Employee Behaviors Top Health Care Cost Challenge

April 9, 2014 (PLANSPONSOR.com) – Improving the health of employees, as a way of improving health care costs, is becoming a greater priority for companies, says a new report.

“The Willis Health and Productivity Survey Report 2014” from Willis North America, Inc. finds the top three challenges in controlling health care costs identified by survey participants include employees’ health habits (61%), high cost catastrophic cases (47%) and the cost of compliance due to health care reform (34%).

With employee health behaviors topping the list, the authors of the study believe this suggests a continued trend of health and wellness intervention. Organizations also appear to be more engaged in addressing high cost health claims, recognizing the cost challenges they face with catastrophic claims.

In order to address the topic of employees’ health habits, the study finds, organizations are engaged in a growing number of health and wellness strategies. Providing employees with tools and information in order to become better consumers (64%) is the number one strategy organizations are using to address rising health care costs. Sixty percent (60%) of organizations are actively promoting health improvement programs and resources. For 2014, the majority of organizations (53%) are implementing a high deductible health plan in an effort to control rising health care costs. The increase in participants implementing high deductible plans demonstrates a shift by organizations to empower their employees to become more informed health care consumers.

The study also shows less than 10% of survey participants are currently implementing a plan to direct employees to a public or private exchange as a way to offset rising health care costs.

In terms of health improvement programs and resources, 68% of organizations surveyed for the report say they have some type of wellness program in place. This represents an increase of 9% compared to 2013. Of these 68%, 28% have a basic program, 29% have an intermediate program and 11% have a comprehensive program.

The report defines the types of wellness programs as follows:

  • Basic – Program offers a few voluntary activities, such as lunch and learns, health fairs and team challenges. They operate with minimal or no budget.
  • Intermediate – Program offers most components of a basic program but adds features such as health risk assessments, onsite biometric screenings, health coaching or a wellness web portal. Some incentives are available for program participation and a designated wellness budget.
  • Comprehensive – Program offers most components of an intermediate program, plus targeted behavior change interventions and has significant wellness incentives. Offered to spouses, tracks wellness program data year by year, and focuses on evaluating the impact of the wellness program.

Thirty-two percent of organizations surveyed for the report say they do not offer a wellness program. Ten percent of that 32% recognize the importance of programs and plan to implement a wellness program in the future.

Organizations surveyed for the report say the biggest barriers to offering a wellness program are a lack of time and staff to dedicate to it. Budget constraints are also a reason cited for not implementing a wellness program. The report also finds very small organizations believe they have too few employees to offer a wellness program. However, the authors of the report caution that an analysis should be conducted of staffing costs versus the high cost of employee poor health habits and claims.

More than 900 organizations were surveyed for the report between November 1 and November 22, 2013. Participating organizations ranged from fewer than 100 to more than 10,000 employees. Organizations were asked to participate in the survey whether they had a wellness program or not.

The full report can be downloaded here.