Insurers generally reward responsible, safe behavior with premium discounts. With that in mind, perhaps the time has come for insurers to consider premium discounts on health insurance for companies using worksite wellness programs to encourage their employees to choose healthier lifestyles.
Comprehensive worksite wellness programs involve partnerships with medical providers to improve employee health and decrease health care costs. Wellness programs often focus on encouraging employees to develop and maintain good exercise and nutrition habits, and help them quit smoking.
Wellness programs also emphasize preventative care. Screening tests for major medical illnesses such as heart disease and diabetes allow for treatments before the occurrence of catastrophic events, which can cost employers tens, if not hundreds, of thousands of dollars per event. Prevention can also be as simple as offering flu shots to employees.
Focusing on healthy lifestyles and preventive care makes sense. Lifestyle and personal behavior choices such as overeating, smoking and lack of physical activity contribute significantly to chronic disorders. According to data published in 2003 by the U.S. Department of Health and Human Services, cardiovascular diseases cost the United States more than $300 billion each year and obesity costs as much as $117 billion a year. Lifestyle and personal behavior choices are believed to contribute to 70 percent of deaths.
Conversely, healthier employees positively affect the utilization portion of the health care cost equation. Healthier employees require fewer emergency and tertiary care visits. Fewer visits mean fewer medical claims, which lead to lower health care costs — the goal every company is trying to achieve.
The time has come to consider new approaches to controlling health care costs. Rather than solely focusing on driving cost out of the treatment side of the equation, insurers also should consider a new formula focused on prevention. Insurance premium discounts for wellness will lead to more employers offering wellness programs, which will produce healthier employees, which will decrease utilization of health care and ultimately will lower health care costs.
Health insurers currently calculate costs based on utilization and demographics. A 55-year-old non smoker, for example, who eats well and exercises is viewed the same as a 55-year-old overweight smoker. Granted, because of their age, both have the same general risks for a certain level of medical needs. But if insurers factor wellness into their premium calculation, employers will have an even greater incentive to make their workforces healthier, thereby reducing costs to everyone involved.
To be fair, there are hurdles in implementing wellness programs. Challenges also will occur in offering premium discounts for wellness programs. But to ignore the return on investment for implementing a comprehensive wellness program — generally cited as $3 saved for every $1 invested — seems unwise.
Savings do not occur overnight, but if employers are patient and committed to the program, a return on investment (ROI) is attainable.
For insurers and elected officials seeking precedence when considering changes to allow for wellness premium discounts, look no farther than Michigan and Massachusetts.
A legislative change in Massachusetts in April allows small group insurance plans to factor wellness programs and tobacco usage into rating categories, which then can be used to vary premiums charged to employers.
In October, a Michigan insurer introduced a health insurance plan that offers small employers an average 10 percent premium discount for encouraging healthy living. Workers who agree to exercise, quit smoking and take medications as prescribed by their doctors receive lower co-pays and deductibles.
Many other employers have boosted participation rates in wellness programs by offering financial incentives such as reduced premium payments and monetary awards to those who opt in to the program. Others have a dedicated wellness department or outsource wellness management to relieve privacy concerns and boost participation. Investments such as these are justified by the ROI for the employer.
As we look toward the future, there are two facts beyond debate: Companies need a proactive solution to deal with rising health care costs, and the workforce needs to become healthier and more productive. If offering insurance premium discounts for wellness programs can help address these problems, then the time has come for insurers to consider this option as a solution that helps employers, insurers and employees.
Dr. Andrew Seter is president and chief executive officer of Sensia Healthcare, a Milwaukee-based occupational medicine practice.
