Workplace Wellness Programs a Great Investment
The Economic and Health Benefits of an Employee Wellness Program
Jun 27, 2009
For the estimated 57 percent of large employers who have employee wellness programs, the direct benefits to employers have come in many forms. The Washington Post reports that 80 percent of those who have provided wellness programs believe they have seen improved health for their employees, and 68 percent reported reduced costs. With insurance premiums skyrocketing 119 percent since 1999, companies with wellness programs have seen reduced medical claims because they have given their employees the tools to improve their own health behaviors.
Benefits to Employees
Employees and their families are benefiting directly from the wellness programs, because even though they have had to pay higher insurance premiums, the incentives for participation in wellness programs has all but made up the difference. Filling out health questionnaires, quitting smoking, losing weight, and managing stress are rewarded with monetary bonuses, gift cards, and most importantly—better quality of life. Some employers have even gone so far as to offer onsite gyms, wellness classes, and urgent care centers, which makes accessing the programs easier and more accessible for employees and families.
While some employees feel employers have gone too far and invaded their personal after-hours lives, others are happy to participate. Individual states have various laws regarding where employers must draw the proverbial line, which means the privacy of employees is protected. Some employers require participation as a condition of employment, and have laid off workers who either refused to comply, or who have lied about their participation. However, most employers have found that most employees are eager to participate.
Economic Benefits
To understand why employees would choose to participate in a workplace program that would require them to oftentimes make significant changes to their lifestyles, we must first understand how incentives work. Krugman, et. al (2008) defines an economic incentive as “anything that offers rewards to people who change their behavior.” Therefore, when an employer offers a free vacation and an iPod for losing weight or smoking, those are incentives to motivate employees to participate.
Several large employers keep employees motivated to maintain wellness by offering short term bonuses, including gift cards, cash, and vacations. Long-term “bonuses” included on-site gyms, urgent care centers, and, of course, healthier lifestyles. Saving $3.00 on average for every dollar invested resulted in higher productivity, less sick days taken, increased employee loyalty, and an overall boost in morale. Most employees are very happy with the results, and sometimes the programs raise awareness of severe chronic diseases that have lurked undetected prior to the program’s commencement. In short, these programs have saved lives.
Employee Illness: The Domino Effect
Businesses that provide health insurance to employees must pass along the increasing cost of premiums to the employees, leaving workers with higher deductibles and out-of-pocket expenses. What many employees do not realize is that their individual health habits have a significant impact on the premiums and out-of-pocket expenses for everybody they work with, which in economic terms is called interaction. Interaction means that one person’s choices affect other people’s choices, and vice versa.
To further illustrate this concept, a benefits principal from the consulting firm Mercer, Tracy Watts, reported that 20 percent of the workforce population for a company is responsible for 80 percent of healthcare expenses. These costs are mostly from chronic “lifestyle” conditions, including diabetes, heart problems, asthma, and cancer—diseases that are prevented through health behavior modification.
Wellness program administrators give employees comprehensive health and lifestyle questionnaires, and work to tailor the programs to fit the needs of the employees. So if the majority of the employees are at risk for high cholesterol more than they are at risk for diabetes, program will make high cholesterol a priority in their classes. But the interaction component of this equation is that even those who are very healthy to begin with still must pay higher premiums, because of the lifestyles of their coworkers.
Conclusion
By investing in the health of employees, corporations and employees have been rewarded substantially. Direct monetary gains, incentives, and better health are all rewards that resulted from employee wellness programs, saving corporations and employees millions of dollars nationwide. When employees learn their lifestyle choices affect the company and its employees—as well as the employees’ families—they may be more motivated to change their behaviors so that everybody can save money in the long run.
For more information: Creating a Culture that Values Employee Health
