Wellness Councils of America (WELCOA), a national organization of employers committed to workplace wellness, reports that more than 81 percent of businesses with 50 or more employees have some form of health promotion program.
Preliminary results from the Greater Milwaukee Annual Report on HealthCare’s Employer Benefits Survey indicates that more than 60 percent of Milwaukee-area companies now offer some sort of wellness and prevention initiatives.
These programs range from weight loss and stop-smoking classes to health risk appraisals and ongoing health and lifestyle coaching.
Although some companies are seeing a leveling out in their annual health benefit premiums, most continue to experience double-digit cost increases. Despite the numerous case studies and testimonials from companies reporting a return on their investment in wellness, the return on investment (ROI) question continues to be asked: "When will wellness, health risk appraisals (HRAs) and other efforts like cost sharing, cost shifting, and financial incentives translate into lower costs for employers?"
Measuring cost benefit ratio
When you look at the literature published on health promotion outcomes, the average ROI is reported as saving employers about $3 for each dollar invested. That is, if you invest $100 to $150 per employee per year in health promotion, you can expect a $300 to $400 savings per employee per year. Other studies show that savings can range from $1.40 per dollar spent to $13 per dollar spent.
Just how is this ROI determined? We see the cost benefit ratio measured in a variety of ways. Most often, companies compare health costs and health care utilization of participants to non-participants at the beginning of a program and then again at the end of a given time period. Other health promotion outcomes include measuring changes in sick leave, workplace injuries and decreased visits to the doctor and emergency room.
Translating HRA scores to dollars saved
Another method used is to compare health costs to health risk data obtained from an annual health risk appraisal. For the past 14 years, Healics Inc., a Milwaukee based health risk appraisal vendor, has been using a tool that gives employer clients valuable information about how improvements in HRA scores translate to their bottom line. "For those employers that provide us with their annual per employee health care costs, we compare that year’s costs with that year’s health risks," says Leigh Cord, owner and president of Healics. Each year, the results are similar, Cord says. "The lowest-risk people spend the least, and the highest-risk people spend the most."
The accompanying chart reviews health care costs by health risk category for Healics clients in 2004. The Healics HRA gives participants 100 points for the best results. Those who score the most points are those with the least risk. Those who score the least points are the ones with the most risks. What the chart indicates is that health care claims increase about 9 percent for each five-point risk category, which means about 1.8 percent per average health point. The reverse is also true. If a group improves by one point on average, then claims should be 1.8 percent lower than they would have been.
Cord has been providing this health cost/health risk category comparison for his clients for several years. "This is the first time that I have looked at costs for each five-point risk level and didn’t realize that our trend line was so perfect," says Cord. "What it comes down to, according to our point table, is that a one-point improvement (or decline) in a group translates into 1.8 percent improvement or decline in health care costs."
Of course, it’s total costs for a group that counts. Healics clients spent an average of $3,250 on each adult employee in 2004. This system doesn’t take into account unplanned high-cost cases or catastrophic events.
But in general, it gives employers a good indication or prediction of how improvements in health risk scores will translate to their bottom line.
Healthy lifestyle
insurance rebates
How willing are insurance companies to reward "healthy" businesses with rebates on their health insurance premiums? Florida appears to be leading the country on this issue. Recently passed legislation requires major insurance companies to give rebates to companies in which the majority of their employees are participating in healthy lifestyle programs.
If a company can show proof of risk reduction, as measured by a health risk appraisal, they are eligible for up to a 10 percent reduction in their annual premium. The first rebates will be provided in 2006, based on the discounts earned in 2005. The rebates will go directly to participating small-group employers, who will have the option to pass the savings along to their employees or use the rebates to lower their business health insurance costs.
So far, the legislation, passed in 2004 and effective in 2005, only relates to small businesses with fewer than 50 employees. Although the trend has not yet hit the Milwaukee market, employers who have invested in wellness and healthy lifestyle programs should discuss the possibility of premium rebates with their health benefits broker.
Connie Roethel, R.N., M.S.H., is president of Complementary Health & Healing Partners (CHHP), a corporate wellness and health promotion services company with offices in Mequon. She can be reached directly at (262) 241-9947.
– September 16, 2005, Small Business Times, Milwaukee, WI
