Not a Member?  Become One Today!

Declining Health of U.S. Workers Is Driving Up Employer Costs
Obesity has largest impact on employers’ health care expenditures

By Stephen Miller, CEBS  4/20/2011
 

The unhealthy behaviors of the U.S. workforce cost employers an average of $670 per employee annually, according to the March 2011 Thomson Reuters Workforce Wellness Index.

The index gauges six behavioral risk factors to track the collective health of working Americans with employer-sponsored health insurance―and the costs associated with less-than-optimal health.

An index score of 100 represents the ideal state where there are no behavioral risk factors present in the population and, therefore, no health care costs attributed to health risks. From 2005 to 2009, the index declined 2 percent from 86.4 to 84.4.

This decline in overall population health―as measured by body mass index (BMI), blood pressure, cholesterol, blood glucose, and tobacco and alcohol use―contributes to rising health care costs for U.S. employers.

For instance, a Duke University study (published in the Archives of Internal Medicine) found a correlation between a worker's BMI, which is used to measure obesity, and the amount of money spent on workers’ compensation claims for that worker—with costs approaching $51,000 for obese workers vs. $7,500 for workers with normal or average weight.

In 2009, about 14 percent of direct health care costs for the employed, privately insured population were associated with these six behavioral risk factors, according to Thomson Reuters’ analysis. That amounts to $670 per employee, with $400 of the overall cost attributed to high BMI. Elevated blood glucose was the second most significant factor, accounting for nearly $150 per employee per year.

"This analysis shows that employers striving to reduce health care costs would be wise to address the behavioral risk prevalence of their workforce," said Dr. Raymond Fabius, chief medical officer at Thomson Reuters. “When employers, insurers and others take a close look at how their beneficiaries compare with national norms, they can begin to identify and target specific problem areas.”

Employee Wellness Programs Make Strides

By improving employee health, workplace wellness programs have been shown to be effective and contribute to a company's bottom line. A $1 investment in wellness programs saves $3 in health care costs, according to research by the Wellness Council of America. For businesses, there is much at stake, according to Donna Rogers, SPHR, director of the Illinois State Council of the Society for Human Resource Management (ILSHRM). She cited statistics from the Centers for Disease Control and Prevention that attributes more than 75 percent of employers' health care costs and productivity losses to employee lifestyle choices.

Illinois employers with wellness programs can compete for the WOWIE Awards, sponsored by ILSHRM and Blue Cross and Blue Shield of Illinois (BCBSIL), if they promote a wellness culture at work, such as by increasing healthy eating options and offering a variety of physical activities for employees.

Participation Tied to Monetary Awards

Nearly three-quarters (73 percent) of American workers would enroll in employer wellness programs to improve personal health if offered an incentive, according to a 2011 survey by Workplace Options, a provider of work/life benefits and employee support services.

Survey results show 92 percent of respondents who worked for employers offering wellness initiatives were aware that programs are available. However, industry experts say utilization of these programs is less than 5 percent on average without incentives from employers.

As health care premiums and costs associated with absenteeism continue to rise, businesses are offering employees more rewards to pursue a healthy lifestyle—a gamble that investments in employee health now will provide a big return in the long run. According to a recent study by Boston-based Fidelity Investments and the Washington-based National Business Group on Health, employee wellness incentives increased 65 percent in 2010 to $430 per employee on average—up from $260 in 2009.

"This is a trend that we're going to continue to see," said Rita Piper, vice president of wellness services for Workplace Options. "What we're finding right now is it takes more money per person to get employees to engage in one facet of a wellness program—and most companies have multifaceted programs. Employers are investing more in their incentive programs, and as a result, employees are achieving greater goals."

The new challenge for employers is finding a way for employees to adopt these healthier behaviors over the long term rather than generating temporary interest around an incentive, Piper said.

According to the Workplace Options survey, only 36 percent of respondents reported that they work for an employer that offers initiatives such as wellness coaches, on-site health screenings and fitness programs, while more than three-fourths (76 percent) feel that it is appropriate for companies to offer employees incentives for improving their health and well-being. The survey was conducted March 4-6, 2011, among working Americans.

Stephen Miller, CEBS, is an online editor/manager for SHRM. 

SHRM members can discuss this article on SHRM Connect, here.

Related Articles:

Wellness Program with Nonparticipation Charge Upheld, SHRM Online Legal Issues, April 2011

Information, Incentives Drive Behavioral Change, Cost Savings, SHRM Online Benefits Discipline, April 2011

Get Your Employees Out and Walking, SHRM Online Benefits Discipline, April 2011

Wellness Engagement in the World of Reform, SHRM Online Benefits Discipline, March 2011

Wellness Participation Up with Management Commitment, SHRM Online Benefits Discipline, March 2011

Big Jump in Wellness Dollars, SHRM Online Benefits Discipline, February 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

Sign up for SHRM’s free Compensation & Benefits e-newsletter

Copyright Image Obtain reuse/copying permission


Sections