Dec. 23, 2004

Wellness programs and their effect on health care costs

Q: What are wellness programs?

A: Wellness programs focus on preventing illness and promoting employee health. They can be a means of reducing health care costs by improving the health of work place employees.

Q: Why focus on wellness programs?

A: Many studies indicate that wellness programs lead to reduced health care costs (see examples below.) Although the results are not conclusive, more and more employers are choosing to implement work place wellness programs as a means of reducing health care costs, and improving employee health and morale. These studies may shed light on creative ways of implementing a successful wellness program.

Additional support for implementing wellness programs in the work place comes from the U.S. Department of Health and Human Services in an article entitled, Prevention Makes Common "Cents":

"Most of the dollars spent on health care in the United States, are for the direct care of medical conditions, while only a very small portion is targeted on preventing those conditions. As Americans see health care expenditures continue to increase, it is important to focus on strategies that reduce the prevalence and cost of preventable diseases.

"Employers are becoming more aware that overweight and obesity, lack of physical activity, and tobacco use are adversely affecting the health and productivity of their employees and, ultimately, the businesses' bottom line. As a result, innovative employers are providing their employees with a variety of work-site-based health promotion and disease prevention programs. These programs have been shown to improve employee health, increase productivity and yield a significant return on investment for the employer. For example, a recent review of health promotion and disease management programs found a significant return on investment for these programs, with benefit-to-cost ratios, ranging from $1.49 to $4.91 (median of $3.14) in benefits for every dollar spent on the program."

Q: What are some examples of successful wellness programs?

A: Here are some examples:

1. Carpenters Health and Welfare Trust of Western Washington. This was a carefully designed study on the costs and benefits of tobacco cessation involving 325 participants who had been on the program for at least 12 months. At one year after registration, 27.5 percent were not smoking. The pilot program costs were 6 cents per hour of contributions (about $11 per full-time employee per year). Ninety-four percent of the participants were highly satisfied. The estimated savings due to reduced use of health care to treat tobacco-related illness are estimated to be worth 15 times the program’s cost, for an annual return on investment of more than 27 percent. During the first two years of the program, 12.6 percent of all smokers enrolled. (From A Collaborative Strategy for Better Care, Healthier People and Affordable Costs, King County Health Advisory Task Force Final Report, June 30, 2004 (1.6M Word); Final Report Appendices (444K PDF))
2. Uniform Medical Plan. The UMP is a self- insured preferred provider health insurance plan offered by the Health Care Authority that is available to 90,000 Washington State employees, both active and retired, and their dependents. Beginning in January 2000, UMP implemented a telephone-based tobacco cessation program. A total of 1,334 UMP members enrolled in the program between January 2000 and December 2002. In the second year of the program, UMP and its program provider evaluated the impact of the $17.50 program registration copayment and standard pharmacotherapy coinsurance on program participation by suspending the copayment and coinsurance for all plan members enrolling from Nov. 1 – Dec. 31, 2001. (From A Collaborative Strategy for Better Care, Healthier People and Affordable Costs, King County Health Advisory Task Force Final Report, June 30, 2004 (1.6M Word); Final Report Appendices (444K PDF)
3. City of Holland, MI, has had a wellness program for the past 11 years. Beginning in April 2001, employees were required to pay a portion of their health insurance premium. However, if the employee meets the wellness participation criteria, she/he will receive credits to offset (or potentially eliminate) this cost. To meet the criteria for obtaining wellness credits, an employee must take a health assessment when offered, which includes cholesterol and glucose scanning, weight/percent body fat tests, flexibility, strength and aerobic step testing. The employee must take three fitness programs that run from 4-6 weeks, minimum of 15-minute exercise intervals and participate in two wellness classes that are presented over a 45-minute lunch hour. For the second consecutive year, their claims experience has been below the insurance carriers' projections for similar groups in their geographic area.
4. DaimlerChrysler. DaimlerChrysler is an international automotive and transportation company with over 95,000 employees throughout the United States. Its National Wellness Program began in 1985 and is a negotiated benefit between DaimlerChrysler Corporation and the International Union, UAW. All U.S. sites with 500+ employees have on-site contracted health and fitness business partners (more than 100 FTEs) to administer the program. The program has voluntary participation. Key components of the National Wellness Program includes: targeted education programs, based on identified health risks and interests; focused education programs which support employees throughout process of lifestyle change; smoking cessation, weight management, cholesterol management, and fitness activities; one-time workshops, multi-session classes, individual counseling, and self-directed modules; maintenance strategies which include ongoing awareness, interactive campaigns, group support with on-site services (e.g., fitness facilities, cafeteria/vending programs, walking routes).
   
   Savings estimates revealed that participation in the National Wellness Program was associated with significant savings in dollars per employee from 1991 to 1995, with the highest dollar savings achieved in 1995 ($16 per employee per month.) Evaluation of the program showed that health risk assessment was associated with significant and substantial reductions in health care costs. Employees who completed one, two or three health risk assessments on average had lower 1997 health care costs of $112.89, $134.22 and $152.29, respectively. Employees who had completed at least one health risk assessment and participated in an additional wellness activity had an average cost savings of $200.35 per year.
   
   To contact DaimlerChrysler for more detailed information, see: www.Chrysler.com (from Prevention Makes Common Cents)
5. Motorola. Forty-five thousand U.S. employees, family members, retirees benefit from Motorola's wellness programs. Motorola invests $6 million annually in wellness and work/life programs. Motorola's long-term wellness program goals include: enhance education, prevention and wellness strategy; demonstrate return on investment; advocate healthy culture. Support programs include: disease management (asthma, cancer, depression, diabetes, infectious diseases); flu immunizations, cancer screenings, smoking cessation; health screenings and health risk appraisals; 24/7 nurse telephone line; health fairs; back care; on-site/external wellness centers; children's aerobics and nutrition; stress management, and shift work wellness.
   
   Evidence of the program's cost-effectiveness include: for every $1 invested in wellness benefits, $3.93 saved; a 2.4 percent increase in annual aggregate health care costs for participating employees compared with 18 percent increase for non-participants; $6.5 million annual savings in medical expenses for lifestyle-related diagnoses (e.g., obesity, hypertension, stress) compared with non-participants; and $6.5 million annual savings in medical expenses for lifestyle-related diagnoses (e.g., obesity, hypertension, stress) compared with non-participants.
   
   To contact Motorola for more detailed information, see: www.motorola.com. (from Prevention makes Common Cents)
6. A county in California offered classes and fitness training to all workers. The result was a significant decrease in sick days related to back injuries, producing a net cost-benefit ratio of 1 to 1.79.
7. City of Mesa, AZ. Workers who participated in a health promotion yielded a return of $3.60 for each dollar invested. NOTE: More rigorous and intensive prevention programs tend to yield higher cost / benefit ratios

Q: What makes a wellness program successful?

A: The Wellness Council of America, in addition to several other studies on wellness programs, concluded that the following factors contribute to creating a successful wellness program:

• Support from senior management.
• Planning and development of a wellness program should be a collaborative effort between management and employees from all areas of the organization.
• Collection of data to understand which conditions the wellness programs should target.
• Develop an operating plan based on the data collected and on information about what makes wellness programs successful.
• Consistent evaluation of outcomes and changes in strategies when needed.

Examples of common work site wellness programs:

• Reimbursement or partial reimbursement of health club memberships.
• Fitness programs on site over the lunch hour.
• Employee assistance counselors.
• Anti-smoking programs.
• Health promotion incentives/disincentives for staying healthy.
• Cholesterol management programs.
• Stress reduction programs.
• Classes on controlling hypertension.
• Back strengthening classes.
• Anti-smoking programs.
• Nutritious/low fat meals available on site.
• Weight loss programs.
• Walking clubs.
• Flu shots/and other immunizations available on site.

Next steps
Obtain information from the Minnesota Department of Employee Relations regarding any Wellness Programs being offered for state employees. Although this information has been requested, it is not available as of this date.

Obtain information from state employees on the level of interest for wellness programs.

Please see www.doer.state.mn.us/ei-sehpp/sehpp.htm for more information on health care tips and services available to state employees.