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Businesses in the United States are nevertheless concerned about high healthcare expenditures. Today, the average annual health insurance premium for an individual employee is over $5,000. And for a family, it is around $14,000. Average family insurance premiums have climbed by 114% since 2000. NHE grew 3.5% to $829.5 billion in last 2 years. By 2020, it is predicted that the nation’s total healthcare expenditures would equal 20% of GDP.
The cost increase has largely been passed down to the workforce. Workers’ premium contributions have increased by 47% since 2005. As of 2010, the typical employee was financially responsible for 30% (or $3,997/year) of their family’s insurance premiums and 19% ($899/year) of their individual insurance premiums. Additionally, co-pays at the doctor’s office and deductibles for hospital services are rising for employees. This tendency has made it very important for businesses and their workforces to reduce healthcare expenses as much as possible.
HOW TO REDUCE MEDICAL COSTS
Today, more businesses are launching employee wellness programs as a means of reducing excessive healthcare expenses as opposed to merely continuing to decrease benefits or pass costs along to workers. A corporate wellness programme is currently offer by nearly 4 out of 10 firms (or 37%), up from just 27% in 2005, according to a MetLife report. The percentage increases to 6 in 10 (or 61%) among major firms (those with 500 or more employees), up from 46% in 2005. Their top aims are to save healthcare expenses, keep and recruit qualified candidates, lower absenteeism, and raise worker productivity.
Profit from Investment (ROI)
Researchers from Harvard University discovered that medical costs decrease by about $3.27 for every dollar spent on employee wellness programs and absenteeism costs decrease by about $2.73 for every dollar invested in a recent meta-analysis of the literature on costs and savings linked to wellness programmes.
Companies that don’t offer comprehensive wellness programmes usually have a negative ROI. An occasional health lesson, a yearly health fair, or the provision of printed health information are usually insufficient to reduce rising healthcare costs. To show wellness programme savings, a company must offer a well-managed programme with comprehensive treatments.
A thorough wellness programme is effective.
The majority of businesses that are serious about controlling costs and saving money understand the need of having a complete programme that contains:
- For the organization’s wellness coordinator, there is training and a wealth of tools.
- An yearly health and lifestyle assessment that includes biometric screenings (such as blood tests, blood pressure checks, and BMI measurements) will allow you to pinpoint needs and monitor progress for both individual employees and the business as a whole.
- assisting people in learning about their risks and changing their lifestyles as necessary.
- Employees are encouraged to take part in suitable health improvement programmes, visit their doctor for follow-up care if necessary, try a self-help or study programme, utilise online health resources and interventions, and even hire a health coach to encourage and support them in making changes.
- Motivational exercises and rewards, such as granting a portion of the insurance premium savings to every participant who meets minimum participation requirements.
- Regular health communications that inspire (monthly newsletter, health challenges, and reminders).
- Health monitoring programme for physical activity, health practises, and occasions connected to incentives, awards, and recognition.
- Analysis of programme outcomes and evaluation.
WHAT AMOUNT SHOULD BE BUDGETED?
How much money should you set aside for a successful, all-encompassing staff health programme? That is a worthwhile query that should receive attention from multiple sources:
Dee Edington, PhD, from the University of Michigan. At the yearly University of Michigan Corporate Health Management conference, Dee Edington, a well-known specialist on ROI for employee wellness programs, was posed this topic. If you anticipate significant cost reductions and a favourable return on investment, he said, “About $300-$400 per employee.” In addition, he said, “Medical treatment is expensive, but wellness care is free,” and he provided evidence to support this claim by demonstrating how businesses that effectively invest in their wellness programmes save at least three times that amount on medical expenses.
Dr. Ron Goetzel, Director, Cornell University Institute for Health and Productivity Studies. For a projected $450 yearly ROI per employee, Dr. Goetzel advises spending $150 annually each employee.
The Wellness Council of America suggests spending between $100 and $150 per employee per year on wellness promotion. If rewards and health coaching are wanting, add an additional $300 per employee each year.
The Wellness Council of America states that you won’t see a return on your investment if you merely spend $45 per employee yearly. Actually, it costs anything between $100 and $400 per employee per year to administer a successful employee health programme. An internal employee wellness programs can be very effective, simple to offer, and reasonably priced with training, careful planning, and assistance from outside vendors. In addition to your health insurance premium costs, the average yearly cost of a wellness programme for clients of Wellsource is $160 per person.
- $10 for online wellness tools and health risk assessment services
- Biometric screening costs $50. (lab work)
- $50 to $120 for phone tutoring
- $50 to $100 as an incentive in addition to a health insurance discount
But keep in mind that the bigger the results – and savings – you can expect, the more you invest.
The following factors affect the real costs:
- Will a contract vendor or in-house staff operate the programme, which is typically far less expensive?
- What level of follow-up interventions are plan?
- Will you incorporate health coaching, which has been prove to be quite successful in helping people change?
- What types of health exams will be perform?
- What kinds of rewards will be given?
- How will you split the price?
The firm is not required to cover the entire cost of the wellness programme. The employee can frequently contribute to the cost of interventions or programmes, such as paying half of the enrollment fee for a weight reduction class, whether in advance or after receiving proof of regular attendance. The employer nevertheless bears the majority of the program’s costs. Additionally, some insurance companies will pay a percentage of the costs associated with wellness programmes and other wellness screenings.
The Affordable Care Act, which took effect on March 23, 2010, offers small enterprises (those with fewer than 100 employees) access to wellness subsidies. Once Congress approves $200 million in grant funding, the HHS secretary will distribute the prizes. Employers must have a comprehensive wellness programme to get a grant. Employers cannot have had a workplace wellness programme in place before the date of enactment.
- Initiatives to raise knowledge about health (such as health education, preventive screenings, and health risk assessments) are including.
- Tries to increase employee engagement (including mechanisms to encourage employee participation)
- Offers programmes to alter unhealthy habits and lifestyle selections (such as counselling, seminars, online courses, and self-help resources), and
- Creates a general atmosphere of support (including workplace policies to encourage healthy lifestyles, healthy eating, increased physical activity, and improved mental health)
Employer insurance benefit costs for employees of state and municipal governments were $4.80 per hour in September 2010. Health insurance accounted for the majority of insurance expenses, costing an average of $4.65 per hour per employee, or about $10,000 annually. The annual growth in healthcare expenditures is predicted to be between 6% and 12% if you do nothing. As a result, budget an extra $1,000 in annual costs per employee, which is unquestionably higher than the price of an effective wellness programme.
There are at least two concerns for the typical employee related to rising healthcare costs, declining output, and rising absenteeism. These health concerns might add up to $9,000 in extra annual costs for the typical firm. This demonstrates the genuine potential for savings from a employee wellness programs that is well-design and can reduce these risks by half or even completely.
Improved productivity (the average economic impact of health hazards on productivity is $2,000 per year per person), fewer worker’s compensation claims, lower employee turnover (studies suggest a 20–30% decrease), and higher employee morale are all advantages of an efficient wellness programme. Additionally, workers tend to be happier, have a lower risk of serious illness, and live longer. (Each employee has a potential gain in longevity of 4.5 years.)
EVERY ORGANIZATION HAS A OPTION
You can decide to handle healthcare in a reactive manner, paying for health issues as they arise and watching your healthcare bills rise. Alternately, you might adopt a proactive strategy in which you make investments in your employees’ well-being, reduce healthcare spending, and boost output. The proactive wellness strategy is undoubtedly beneficial for both employers and employees from a commercial perspective.
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