Last January, Tim Longmeyer came face-to-face with how his lifestyle impacted his overall health and wellness. After taking the Health Risk Assessment for the Commonwealth of Kentucky’s new wellness plan he came out with a score seven years higher than his actual age.
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The “aha” moment that followed the HumanaVitality test set him on a path of proper nutrition, increased activity and wellness education. “I lost 40 pounds, probably increased my life span and improved my overall quality of life,” he says.
Success stories like Longmeyer’s go a long way to encourage employers to purchase new population-driven health plans that zero in on each employee’s specific needs.
“People understand wellness better and are happiest when it works for them,” says Sean Slovenski, vice president of health and productivity solutions at Humana. Studies show that employees are increasingly buying in to these consumer-driven plans to help reduce rapidly increasing health care costs.
Sustained healthy behaviors among employees have a lot to do with improving a company’s bottom line, experts say, and health buzz culture is the necessary first step to a two-year return on investment that typically reaps $3 in savings for every $1 paid in administrative costs.
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Kyle Rolfing, founder and president of RedBrick Health, claims the computation takes into account “soft” numbers—about a third that reflect productivity. But soft numbers don’t always pass muster with CFOs, but Rolfing says employers can expect a two-to-one return in the same two years if productivity is taken out of the equation.
Technology plays a huge role in building claims and prescription data that monetize progress.
Slovenski says participation in integrated programs can result in cost-trend reduction—2% to 3% annually that bounce back to employers, and depending on cost sharing arrangements, to employees. Instead of 12% or 13% hikes, rates may only go up 8%. “This is an indicator of the massive impact lifestyle has on a population.”
Longmeyer believes Kentucky, which started its actuarially-based program in January 2012, is well on its way to positive financial results. Employees who have achieved silver, gold and platinum Vitality status levels are already experiencing reductions in health costs. What’s more, Longmeyer claims consultant, Aon Hewitt, says the Commonwealth would breakeven in its first year.
Nationwide Financial, which has been focused on wellness for its 30,000 associates for several years, is already reaping a return on investment. In 2011, Nationwide’s health care benefit cost decreased for the first time in the company’s history.
“Our benefit cost is 38% lower than other plans with similar designs,” says Nationwide Financial Distributors President John Carter. “Employee out-of-pocket costs are 20% lower than the rest of the industry.”
Nationwide matches $450 annually in premium dollars for an individual employee; $900 for a family. Coverage is correlated to a health savings account (HSA), a wonderful way to contribute tax-deferred dollars with a match toward health care, Carter says.
Also, Nationwide pays its associates close to $300 for completing health risk assessments and following through on requirements for improvement. Employees can log onto Nationwide’s MyHealth portal and choose among tools to identify and address health risk.
“When conditions become chronic, it’s hard to bring people back,” says Carter. Plus, sustained health behaviors during work years can help ease health care cost in retirement.
Tools and Rewards
Wellness plans typically offer health-risk assessments, 24-7 nurse hotlines, health fairs and screenings as well as online, over-the-phone and on-location coaching to help employees establish a baseline health status and determine where and how to invest their time.
Health engagement technology company Redbrick Health’s RedBrick Journeys program uses social tools to enhance personalization and cultivate desired behaviors into simple, small steps geared to each individual. “Identification and stratification effectively create a personal health map in real-time,” says Rolfing. “And reducing behaviors to small choices makes tasks easy to accomplish and interactions fun.”
Employees engaged in integrated programs receive encouragement for participation not only through lower health premiums but also rewards for engagement. Humana Rewards include items such as iTunes gift cards, health equipment like pedometers and heart monitors, movie tickets, hotel stays or small kitchen appliances.
Back in the 1980s, only 1 in 10 employers understood that prevention turned back the dial on more than 70% of disease states, says Slovenski. “This is the first time the economy has tanked and wellness program spending is up.”
For example, Covenant Health ramped up its employee health program in January. Derek Winkle, human resources director, says the earlier incarnation comprised a strong walking program, but education, personalization and the tracking to measure ROI were missing.
“Communicating health information to employees helps them take action, and incentivizing is significant to help them grow blue [HumanaVitality’s level-one status],” says Winkle. Beginning next year, Covenant will tie premium bands to program engagement.
The transition in health-care benefit delivery parallels the shift from defined benefit to defined contribution plans when employers made 401(k)’s an attractive recruitment tool.
Health care, too, requires “consumers to have both financial accountability and the appropriate tools,” Rolfing says.
In population-based health, employers are essentially telling employees, “‘If you put your own time and energy around health and wellness, we will match your investment with dollars, introduce HSAs and reduce premiums,’” says Rolfing.