Most employees think of the open enrollment period as a time to prepare for updates and changes to next year’s health insurance benefits, but it’s also the perfect time for smart companies to promote wellness programs. Programs that encourage preventive health measures and general wellness such as smoking cessation, weight loss and improved fitness, can improve employee health and morale, increase individual productivity, and lower overall company health care costs. In fact, research shows that creating a wellness culture offers a competitive edge to today’s leading companies.
While the healthcare industry has seen a major push for preventive care in recent years, due to a clear correlation between preventive care and lower health costs, some healthcare institutions haven’t yet implemented effective programs to promote wellness among their own employees.
A number of U.S. health trends show a clear path to lowering healthcare spending, and these trends can guide employers who wish to cultivate healthier and more productive employees. Some of these trends include the following:
- Heathcare costs related to smoking amount to more than $170 billion annually, with 16.8% of US adults who smoke.1
- The percentage of Americans affected by obesity has more than doubled since 1980.2
- Widespread obesity has a significant impact on US medical spending and is expected to continue its dramatic increase in the future.3
- From 1995 to 2010, the incidence of diabetes increased by 50% or more in 42 states, and by 100% or more in 18 states.4 Diabetes accounted for $245 billion in medical costs in 2012.5
Higher retention and productivity, lower costs
Some of the earliest full-fledged wellness programs evolved in large corporations in fields with strong competition for highly skilled employees. Facebook and Google, for example, deployed wellness programs early on because they understood not only the cost benefits and gains in employee effectiveness, but also because of the positive effect wellness programs have on employee retention. Research by Towers Watson and the National Business Group on Health (NBGH) shows that organizations with highly effective wellness programs report significantly lower voluntary attrition than those whose programs have low effectiveness (9% vs. 15%).6 Highly effective programs are marked by having stronger balance sheets, lower benefits costs and higher workforce effectiveness.7
Most likely contributing to that trend is the fact that employees perceive a strong wellness program as a value-add benefit, and demonstration of the company’s commitment to employees. Workplace health programs are a component of an attractive employee compensation and benefits package-a plan that can be used as a recruitment and retention tool.
On the cost side, offering wellness programs can lower overall healthcare spending across the company, as well as improve productivity by reducing absenteeism and “presenteeism,” or attending work while sick. Replacement costs for ill or injured workers who are absent are reduced, and costs for recruiting and training new workers drop. A higher level of general wellness also accounts for a lower risk of injury on the job and off. What’s more, healthier employees also account for lower insurance costs and worker compensation and disability costs. As noted in Harvard Business Review, Johnson & Johnson estimates that wellness programs have cumulatively saved the company $250 million on healthcare costs over the past decade; from 2002 to 2008, the return was an astounding $2.71 for every dollar spent. 8
Making wellness an open enrollment priority
Open enrollment is the most critical time to connect with employees on any healthcare issue, and in today’s competitive cost and benefit environment, health insurance is just one part of a company’s health hub. To create the kind of successful wellness culture that can lead to a competitive advantage and lower costs, wellness programs should be addressed along with other benefits.
It’s important to develop a comprehensive approach that both updates and educates employees on all wellness offerings, as these may not be top-of-mind during open enrollment. Any small investment of time and budget in employees’ well-being can pay exponential benefits over time.
Focus wellness programs on quickest gains
To target the greatest benefits, target the areas where preventive programs can make the most difference. HR professionals in healthcare can take a cue from the medical professionals in their organizations, who already understand that obesity, diabetes and the use of tobacco are three clear areas that take a significant toll on health and increase healthcare costs.
When targeting these areas, look for options that have proven track records, and consider the value of programs with strong brand recognition that can help reduce communications efforts and expense on your part. Indiana University (IU) Health, for example, enrolled more than 500 employees in the Weight Watchers program in 2014. In the first year alone, the results were significant, with participants collectively shedding 9,000 pounds. Given the direct correlation between weight reduction and reduced medical care, that’s the kind of change that can show bottom-line improvements for employers and employees. 9
Amy Tatum, program and account coordinator for employee wellness at IU, explains that Weight Watchers was a perfect fit for strategic focus on obesity, diabetes and tobacco. “The on- or off-site meetings are a great way to keep employees engaged and excited,” she noted, “and employees’ attendance helps them receive points towards their insurance premium reduction level.”
Open enrollment is a company’s best chance all year to reach employees about health and wellness, so make sure you give your new or existing wellness program a fair shot at success by including it in your open enrollment communications. Addressing key wellness issues during open enrollment can require only a small budgetary commitment, but can pay off significantly all year long.
- Centers for Disease Control and Prevention, “Fast Facts – Smoking & Tobacco Use,” December 11, 2015.
- Centers for Disease Control and Prevention. NCHS Health E-Stat: Prevalence of overweight, obesity, and extreme obesity among adults: United States, 1960-1962 through 2011-2012. September 19, 2014.
- USA Today, “Rising Obesity will Cost U.S. Health Care $344 Billion a Year,” Nanci Hellmich, November 17, 2009.
- Centers for Disease Control and Prevention, “Diagnosed Diabetes Grows at a Dramatic Rate Throughout the United States,” November 15, 2012.
- Centers for Disease Control and Prevention, “National Diabetes Statistics Report,” 2014
- Harvard Business Review, “What’s the Hard Return on Employee Wellness Programs,” Leonard Berry, Ann M. Mirabito, William B. Baun, December 2010.
- National Business Group on Health and Towers Watson, “The Health and Productivity Advantage,” 2010.
- Berry, “What’s the Hard Return on Employee Wellness Programs.”
- Finkelstein EA, Trogdon JG, Cohen JW, Dietz W. Annual medical spending attributable to obesity: payer-and service-specific estimates. Health Affairs, 2009;28(5):822-831.