Healthy Living is the Key to Healthcare Savings
by Mark M. O'Connell & Tim Kaine
As final negotiations on health insurance reform continue, the debate has centered on achieving three basic goals: more security for insured Americans, affordable and quality insurance for the uninsured, and strategies to reduce the unsustainable growth in healthcare costs. There are many different ideas about how to accomplish these objectives. All agree, however, that the end goal of reform is individual health.
Although lifelong friends, we lie on opposite sides of the political spectrum as a Democratic Governor and a Republican CEO. You might expect us to differ on our approach to the issue of healthcare; however, we've found common ground in the debate by focusing on employee health as the key. By developing a culture of wellness within our companies and organizations, we can ensure healthcare reform achieves our goals. But no reform effort will deliver good health results--or cut costs--if our population lives increasingly unhealthy lives.
The experience of Kansas City-based Multi Service Corporation will sound familiar to any American business operating today. Steady increases in year-over-year healthcare costs for the 300-person global transaction management company led Multi Service to trim benefits in order to control growing annual premiums. By 2008, employees were left with a smaller plan with rising costs. Their solution to control future expenses: Improve the health of participating employees.
Changing human behavior is admittedly difficult. But the workplace offers the ideal environment to engage individuals. Organizations can implement a culture of wellness into the workplace and change behaviors over time. Multi Service instituted its first corporate wellness program, FitU, in April 2008, and the program has been widely successful on both the individual and corporate level. At minimal direct cost to the employee, the initiative incorporates educational, interactive, and physical events to promote comprehensive wellness--including health screenings, lunch-and-learns, fitness competitions, and discounted memberships to a local fitness facility subsidized by the company. It's no wonder the average Multi Service employee attends at least one FitU event each quarter.
The success of Multi Service's program can be replicated by other businesses, and the evidence is convincing that the effort is worthwhile. The percentage of employees that smokes cigarettes is down from nearly 27 percent in 2004 to 11 percent in 2008 thanks to the promotion of smoking cessation programs. The average percentage of employees that suffers from frequent stress, headaches or migraines, or symptoms of depression is down 7.2 percent. The percentage of severely obese employees is down from 5.5 percent in 2004 to 3.8 percent in 2008--much closer to the national average--and a six-month long New Year's resolution challenge resulted in the 11 percent of the employees who participated losing an average 5 percent of total body weight. The number of employees that exercises regularly is up by 4.3 percent. One year later, these steady improvements haven't cost much, but they are helping control expenses while building a great team atmosphere at the same time.
Although the size of its workforce is dramatically larger, the Commonwealth of Virginia was experiencing the same issues in the same timeframe. Like most states, Virginia was facing a recession and significant budget shortfalls in 2008--as well as rising healthcare costs. In FY 2008, the costs of health benefits for Virginia's 100,000 employees rose 10.2 percent, with the state incurring the majority of the increase. Most striking was that lifestyle-related claims represented a significant portion of those costs.
Virginia decided to focus on nationally-accepted health measures to target treatment for prevalent chronic ailments like high blood pressure and obesity, which were eroding the health of state employees. Now, routine annual wellness checkups and preventive cancer screenings are provided at no cost, and for the first time, free flu shots are available. Smoking is banned in all state buildings, lunchtime walking groups have become popular, and the state's cafeterias are required to serve healthier food. The state also encourages expecting mothers to participate in Future Moms, a prenatal program to help reduce the costs and quality-of-life issues associated with high-risk pregnancies and premature births. Hospital co-pays are waived for participants who sign up for the program in their first month of pregnancy.
The results in Virginia mirror the success of Multi Service's initiative. Registrations in Future Moms were up 16 percent in 2008 and the state's most recent infant mortality statistics show improvement. Fully 30 percent of the eligible workforce in Virginia has taken advantage of the state's smoking cessation program--and more than 26 percent of participants remained smoke free after one year. The 8.5 percent of eligible employees who signed up for weight loss programs in 2008 achieved a total weight loss of more than 37,000 pounds.
Some of Virginia's cost savings have stemmed from bringing the traditionally outsourced state wellness program CommonHealth in house, which reduced costs by nearly $4 million. The broader point is that these health-centered initiatives are popular: The number of state employees participating in one or more CommonHealth initiatives doubled in 2008 alone, and the program reaches more than 1 in 4 employees.
Whether organizations are working to maximize their revenue or to stretch the reach of limited taxpayer dollars, notable savings can be achieved by living healthier. A 2005 study by the American Journal of Preventative Medicine suggests that employee wellness programs may be the best way to minimize healthcare costs and improve employee productivity. The study shows every dollar invested in employee health and wellness may result in an additional three to four dollars in savings for the organization. The magnitude of this effect would translate into even larger savings at the national level. At the same time, researchers estimate that if the American population could decrease instances of chronic illness among individuals age 50 and older to European levels, the United States would save between $1,200 and $1,750 per citizen each year--an annual savings of $100 to $150 billion.
As the nation continues to debate healthcare reform, we must remember the end goal is health. By educating individuals and promoting advantages of a healthy lifestyle nationally, our country can reap so many benefits--financial and otherwise. At the same time, by encouraging employers to implement constructive and engaging wellness-related programs--and rewarding them for measurable outcomes--America can achieve the most affordable and effective version of reform possible.
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