Nevertheless, most companies see tangible savings on health insurance if they run good health-management programs. Steven Aldana, a professor at Brigham Young University in Provo, Utah, says that of 32 studies looking at health-care savings through health-promotion programs, only 4 failed to show positive results.
The size and timing of the results are debatable. Aldana estimates that every dollar spent on health-promotion programs will yield $3.50 in avoided future health-care costs before 3 years. Other estimates aren’t as bullish. Watson Wyatt’s Bruce Kelley pegs the ROI at $1.50 for every dollar spent in the first 3 years, with the ratio cresting at $3-to-$1 between years 5 and 10. Joe Marlow, senior vice president at Aon Consulting, puts it at $2-to-$1 between years 3 and 5. Some vendors also tie the cost of the programs to performance guarantees. As much as 40 percent of the cost can be tied to meeting certain fiscal goals, says John Harris of Harris HealthTrends Inc. “It used to be 5 percent, but it has gone up lately,” he says.
One of the difficulties is that results can take years to materialize and affect only a small portion of the workforce. “If the average overall risk score decreases by 6 to 12 percent per year of the program, that’s a great total,” says James F. Fries MD, director of the Koop awards and professor of medicine at Stanford University School of Medicine. But if executives expect overnight improvements, they will be disappointed. “Real health changes can take up to a year, and the financial impact takes longer to see—from two to four years,” he says. Fries has identified five areas that he believes generate the most immediate results (see sidebar, above). He suggests, for example, that corporations purchase prenatal-care programs. “Low-birthweight babies cost $500,000 each. If you can prevent even one or two, that’s a huge savings,” he says.
The Privacy Issue
But some employees bristle at the prospect of their employers keeping tabs on their health if it doesn’t affect their work. What if employers started requiring workers who smoke or are overweight to pay higher health-care premiums? Could the health status of a worker be used as a deterrent to promotion?
To allay these concerns, most companies with health-management programs have made participation in them voluntary. And most rely on third-party providers to collect health information and to keep it private. “In their initial communication to employees, companies make it clear that the contractual relationship precludes the vendor from sharing information,” says Watson Wyatt’s Kelley.
So far, employers seem to be doing a good job of handling the privacy issue. “With the Health Insurance Portability and Accountability Act bona fide wellness-program guidance still in proposed form, there have currently been no published cases focusing on discrimination issues with regard to employer-sponsored workplace wellness programs,” says Amy Gordon, a partner at law firm McDermott Will & Emery LLP in Chicago. However, she adds, those cases could take years to show up in the court system.
The popularity of wellness programs could also get a boost from Congress. A bill proposed by Sen. Tom Harkin (D Iowa) would provide employers with a 50 percent tax credit of up to $200 per employee for implementing health-promotion programs. (With the focus in Congress on Social Security, the bill faces an uphill climb toward passage.)
In the meantime, the need to soften the pain of soaring health-care costs remains urgent. Whether health-management programs will truly ease that pain is one of the most pressing benefits questions today.
Ilan Mochari is a freelance writer based in Cambridge, Massachusetts.
Five Areas to Target For Quick Health-Care Savings.
1. Doctor-Visit Guidelines:
Provide employees with guidelines on when to see a doctor. By steering employees to doctors when they should go, you could head off more serious problems later. Encourage regular checkups to avoid the neglect that often leads to the enormous future expense of surgical procedures.
Get your employees to think positively about themselves and taking charge of their own health. If employees start monitoring their own health, they may begin to lead lifestyles that offer the fiscal advantages of preventive medicine.
3. High-Risk Employees:
If an employer can reach employees who are at heightened risk of a heart attack or lung cancer in the first year of a program, the cost savings will be immediate.
4. Disease Management:
Target employees with chronic diseases, such as diabetes, heart failure, asthma, and emphysema. Early intervention minimizes surgeries and hospitalizations.
5. The First Year Of Life:
The medical intervention necessary for low-birthweight babies averages $500,000. Good prenatal programs can help prevent that.