In this third article of our five part series on employee benefits, we look at how wellness programs will evolve in 2015.
With 98% of larger employers offering employee wellness programs, this practice has been trickling down to smaller companies in recent times. However, more companies are realizing that their current wellness programs are not effective enough to manage the cost of their health insurance premiums.
Wellness 2.0 or ‘population health management programs’ will be the next wave for more sophisticated employers. Getting there can be challenging because it involves realizing true behavior change and implementing evidence-based practices that may not be popular. This involves a lot of time and effort, resources that many companies do not have.
Government Incentives
The ACA promotes implementing and expanding employer wellness programs by offering various incentives to businesses. Small businesses with fewer than 100 employees can receive grants to start wellness programs. The Workforce Wellness Grant offers $200 million to small, qualifying businesses that facilitate wellness programs. Yet the true benefits are a healthier workforce, which can positively change the bottom line.
Case Study: Johnson & Johnson
With more than 250 operating companies throughout 60 countries, Johnson & Johnson is the world’s largest and most comprehensive manufacturer of health care products. J&J employs approximately 129,000 people around the world and has risen to become the leader in the health care industry. In 1995, J&J began its Live for Life wellness program to improve the well-being of its global workforce.
The program was designed to integrate the functional areas of occupational health, wellness and fitness, EAP, and disability management under one umbrella. As a result of the wellness program, J&J was able to realize the following results:
- Reduce the number of employees who smoked by over two-thirds;
- Reduce the number of employees at risk for nutrition, blood pressure, and obesity;
- Keep J&J’s annual increase in medical and prescription costs at 1%, while 16 other companies experienced an average 4.8% increase in costs;
- Produce annual savings of $565 per employee;
- Increase return on investment from $1.18 to $3.92 for each dollar spent;
The leaders at J&J estimated its wellness program has saved the company a staggering $250 million in health care costs over the last decade.
The Hard Return on Wellness Programs
With or without government incentives, healthier employees cost you less. Doctors Carl Lavie and Richard Milani demonstrated the effectiveness of wellness programs at a single employer with a random sample of 185 employees and their spouses. During the study, participants received exercise training and cardiac rehabilitation through an expert team. At the end of the study, 57% of the participants who were originally classified as high risk were converted to low risk by the end of the six-month program. More importantly, medical claim costs decreased by $1,421 per participant, compared with those from the previous year. In the end, each dollar invested in the intervention program returned $6 in health care savings.
Although wellness programs have not traditionally been viewed as a strategic benefit, much of the newer evidence suggests a completely different narrative. With the grants and tax incentives available under the most recent healthcare legislation, smart businesses are using health management programs to lower their overall healthcare costs.
Alan Wang is the President of UBF and serves as the lead consultant. He has delivered the UBF solution set throughout the world and is highly regarded for his areas of expertise. You can follow him on Twitter @UBFconsulting.