With the impact of health care reform still evolving, employers are taking a fresh look at their strategies for keeping employees healthy and productive.
Optum research shows that despite the still struggling economy, wellness program budgets have largely remained stable. In fact, more than one-fifth of employers we surveyed reported spending more than last year. And roughly 40% anticipate that spending will increase during the next three years.
Additionally, a large majority (87%) report that health management programs are important to the benefits mix at their companies. Program penetration also remains stable: on average, small companies offer about five programs, mid-sized firms offer seven, and large companies offer nine.
While the reasons behind this continued embrace of these programs vary from firm to firm, one driver may be the changing benefits delivery model. According to an Aon Hewitt survey, 64% of employers would use savings from private health exchanges to expand existing health and wellness initiatives.
In some areas, however, employers are retrenching. For example, according to Optum’s survey, while more than half of employers continue to offer health management programs to family members, far fewer do so for retirees. Only 17% offer such programs to retirees, a decline from 25% two years ago.
We found that incentives continue to play a significant role in employee engagement – more than 81% offer incentives, up from 74% two years ago. And the dollar value of incentives is on the rise. Employers report spending an average of $167 per participant per year on incentives, up from $154 a year ago. Employer contributions to health accounts are the most popular type of incentive.
Interestingly, employers said they are moving away from rewarding workers simply for signing up for, or even completing a wellness program. Many companies – 43% – are now rewarding for attaining specific health outcomes, such as losing 10 pounds. Additionally, one-third of companies said they would be interested in rewarding for specific outcomes in the future.
Over half of employers surveyed report that the Affordable Care Act has affected their wellness program incentive strategies as follows:
- 30% increased incentive amounts for tobacco cessation programs
- 23% extended incentives to spouses
- 21% offered higher incentive amounts for programs other than smoking cessation
While employers have traditionally measured program success by claims reduction, a new trend is emerging. For the first time in the five years we have tracked health management programs, companies of all sizes are determining success by health risk reduction.The fact that health risk reduction has become the leading success metric is important because health risks are linked to lost productivity and increased medical costs.
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Jeffrey R. Ungvary