As the size of employee health care contributions nears 8 percent of annual salary, employers are focusing on wellness programs to cut health care costs and improve productivity, according to a study.
The findings were reported in Chicago-based Aon Consulting's 2008 Benefits and Talent Survey, which noted that even as employers add such programs, they are doing little to track their effectiveness.
Aon found that while the median households in the United States earn approximately $48,000 annually, according to U.S. Census Bureau figures, the amount these families spend on employer-sponsored health care per year continues to edge closer to one month's salary.
According to the company, its survey revealed that the median annual contribution for family health care coverage is $3,120–a 15 percent increase from 2007, and 22 percent increase from 2006.
Meanwhile, it found that organizations have experienced approximately 10 percent annual health care cost increases since 2006.
The consultants' report said employers have started to move beyond this traditional cost shifting to cost control by focusing on improving the health and productivity of their employees.
Aon's survey of more than 1,100 U.S.-based organizations found that 64 percent of employers now have a benefits strategy that promotes the importance of health and productivity to their employees.
John Zern, Aon Consulting's U.S. Health & Benefits practice director, explained in a statement, "By providing their workforce the tools and resources to improve their health, employers are making a commitment to invest in their employees, leading to a more productive workforce."
This, he said, is "a change from the traditional perspective of cutting medical program costs without regard to long-term impact or worker productivity."
Aon found the most common way organizations today are promoting health and productivity is through wellness programs, designed primarily to prevent the development of chronic conditions such as diabetes and heart disease.
According to the survey, the amount of employers implementing specific wellness programs has increased threefold from 2007 to 2008.
It cited a figure that approximately 46 percent of employers are implementing smoking cessation programs this year, up from 14 percent of employers in 2007.
Aon listed the top five wellness programs employers are implementing in 2008 as:
o Promotion of exercise and physical activity–68 percent, up from 19 percent in 2007.
o Disease management programs–60 percent, an increase over 18 percent in 2007.
o Health risk appraisals–48 percent compared with 14 percent in 2007.
o Biometric screening–47 percent, up from 12 percent in 2007.
o Telephonic health care coaching–46 percent a rise from 14 percent last year.
Tom Lerche, Aon Consulting's Health Care practice leader, said the numbers show "employers now recognize the link between employee lifestyle behaviors and medical spend."
He said employers offering stress management, weight management and smoking cessation programs can focus on the root causes of chronic conditions influenced by smoking, obesity, poor nutrition and a sedentary lifestyle, thus reducing "health risk factors among employees and dependents, which lead to a lower rate of increase in health care costs."
Aon found that a worker shortage has also impacted the increase in wellness programs among employers.
"In an era when retiring baby boomers are expected to contribute to the skilled worker shortages in the next 10 years, employers are embracing wellness and health promotion programs today to reduce absenteeism," Mr. Lerche said.
"Some employers value wellness programs as an effective recruitment tool, and others believe the programs can reduce disability costs," he explained.
According to Mr. Lerche, the availability of wellness programs has increased and more employers are buying these services directly and more carriers are offering wellness initiatives to businesses.
The survey also reports that employers have added incentives to motivate employees to participate in wellness programs, with 23 percent offering incentives to take health risk appraisals.
Twenty percent of employers are providing incentives to employees who complete health risk programs such as tobacco cessation or weight management programs. Incentives vary, but about 22 percent of employers offer nonmonetary awards such as gift cards and merchandise. Only 10 percent of organizations offer employees a premium contribution reduction.
Even as they offer them, Aon found that the majority of employers do not have a process in place to measure program impact or track return on investment.
o Ninety-two percent of companies do not have a data tracking process for overweight employees.
o Eighty-seven percent can track smokers.
o Among employers 79 percent don't follow biometric data as a result of employee screenings.
o Sixty-nine percent do not track participation in a corporate disease management program.
According to Aon Consulting, if employers did tracking and benchmarking of programs, they could evaluate benefit plans including health management vendor performance, identify main reasons for medical costs, implement value-based strategies for new programs, and determine return on investment and the effectiveness of wellness programs in improving health status and lowering service utilization.
"Employees will be much more appreciative and engaged if they are presented with data tracked over time that explains why benefit changes are being made," Mr. Lerche said.
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