Workforce Health and
Cost Trends: What to Expect in 2009
According to the American College of Occupational and Environmental Medicine
and the Integrated Benefits Institute, when employer health care costs are
combined with the cost of productivity losses through absenteeism and presenteeism,
the annual cost averages $13,000 per employee. Although employers increasingly
are recognizing that productivity is inextricably linked to the health of
their workforce, most employers struggle to find the proper strategies to
curtail the burgeoning costs while improving wellness.
Preliminary survey findings by HR consultancy Mercer indicate that health
benefit costs will rise by 5.7% in 2009 – the lowest rate of increase
in more than 10 years. Other consultants, such as Aon Consulting and Buck
Consultants are predicting increases in the 10 to 11% range.
In all cases, the findings recognize that employers are taking steps to
curb costs. Most employers intend to increase deductibles, co-payments,
co-insurance or employees’ out-of-pocket spending limits. From 2003
to 2007, the median family deductible for in-network services in a PPO rose
from $1000 to $1500. Other cost saving measures include adding consumer-directed
health plans, a high deductible plan with an employee controlled HSA or
health reimbursement arrangement (HRA).
Faced with higher costs, many employees are taking appropriate steps to
lower their medical costs, such as lower cost drug options. However, some
are taking actions that could lead to higher costs in the future including
skipping recommended doctor’s visits.
According to Cathy Tripp, national leader of consumerism at Watson Wyatt,
“In the current financial climate, employers stand to gain from reinforcing
messages on preventive care, wellness resources and the importance of following
prescribed drug regimens. There are a number of behaviors that, if embraced
today, will lead to substantial health cost savings in the long term.”
Wellness programs are among the most prevalent ways companies are promoting
healthful behavior. A June 2008 report, Employee Health & Productivity
Management Programs: The Use of Incentives, by ERISA Industry Committee,
the National Association of Manufacturers (NAM) and IncentOne, Inc. found
that incentives are an effective tool to engage employees and keep them
involved in wellness programs. The report concludes that incentives for
weight management programs ranged from $5 to $500 and for smoking cessation
programs from $5 to $600. Incentives per person per year ranged from $100
to $300, with an overall average of $192.
Employers continue to experiment with incentive offerings. While in 2007,
the primary incentive was health premium discounts; in 2008, gift cards
were the most popular incentive, closely followed by health premium discounts
and cash incentives. Rewards are focused on participation and completion
rather than the achievement of specific goals such as weight loss or smoking
cessation.
While motivating employees to participate, employers must comply with an
array of legal and regulatory issues, including HIPPA, ADA and state laws.
Legal issues in this area are constantly evolving as more challenges to
programs occur. |