The medical cost trend has and is projected to continue to average nearly 10% annually. For a full family plan costing $12,000, that’s a $1,200 annual increase for each covered employee. Multiply that by your total labor force, couple it with the fact that education is a service industry, and throw in Michigan’s structural budget problems (how about that FG increase)…and you have an unsustainable cost equation. There is little dispute that soaring medical costs are a major concern for employers. Often taming these costs means either increasing employee contributions or cutting benefits. But in a profession where attracting the “best and the brightest” is critical to the education of our future workforce, an essential element for the success of our nation in this “flat” world, decimating our benefit programs is not in anyone’s best interest. So what can we do?
Consider this…a survey released last fall by MetLife indicates that 70% of employers who offer wellness programs saw them as a “very important tool for employee retention.” According to Dr.Ronald Leopold, a vice president at MetLife, employees surveyed indicated that medical coverage is the second most important factor affecting their loyalty to their employer after salary/wages. Leopold stated, “Since medical coverage has essentially become “table stakes” for competitive employers, a way to keep health insurance viable and offset future spending for chronic medical conditions can be to invest in targeted wellness and prevention programs.”
Now think about this… studies show that medical costs for a 45-to 54-year-old in a low health risk profile average $2,081 compared to high risk at $5,813. Chronic illnesses, including heart disease, diabetes and obesity, account for three-quarters of health costs…and the typical American diet is responsible for most of the preventable diseases, including 91% of diabetes, 82% of heart disease, and 71% of colon cancer! The CDC reports that American society has become “obesogenic,” characterized by environments that promote increased food intake, non-healthful foods, and physical inactivity. The National Center for Health Statistics reports that almost 2/3 of Americans are overweight, with more than 1/3 identified as clinically obese. According to Dee W. Edington, director of the U-M Health Research Center, overweight and obese people on average incur up to $1,500 more in annual medical bills than people at healthier weights. Yikes!
And how about this…The American Medical Journal reports that in a recent study of six large companies, findings indicate that the cost associated with serious persistent stress was roughly $24 billion, equating to about 8% of the total healthcare expenditures of those companies. Experts estimate the cost of employee stress – just in lost productivity from absenteeism and lower morale – at $300 billion dollars per year. OMG!
And of course there are the alarming statistics showing that U.S. healthcare costs doubled between 1990 and 2001, and are projected to double again by 2012. By the year 2015, our country’s healthcare price tag is estimated to reach $4 trillion. Ouch! But what if costs could be lowered by keeping employees healthier in the first place?
More and more, businesses (the vast majority of large companies and over 70% of all employers) are realizing that spending a few dollars now on preventative care for employees will pay dividends in the long run. “Sickness care costs money,” says Edington, “keep the healthy people healthy. How? Create a culture of health.” Hello school wellness program! Skeptical? Maybe. But a growing bank of research supports that costs go down when employees and employers work in partnership to adopt wellness principles.
If this is true, then why are we in the education industry so reluctant to adopt comprehensive wellness strategies? It certainly is not because we have avoided double digit health cost increases. It is definitely not because we aren’t concerned that 16% of the children in our classrooms are obese (type 2 diabetes is rapidly increasing in this segment of the population). It is more likely because the vast majority of our employees are covered by fully funded insurance, where wellness programs have historically been a cost “add.” While these programs have perhaps netted savings for our carriers, employers have not seen those savings reflected in lower health premium rates. And until recent years, school employees had little incentive to become active participants in controlling organization health care costs, because employers funded 100% of their medical benefits.
But the game-rules have begun to change, and the pace of change is accelerating. As schools opt to self-insure, either individually or cooperatively through a regional pool (such as the Western Michigan Health Insurance Pool), and as MESSA moves towards an experience-rated model (coming your way this summer), wellness starts to matter. Being experience rated means our insurance premium increases will be directly correlated to the cost of our organization’s employee claims. So if we positively impact claims by keeping our workforce healthy, we can partially mitigate the rising cost of healthcare through lower premium increases. For employees in districts who have implemented cost-sharing plans (HSA’s, HRA’s, % of premium, etc.) wellness definitely matters. The reactive approach – where you pay for health problems after they develop and then watch your costs climb, is no longer sustainable. Conversely, the proactive approach – where you invest in the health of your employees, cut costs, and improve productivity - makes good business sense.
Experts vary in the per employee investment amount they recommend for a wellness program, but research suggests the following:
- According to Ron Goetzel, Director, Cornell University Institute for Health and Productivity Studies, an employer annual investment of $100-$150 per employee to participate in an employee wellness program can save companies $300 to $450 for each employee.
- The Wellness Councils of America reported a $24 return for every $1 spent on a company wellness program for small businesses.
- U-M’s Dee Edington recommends $300-$400 per employee if you expect good savings and a positive ROI. His research shows that companies that invest adequate amounts in their wellness programs save at least 3 times their investment in health-related costs
Not a bad return on your investment. So how do you get started? Talk to your current health benefit provider. They are as interested as you are in wellness initiatives, and many have spent significant dollars to enhance transparency and to research and design programs to encourage healthy lifestyles. Get in touch with your local hospitals - they are a great resource. You might also consider hiring a benefit consultant with expertise in this area. Network with local companies and other schools who have implemented successful wellness programs. Get online and Google “Dee Edington.” And to really get you motivated, take a second to calculate your own BMI (Body Mass Index). The formula is: (Weight in Lbs/Height in Inches squared) * 703. According to the Office of the Surgeon General, for adults: 18.5-24.9 healthy weight, 25.0-29.9 overweight, 30.0 and > obese. Where do you fall?
The benefits of employee wellness programs are measured in years, not months. But the evidence supporting these programs is compelling. In the education industry, a wellness culture in the workforce is likely to spill over into the classroom, benefiting the students whose education and well-being we have been entrusted with. A well-designed wellness program is in everyone’s best interest. So what are we waiting for? It’s time to join corporate America and admit that for us too, wellness is a trend whose time has come!