesn’t offer incentives. A 2011 survey by employee support and work/life benefit provider Workplace Options showed the following:
- Of the respondents, 76% felt it’s appropriate for companies to provide incentives for employees to better their well-being and health.
- If offered an incentive, 73% of the respondents would enroll in their employer’s wellness program to better their personal health.
- Only 36% of the respondents worked for an employer offering initiatives like wellness coaches, fitness programs, and on-site health screenings.
With the cost of health care premiums, absenteeism, and Workers Compensation continuing to rise for employers, many are starting to embrace the idea that offering employees rewards to pursue a healthy lifestyle is a worthy investment gamble. A Fidelity Investments and National Business Group on Health study showed that employee wellness incentives per employee increased from $260 in 2009 to $430 dollars in 2010. Representatives from the study noted that employers now face the challenge of getting employees to continue the healthier behaviors they adopt over the long run, not just temporarily from an incentive.