Workplace Wellness Programs Underutilized by Small Employers at their Peril

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Employers in New Jersey expect health insurance costs to rise 10 percent in 2017, far faster than the rate of overall inflation, according to a new survey.

The Federal Reserve Bank of New York’s survey of manufacturing and service-sector employers shows workers once again should brace for higher premiums, deductibles and co-pays as employers try to keep a lid on rising health care costs. But virtually none of the employers will drop the benefit.

What's driving the health care cost increase? At least 25 percent of health care costs incurred by working adults are directly attributable to health risks that can be modified (e.g., diet, exercise, tobacco use, moderate alcohol consumption, etc.).

Gallup estimates that 450 million days of work a year are missed because of health problems, resulting in an estimated cost of $153 billion in lost productivity.

New Jersey's health insurers are slowly transforming the way care is delivered by paying providers for the quality of their care instead of the number of services. And some employers promoting workplace wellness programs and arming employees with all sorts of tools, from discounts for gym memberships to Fitbits.

Generally speaking, a wellness program promotes health awareness and healthy lifestyles as a means to contain the increasing cost of health insurance and to engage employees to reach higher levels of productivity. The goal of a wellness program is to improve the health and wellbeing of employees (and their families).

Effective wellness programs can be as simple as bringing baskets of fresh fruit into break rooms to encourage better eating. They can be as extensive as building fitness facilities onsite or paying for obesity treatments.

Demonstrating a financial return for a wellness program is a challenge, he says.

“While the ROI for a wellness program seems intuitive, many organizations have measured positive tangible results.”

A survey reported by Buck Consultants, LLC analyzed the effectiveness of workplace wellness strategies at 555 firms representing 7 million employees. About half of employers – 49 percent – reported health care cost reductions of 2 to 5 percent per year.

It’s more difficult for smaller employers to measure ROI because they are not allowed to negotiate premiums with health insurance companies in the highly-regulated small group market (2-49 employees).
In a 2012 survey of small employers that have implemented a wellness program, 70% stated that the ROI was either unknown or had not been calculated.
However, according to the Cornell University Institute for Health and Productivity Studies, a company investment of $100 to $150 per employee each year can save employers $300 to $450 for each employee per year.  On the high-end, the Wellness Councils of America reported a $24 return on every one dollar spent on a company wellness program for small business. In a 2010 survey by the Art of Health Promotion, employers that instituted employee health and wellness programs realized a 30% reduction in absentee costs.

While small employers may not utilize wellness programs, they have an incentive to do so.

In New Jersey, employers with 50 to 99 workers pay about $1,000 per worker less for health insurance than employers with two to 19 employees, said John Sarno, president of Employers Association of New Jersey, a trade group that offers healthcare to small business owners through the Affiliated Physicians and Employers Health Plan (APEHP).

"There’s no time and little interest (to manage wellness programs)," Sarno said, "so the 'solution' is the high deductible plan, which works for (healthier) employees and doesn’t work for others."

But to promote wellness among smaller employers, the APEHP has launched a wellness program that passes savings onto participating employers by reducing their premium.

“If an employer elects to participate in the wellness program, they will be rewarded if their employees successfully complete the program,” says Sarno

If 80% of employees enrolled in the health plan  enroll in the wellness program, and 80% of those in the wellness program complete it within the allotted time frame, sponsoring employers will be eligible for a premium award of up to 1% of their paid health care fees.

“Small employers have a choice. Continue to be gouged by rising costs and punish employees with less healthcare or make an effort to bend the cost curve with employee engagement,” says Sarno.

More information on the APEHP Wellness Program: