For five years, Lebanon-based Coeur Inc. has given employees who participate in its wellness program a discount of up to $100 a month on health insurance premiums.
Now employees also must take nicotine tests twice a year — and those who are determined to be tobacco users could forfeit up to a fourth of that discount.
That change reflects the evolution of wellness programs as more employers move beyond awareness to seeking results. They’re also expanding their arsenal of carrots and sticks used to encourage healthier lifestyles among employees, hoping to keep rising health costs in check.
“Costs follow health risks, so the more health risks an employer group has, the more costs are associated,” said Jeremy Curtis, vice president of Nashville-based Corporate Health Partners, which provides wellness programs to a dozen employers including Coeur. “An employee that smokes and has diabetes costs their employer more money than someone who doesn’t have diabetes, isn’t overweight and doesn’t smoke.”
For Coeur, becoming self-insured and implementing the wellness program have helped to keep the total cost of health insurance benefits the same as five years ago. But return on such investments
doesn’t come overnight, said Jay Cude, chief executive of the manufacturer of disposable medical devices for the imaging market.
“You have to have a long-term view on that,” he said. “For the first five years, we focused on the carrot. At this point, we’ve added a little bit of a stick.”
This year, 52 percent of employers with 10,000 or more employees said they use incentives and penalties to boost employee participation in wellness or health management programs, up from 43 percent last year, according to consultant Mercer’s 2011 National Survey of Employer-Sponsored Health Plans. Among employers with 500 or more employees, those using incentives and penalties rose to 33 percent this year from 27 percent.
Mercer’s survey, meanwhile, showed that more small employers are adopting health management programs such as nurse advice lines, health risk assessment, disease management, health advocate services and behavior modification.
Yale Miller, executive vice president of operations with Aegis Health Group Inc., a Brentwood-based hospital business
development company, sees three key trends driving employers and employees to embrace wellness.
First, the per-employee costs of providing health benefits are cracking the $10,000 level this year, making employers open to new ideas for saving money. Meanwhile, employers are learning from new research that medical costs account for less than half of the true cost of chronic disease in the workplace, with factors such as absenteeism and lost productivity accounting for the rest. And finally, as workers are asked to pay more out of pocket to cover rising costs of health benefits, they’re also more sensitive to their need to participate in wellness efforts.
The health-care reform law passed last year clarified how much more employers can charge healthy vs. unhealthy workers for benefits, Miller said. Workers deemed unhealthy — based on behaviors or the actual results of health screenings — can be charged up to 20 percent more, with that differential rising to as much as 30 percent in 2014.
Most wellness programs began with employers offering health fairs and giving employees gift cards
or premium discounts for simply participating. Now employers are also basing incentives or rewards in part on employees achieving specific results.
Curtis of Corporate Health Partners recommends that employers tighten the screw each year, making rewards or incentives tougher to reach. Those bringing out the stick, however, must tread carefully to avoid alienating employees, who generally respond better to incentives than penalties, Miller said.
At Franklin Road Academy, employees have access for a fee to a Zumba class and a personal trainer who comes to campus. Under the private school’s wellness program, workers can avoid paying any premiums on their health benefits by participating in a screening that includes blood pressure and body-fat checks, taking a personal health survey online, engaging in 20 minutes of physical activity three days week, attending a wellness education seminar once each quarter and being tobacco-free.
Until July, participation in the program was voluntary. Now it’s mandatory. Workers who don’t participate face a $30-a-month, or $360-a-year, hit to their paychecks.
That change has boosted participation from 80 percent to more than 90 percent, said Glenn Seagraves, director of finance and operations for the 130-employee academy.
“Obviously, the healthier you are with health insurance experience, the less our premiums will be in the future,” he said. “The intent is to create a healthier employee. In the short run, it’s hard to measure results. But over the long term, we’re confident we’ll be a healthier workplace.”
This year, Tennsco Corp., a Dickson-based maker of steel storage products, began basing premium discounts on employees’ achieving health targets such as keeping blood pressure, cholesterol, body-fat and blood glucose levels
in a desired range. Before, employees simply had to participate in one of the company’s two wellness fairs held each year to get the discounts.
Tennsco’s employees also can save up to $10 a week — up to $20 a week including their spouses — for not using tobacco and completing a health risk assessment.
Phil Corbin, vice president of human resources with 500-employee Tennsco, which operates six plants in Dickson, estimates its annual wellness budget at nearly $100,000. The company subsidizes employees’ gym memberships
At Coeur, the wellness program should account for up to 8 percent of next year’s total spending on health care. Health coaches from Corporate Health Partners visit the company’s Lebanon headquarters and its three plants in North Carolina, Wisconsin, and Mexico to guide its 330 employees toward healthier lifestyles and help them be accountable to goals set by the coach or the worker.
Cude, Coeur’s CEO, said it’s hard to tell exactly how much the company saves through its wellness program. But he’s glad the firm is no longer seeing increases of between 10 percent to 15 percent a year in its health insurance premiums, as it did five years ago.
“Clearly, we’ve had pretty significant success,” he said.
Getahn Ward covers the business of health care and publicly traded companies. Contact him at 615-726-5968 or email@example.com.