Benefits Business

New dimensions in wellness

Employers want more bang for their buck, eye new approaches

By Len Strazewski

It's a well-known fact that fit, healthy employees are more productive, have fewer health-related absences from work, and are less likely to experience the kinds of lifestyle-related conditions that are a major contributor to increased group health insurance costs: obesity, heart disease, Type 2 diabetes.

For all of these reasons, employer-sponsored wellness initiatives have become a key component of corporate strategies to promote employee health and control insurance costs. Despite the proliferation of wellness programs, health management techniques and incentives, however, health care costs continue to increase.

The health and wellness environment is changing rapidly, and employers are demanding more from their investment in wellness and health management. As a result, many employers are starting to rethink their wellness plan designs.

Some employers are building in more rewards, incentives and support to encourage enthusiastic participants. Others are shifting their investments to provide lower premiums for employees who succeed at health and wellness goals—and penalties for those who don't.

According to the 2012 Aon Hewitt Health Care Survey, employers will continue to provide health care benefits, even though the Patient Protection and Affordable Care Act will allow employers to back out of their benefits plans. But they are likely to change the risk and reward design.

The consulting company polled more than 1,800 large and mid-sized employers covering more than 15 million employees. The survey revealed that, despite wellness and cost control efforts, annual employer health care costs have increased 40% over the past six years to an average of $8,000 per employee.

At the same time, employee costs, including out-of-pocket costs and premiums, have increased 82% to an average of $5,000 per year.

Despite the increases, of the employers surveyed, 94% said they plan to continue to offer health care benefits to employees for the next three to five years. However, almost two-thirds of employers intend to move away from the traditional "managed trend" approach to controlling costs and toward requiring insured employees to take a more active role in their own health planning.

"The health care marketplace is becoming increasingly complex. New models of delivery, new approaches to managing health and new compliance requirements are challenging employers to think differently about their role in owning health insurance responsibilities for employees and their dependents," says John Zern, executive vice president and health and benefits practice director for Aon Hewitt.

"Employers are staying in the game, but they are taking bold and assertive steps to achieve more effective results—and they are doing so at a faster pace than we have seen in years."

The survey found that 61% of employers expect to move toward incentive arrangements that would lower premiums for employees who manage their health risks more effectively. Higher premium costs would be shifted to employees who aren't committed to wellness.

"Over the past decade, employers have reserved an increasing portion of their cash compensation for pay-for-performance bonus programs," Zern says. "We see similar programs emerging with health benefits that reward those employees who actively participate to achieve health outcomes."

Motivation and support

For beginners, starting and sticking with a health and fitness program is hard work with little tangible reward up front. Sure, healthy employees feel better, are more productive and may live longer. But the rewards for their efforts are slow in coming, and there's not much to celebrate right away.

"Employers are examining wellness programs from their own perspective—their need to reduce medical costs and improve productivity. But the issues go way beyond employer needs. Obesity and diseases such as Type 2 diabetes and hypertension are a national epidemic," says Shea Vaughn, a Chicago-based corporate trainer in health, wellness and fitness and founder of SheaNetics®, a mind-body wellness and exercise lifestyle program.

KKIt's not just about the health screening numbers, she explains, but also about how participants feel about themselves, their health and the emotional rewards for their success.

Vaughn's own fitness techniques combine elements of Eastern and Western cultures and include workouts from yoga, Pilates, ballet, Tai Chi and martial arts and inspirational exercises drawn from spiritual disciplines.

The combination extends beyond traditional wellness programs, she notes, and beyond what some employers are willing to support, but she believes that employers are becoming more open to comprehensive programs that meet both employer and employee needs.

"Employees have needs that go beyond weight loss and exercise. Are their employers willing to support those needs and the positive lifestyle messages that lead to healthy outcomes? Are they willing to pay for programs that do more than promote exercise and health screenings?" 

To introduce her ideas, Vaughn established the nonprofit Healthy Initiative Foundation, a strategic partnership of corporations, civic leaders and medical and wellness professionals. The goal, she says, is to defeat obesity, Type 2 diabetes, heart disease, certain cancers and other lifestyle diseases in children and adults "with transformational ideas and sustainable programs."

"The 90-Day Breakthrough" is the initiative's signature effort and involves not only health and fitness activities, but also tangible rewards that support the participants' goals.

The pilot program, offered to 40 participants late last year, provides a complimentary wellness package of fitness products, services and memberships. It includes a one-year membership in a fitness facility, a personal fitness evaluation, and counseling on goal setting. Also included are ongoing biometrics monitoring and seminars on exercise, nutrition and wellness; exercise classes that focus on strength, flexibility and weight loss; and a home gym package.

The pilot program culminated with a gala in Chicago in March, celebrating the success of the first participants and the sponsors whom Vaughn expects to become "ambassadors" of her program as she rolls out the initiative nationally later this year and encourages more participation on the part of employers and the health care community.

The Vaughn approach may be too much like a television show for some employers, but rising health care costs and changes in the group health insurance market are likely to be a catalyst for more innovation in wellness plan design. And employers are likely to put more money behind wellness and health management programs, benefits consultants say.

But it most likely won't be all cheers and prizes; there will be a catch. Employees who participate in the programs will be rewarded, but those who don't may pay a higher price for their group health coverage.

The author

Len Strazewski is a Chicago-based writer, editor and educator specializing in marketing, management and technology topics. In addition to contributing to Rough Notes, he has written on insurance for Business Insurance, Risk & Insurance, the Chicago Tribune and Human Resource Executive, among other publications.