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Benefits Business

Capitalizing on the link between wellness and insurance costs

Agents have something besides premium increases to take to their benefits clients

By Len Strazewski

Are your clients’ workers getting healthier or sicker? Is there any way to tell—short of sticking tongue depressors down their throats?

Health plan renewal rates probably aren’t a good measure. As most agents know, rates are based on more factors than simply the most recent medical claims. And even if many of your employees appear to be healthy and productive, there’s no good way to understand the overall health of the employee group.

However, if your clients want a better way to monitor, measure and improve their employees’ health, a wide range of new wellness and health management programs and incentives is available.

For example, Principal Financial Group is introducing a comprehensive package of wellness and health management tools—including a new way to measure health and the impact of wellness programs.

The Principal Wellness Score, developed by the Prevention Research Center at the University of Iowa, gives individual employees a simple, quantitative way to track their health performance on a year-to-year basis, explains Audrey Vaughn, second vice president of wellness and medical management at the insurer.

Employees who participate in a health risk analysis and on-site wellness screening are assigned a baseline score from 0 to 100. The employees can then enter their score into the company’s online health management portal, My Health Manager, and use medical resources provided by information vendor WebMD to set health goals and track improvement over time. The company also provides one-to-one counseling to help employees set appropriate goals and get them started on nutrition and wellness programs.

While the individual scores are private and not available to employers, the insurer provides an aggregate score to employers, giving the firms simple answers to the big questions: Do I have a healthy workforce? Is it getting better or worse?

“Employers looking for ways to improve the health and productivity of their employees and drive down benefit costs want to see the big picture regarding their employees’ state of wellness,” Vaughn says.

“With the wellness score, employers now have an actual number that they can use to measure the health of their employee population. Using that number, employers can track health improvement year to year and get a better idea of what will happen to their claims cost over time. Quite simply, a higher aggregate wellness score could indicate lower costs in the future.”

The insurer also can use the individual scores to manage personal incentives for improvement of individual employee health, Vaughn says. Many employers now reward healthier employees with cash, prizes, premium reductions or other incentives, she says.

Receptive employers

Health incentives programs shouldn’t be a very tough sell for an informed agent. Large and medium-sized employers are turning to wellness programs and employee incentives—usually premium discounts—for participation in a big way, according to a recent survey conducted by the ERISA Industry Council (ERIC) and the National Association of Manufacturers (NAM) in Washington, D.C., and IncentOne, a vendor based in Lyndhurst, New Jersey.

The organizations polled 242 large employers who are members of ERIC and NAM and found that three-quarters of the companies offered health management programs to their employees and two-thirds of those firms encourage participation with employee incentives.

About 40% of the companies offer premium reductions as an incentive, and about 29% offer cash bonuses to employees who meet health goals.

Among the companies that did not offer health management programs, three of four executives said they probably should—indicating their willingness to talk to their agents and brokers about purchasing stand-alone programs or adding wellness or disease management programs to their existing health plan.

“Clearly, employers are finding that investing in their employees’ health is both the smart thing to do and the right thing to do for both employers and employees,” notes ERIC president Mark Ugoretz. And directing resources toward workers’ health must be balanced with an understanding of how programs can reduce benefit expenditures and improve workers’ productivity.

“It’s a win-win for both employees and employers,” he said about the survey results.

In July, IncentOne—a company that provides health management incentive programs and online incentive management tools—also announced a partnership with the Midwest Business Group on Health (MBGH) in Chicago, one of the nation’s largest coalitions of public and private employers to offer health and wellness incentives to member employers.

According to a survey of its members, 95% of MBGH employers agree that there is a link between an employee’s health and his or her productivity, and a majority of members who identify themselves as industry leaders say they need to provide wellness programs and incentives.

Sue Lewis, a senior vice president of IncentOne, says that while large employers are taking the lead in providing health management incentives, medium-sized and smaller employers are following suit.

“Many of the leading health plan providers and insurers are purchasing these programs and integrating them into many of their health plans that are available for small to medium-sized employers. Larger employers are designing their own programs, choosing from an expanding range of services and design options,” she says.

The MBGH partnership will allow the vendor to package services and technology management tools that the organization views as “best practices” among its experienced members, Lewis says.

The IncentOne portal, which will be available as part of the program, allows employees to manage their wellness programs and incentives online—accumulating points for meeting health goals, including smoking cessation, weight reduction, exercise hours at local fitness centers, attending health fairs and adhering to good lifestyle and medical treatment programs.

Incentives can include directly lowered monthly premiums for employees who meet health goals, cash bonuses, merchandise gift cards and contributions to tax-advantaged Health Savings Accounts that can be used to accumulate funds toward deductibles or retiree medical premiums.

The programs aren’t cheap, but they are becoming more affordable, according to Lewis. Employer costs range from $70 to as high as $200 per employee per year for comprehensive and rich incentive programs.

Few employers agree about how to measure return on these investments, she notes, and the ERIC/NAM survey indicates that only about 14% of employers attempted to measure the return on investments.

“It is pretty clear that these programs are downstream investments. Employers don’t see results immediately,” Lewis says. “However, employers do start to see improvements in their costs and productivity in 24 to 36 months, and employers that have attempted to measure return estimate a range of 2 to 1 to 5 to 1 return on dollars invested in the programs,” she says.

For more information about health management programs and their value to your clients, check out the Disease Management Association of America (www.dmaa.org) and the Wellness Councils of America (www.welcoa.org). *

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