Employers Continue to Invest in Health of Workers

March 9, 2010 (PLANSPONSOR.com) - Most U.S. employers say they are continuing to make investments today that will improve the long-term health and productivity of their workforce, according to a new survey by Hewitt Associates.

Hewitt’s annual health care trends survey of nearly 600 large U.S. companies representing more than 10 million employees shows that employers’ short- and long-term approaches to health care remain consistent with last year. Almost two-thirds (65%) say they currently invest in long-term solutions to improve the overall health and productivity of their workforce, while less than a third (32%) are primarily focused on controlling their annual health care costs.

Just 3% reported currently moving away from directly sponsoring health care, according to a news release.

When asked about their future approach to health care, more companies (80%) plan to focus on improving health and productivity in the next three to five years.

The survey, conducted from December 2009 to January 2010, found that employer concerns regarding rapidly rising health care costs continue to grow. Almost all companies (95%) say managing costs is a top business issue, up slightly from 91% in 2009.

However, Hewitt found most companies are just beginning to consider and implement the types of strategies, tactics, and goals that will create positive and sustainable improvements in employee health and constrain escalating health care costs. Fewer than half (42%) of employers have a formal policy or strategic health care plan in place – consistent with last year.

In addition, while 80% say offering competitive benefits is a key component of their health care strategy, most indicate managing cost as their top business priority – a clear disconnect between HR benefit goals and overall business objectives, the announcement said.

Strategies for Improving Employee Health

Despite a minority of companies having a formal overall health care strategy in place, Hewitt’s annual health care trends survey of nearly 600 large U.S. companies suggests there is a growing recognition among employers that programs and tactics, tailored to an employee’s specific needs, will provide them with the best foundation for future change.

More than half (53%) of companies currently have a disease management/health improvement strategy in place. Of those that don't, 11% plan to implement one in 2010, and another 75% plan to implement one in the next three to five years.

Just over a third (35%) of companies incorporate behavioral health programs (e.g., Employee Assistance Programs and/or targeted networks of mental health specialists) into their strategies, and more than half (58%) are planning to do so over the next three to five years. In addition, while less than one in five (19%) consider absence management as part of their current health and productivity strategy, 56% plan to incorporate it over the next three to five years.

To encourage participation in health care programs, more than a half (58%) of companies offer incentives to employees and a quarter (24%) extend these incentives to spouses and/or family members. The number of companies offering cash incentives for completing a health risk questionnaire almost doubled from last year - from 35% in 2009 to 63% in 2010. In addition, 37% of companies provided cash incentives for participating in health improvement and wellness programs, up from 29% in 2009.

Penalties, such as higher benefit premiums or deductibles, are also emerging as a popular tactic, the survey found. Almost one in five (18%) employers already use penalties, and another 29% say they will use them in the next three to five years. Smoking and failure to participate in disease management programs are the most common behaviors for which penalties are deployed.

Nearly 60% of employers say they take the diversity of their workforce into account when they design and communicate their health plans.

The majority of companies continue to measure the success of their health and productivity programs by how well they manage medical costs (58%) or by how well their programs are being utilized (57%). Just 19% measure employee behavior change, and 15% measure behavioral modification; however, more than half (53%) say they plan to measure employee behavior change and/or behavioral modification in the next three to five years.