Engagement Programs, Incentives Boost Employee Healthcare, Productivity
Healthcare is on everyone’s mind – from the halls of Congress debating the legality and constitutionality of the Affordable Care Act (ACA), to employers who are making changes to their health insurance plans to meet the new provisions under healthcare reform, to individuals testing the waters of state health insurance exchanges, which were just launched. It will take some time before we know the impact of the ACA (also known as ObamaCare) – both the good and bad – but one thing is for sure: healthcare costs are rising and a tipping point has arrived for both employers and employees to find solutions. One of these solutions is to implement performance-based health plans in which individuals within a company take more responsibility and are accountable for their own health. Employees accomplish this by taking steps to reduce their risk for disease and illnesses and the subsequent need for medical services through participation and engagement in well-designed health promotion and wellness programs.
In fact, according to the 2013/2014 Staying@Work Survey, conducted by Towers Watson, a global professional services company, and the National Business Group on Health, in order for employers to stem the tide of higher healthcare costs they will have to address lifestyle risk issues, improve employee engagement and articulate a strategy to establish a workplace health culture.
This first-of-its-kind study, which surveyed employers around the world, reported the same lifestyle risks as the biggest workforce issues: stress, obesity and lack of physical activity. These risk factors result in increased employee illness, higher medical costs and lost productivity due to unplanned absence and decreased efficiency at work. To combat these issues, companies have to overcome poor employee engagement, says the study. Nearly eight in 10 (77%) employers view a lack of employee engagement as the biggest obstacle to changing behavior. Despite offering a variety of health and productivity programs, employers report that actual program participation is low.
“Companies have long maintained that a healthier workforce is a more productive workforce, and many are considering innovative tactics to improve employee health and well-being,” said Shelly Wolff, senior health care consultant at Towers Watson. “But along with the urgency of health care reform and the coming excise tax, there is a realization that companies need to manage these programs more effectively and encourage employee participation and engagement.”
In fact, beginning in 2014, under the Affordable Care Act, employers will be permitted to charge a 30% healthcare premium differential to employees based on participation or performance in health promotion; smokers can be charged up to a 50% difference. According to the Towers Watson, in 2014, almost four in 10 (36%) U.S. companies will use penalties such as an increase in premiums and deductibles for individuals who do not complete the requirements of health management activities (with a jump to 61% for 2015/2016). Outcome-based incentives that reward or penalize employees based on tobacco use will grow from 54% next year to 71% in 2015/2016. Moreover, rewards or penalties for other biometric outcomes (e.g., health-contingent targets such as BMI, blood pressure or cholesterol level) will dramatically increase from 26% in 2014 to 68% in 2015/2016.
Why the performance-based health approach? Take a look at some facts. Risky behavior and poor health habits are associated with a greater burden of illness and related costs. In one study, for example, employees with three or more risk factors (including smoking, hypertension, hypercholesterolemia and diabetes) had claims costs that were double than those with no risk factors. According to the Centers for Disease Control (CDC), 50%-70% of all claims are preventable and modifiable when changes to lifestyle and behavioral choices are undertaken. Stop smoking, for example, and the healthcare benefits become clear, including lower medical costs.
Those companies that already employ some type of performance-based health program are most effective when employees are truly engaged in their health and wellbeing. These companies have several things in common that make their programs successful: the commitment of senior leadership, a comprehensive strategy, the implementation of employee engagement strategies, managers as role models, frequent communication to employees, reduction of employee stress, easy access to high-quality health care services, and the establishment of metrics to understand health and productivity outcomes.
Caitlin-Morgan provides a full suite of insurance and risk management programs for several key industries. We can help you secure a proper insurance program for your clients as well as assist you in stemming their Workers Compensation losses with return-to-work programs, claims analysis and other key risk management services. Contact us today 877.226.1027