First In A Series: Insurance
Economics Or Health?
Wellness programs can reduce claims which, in turn, could reduce insurance costs.
Patricia Smith
Senior Editor
Most surveys rank health insurance high on the list of things drivers look at when comparing compensation packages. Unfortunately, health insurance also ranks high on everybody's lists of rising cost items.
Most experts expect premiums to increase 10% a year over the next several years. The average cost for family health coverage is currently about $11,000 and is projected to exceed $17,000 by 2010. Companies that self-insure face similar cost hikes.
Medical malpractice is getting most of the attention as a driver of high insurance premiums, but insurers say technology and innovation is the main reason for escalating health care costs.
Everyone wants the latest and greatest medical innovations, procedures and medicines, explains Chris Patrick, senior vice president, Cottingham & Butler.
As the medical community continues to invest in new products, the cost of these innovations is passed back to the consumer."
Many employers continue to tackle the problem by pushing more costs to their workers through higher deductibles and co-pays, or by raising the insurance premium for employees. Patrick thinks it's time for a different approach.
"Raising deductibles and co-pays just shifts more costs to employees, it doesn't lower costs," he argues. "In a lot of cases, the net result is a reduction in compensation for employees."
What's needed, says Patrick, are programs designed to reduce health care costs and health insurance claims by promoting wellness and disease management. He is hardly alone.
"Is this an economic problem or a health problem?" asks the Health Enhancement Research Organization (HERO), an organization dedicated to making employee health management a widely accepted strategy for controlling health care costs. As HERO notes, most of the solutions being tried are economic, but they fail to address the root cause of high insurance premiums: health issues leading to costly treatment.
And, to a large extent, higher health care cost stem from unhealthy living.
According to HERO, from 50% to 70% of all illnesses and medical problems are associated with a relative handful of lifestyle choices: obesity, smoking, inadequate exercise, poor nutrition, and inability to manage stress. Research shows that people who are prone to these problems generally have much higher health care costs than those who are not. Thus there is growing interest in employee health management as a way to help curb medical and, ultimately, medical insurance costs.
DRIVERS AND WELLNESS
www.fmcsa.dot.gov).
Among other things, researchers found that the prevalence of smokers among truck drivers was about twice that of the general population. Three-fourths of the commercial drivers studied were overweight and a third of those were classified as obese. The study also found that a high percentage of truckers suffered from high blood pressure, high stress levels, poor diet and lack of aerobic activity.
Most drivers in the study were aware of their potential health problems and said they were very interested in health improvement programs. However the majority also said they didn't have the time, opportunity or motivation to make changes on their own.
JUSTIFYING THE COST
Motivation also seems to be a missing ingredient in many company-sponsored wellness programs. The FMCSA study looked at programs of several companies that employ truck drivers. Most were initiated at the corporate level, offering healthier menu selections at company cafeterias and workout facilities at company facilities. In the majority of cases those facilities weren't accessible to drivers or, if they were, drivers seldom used them. And while top management at these companies agreed that employee health should be a priority, many of the programs faltered due to lack of a committed coordinator or adequate resources.
Cottingham & Butler offers wellness and disease management to its insurance brokerage clients, but it's often a hard sell. The most frequent objection: cost. Although the cost of a fairly comprehensive program is usually less than 1% of a company's total health insurance premium, Patrick says clients often balk because it's so hard to accurately measure what that expenditure really buys.
"Conservatively, most people will tell you that the return on investment for a good wellness/disease management program is somewhere in the neighborhood of 3:1 or 4:1," he says, "but it can take a while for the savings to show up, and it's very difficult to track."
The problem is that you're looking for things that didn't happen versus things that did. For instance, we can logically assume that shedding some weight will help prevent diabetes and heart problems but there's no way to know, for sure, that such problems would have developed if the driver hadn't lost the weight.
Patrick says studies also show that healthier employees not only incur fewer medical and workers' compensation expenses, they're also more productive and more focused on their work. Again though, it's tough to measure and tougher to prove.
Companies with a long-term commitment to employee wellness and disease management say it can make a difference. Union Pacific's health promotion program, which has won numerous national awards, was started at a time when the company's medical costs were about twice the national average. The initial self-care initiative cost about $50 per employee and saved the company an estimated $1.26 million. The number of smokers in its workforce has gone from 40% to 28% in the last 10 years.
More than 27,000 UP employees have participated in the company's Health Risk Assessment program, which identifies at-risk workers and provides follow-up and intervention as needed. In addition to health assessment and wellness incentive programs, the company has contracted fitness facilities across its system and has occupational health nurses at major repair facilities.
The U.S. Dept. of Health & Human Services says that almost all companies with more than 750 employees now offer some kind of health improvement programs, although the scope of those programs vary considerably.
The agency reviewed health promotion and disease prevention programs of nine large employers and estimated that the companies saved anywhere from $1.50 to almost $5 in health-related expenses for every dollar spent. The average savings was $3 for every dollar spent.
HHS admits that researchers are somewhat skeptical of cost/benefit data offered by many employers since sample sizes are often small and results may be biased. Nevertheless, it says there is a "strong indication that many health promotion and disease prevention programs do work and do result in significant cost savings."
At this point, insurance companies aren't lining up to offer lower premiums for companies with wellness programs, but if such programs can reduce claims it stands to reason that insurance premiums will eventually be impacted. Or, as Patrick points out, "health insurance costs will continue to rise for those companies that don't promote claims prevention."
How Health Programs Work
Employee wellness and health programs run the gamut from education to intervention. At the very least, companies and/or their insurers are trying to increase awareness of healthy lifestyle choices by keeping their employees informed.
Such efforts can be easy and cheap, drawing from the abundance of material available - usually free or at minimal cost - from insurance companies, health care providers and organizations such as the American Cancer Society and the American Heart Assn. One of the best resources for program planning and implementation is the Wellness Councils of America, www.welcoa.org.
In its initial proposal for wellness training FMCSA recommended information on how to maintain healthy blood cholesterol, blood pressure and weight, as well as the importance of periodic health monitoring, testing, proper diet and exercise. Such information is readily available from the sources mentioned earlier.
For companies looking for a quick, easy way to comply with the entry-level training requirements, J.J. Keller & Co. offers a video covering all required segments, including a section on diet, exercise, avoiding excessive use of alcohol and preventing driver fatigue.
If you're serious about changing behavior and reducing claims, consider financial incentives. Even high deductible health plans can be structured so that regular checkups and other preventive measures are covered 100%. Experts say these annual screenings don't necessarily have to be expensive and, in fact, costly workups with EKGs and a battery of blood tests aren't necessary for the average healthy person. Most suggest screening programs based on guidelines established by the U.S. Preventive Services Task Force.
Health plans can also be structured to reward employees for healthy lifestyles by reducing co-pays or premiums. For instance, the company might pay 75% of the health insurance premium for non-smokers and 60% for smokers. Many companies arrange for discounts on health club memberships and diet or stop-smoking programs. Some even pay part of the cost. In most cases, the benefits are extended to families not just employees since success depends heavily on family participation and/or support.
Increasingly, wellness programs are taking further steps to reduce claims through health assessments and disease management. Cottingham & Butler works with a couple of firms that provide health assessments of individual employees. Wellness counselors or occupational health nurses then work with those individuals to address areas of improvement.
For truck drivers, the most common concerns are smoking, diet and exercise. "Most truckers don't feel they're sedentary because they work really hard," says Linda Perry, Cottingham & Butler's customer relations manager. "But they do spend a lot of time sitting, which can lead to circulatory problems, high blood pressure and diabetes. There are a lot of things they can do - little things - that can protect their health and maybe even their careers."
Counselors, available 24 hours a day, are aware of the truckers' unique schedules and work environment. Thus they try to tailor their advice to meet those circumstances - finding healthy choices on truckstop menus, for instance, or figuring out ways to stretch and exercise in or around the truck.
The counselors also challenge drivers and provide both advice and encouragement to meet those challenges. "We deal with a lot of drivers who have weight issues," says Perry. "Dropping 150 pounds is a daunting challenge, so wellness counselors break it into small steps - maybe two pounds a week - and keep in touch with the driver through each step."
Perry stresses that health assessments are confidential and employers don't see health reports on individual employees. Instead they get reports showing general health of their workforce and trends that merit further attention. For instance, if 50 employees undergo a health assessment and 25 have high blood pressure, the company clearly needs to focus its health resources on the causes, prevention and management of hypertension. At the same time, those 25 employees will receive personalized and confidential health coaching.
Prevention is one way to reduce health care costs. Another is disease management. As Patrick points out, certain diseases like diabetes, asthma and hypertension can lead to expensive complications when they're not taken care of. But if those same diseases are properly managed, related costs remain relatively low.
"What we do is work with those employees to educate them, to encourage compliance with their health care providers and to be a resource for them when they have questions or concerns," he says.
"If you have a person who is on oral medication for diabetes, you really want to make an all-out effort to keep him or her off insulin and keep the disease in check," adds Perry. "It's one serious disease that you can actually impact. A good assessment program can identify this early on and a nurse can provide ongoing counseling."
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