Employers shift focus to wellness programs to reduce healthcare costs and
CHICAGO, April 21 /PRNewswire-FirstCall/ -- While the median households in the United States earn approximately $48,000 annually(1), the amount these families spend on employer-sponsored health care per year continues to edge closer to one month's salary. Aon Consulting's 2008 Benefits and Talent Survey revealed that the median annual contribution for family healthcare coverage is $3,120, which is a 15 percent increase from 2007, and 22 percent increase from 2006 (see chart page 4). Meanwhile, organizations have experienced approximately 10 percent annual healthcare cost increases since 2006.
Employers are beginning to move beyond this traditional cost shifting to cost control by focusing on improving the health and productivity of their employees. The survey of more than 1,100 U.S.-based organizations found that 64 percent of employers now have a benefits strategy that promotes the importance of health and productivity to their employees.
"By providing their workforce the tools and resources to improve their health, employers are making a commitment to invest in their employees, leading to a more productive workforce," said John Zern, Aon Consulting's U.S. Health & Benefits practice director. "This is a change from the traditional perspective of cutting medical program costs without regard to long-term impact or worker productivity."
The most common way organizations today are promoting health and
productivity is through wellness programs, which are primarily designed to
prevent the development of chronic conditions (i.e., diabetes and heart
disease). According to the survey, the amount of employers implementing
specific wellness programs has increased three-fold from 2007 to 2008. For
example, about 46 percent of employers are implementing smoking cessation
programs this year, up from 14 percent of employers in 2007. Following are
the top five wellness programs employers are implementing in 2008:
-- Promotion of exercise/physical activity -- 68 percent (19 percent
-- Disease management programs -- 60 percent (18 percent in 2007)
-- Health risk appraisals -- 48 percent (14 percent in 2007)
-- Biometric screening -- 47 percent (12 percent in 2007)
-- Telephonic health care coaching -- 46 percent (14 percent in 2007)
"These figures show that employers now recognize the link between employee lifestyle behaviors and medical spend," said Tom Lerche, Aon Consulting's Health Care practice leader. "Chronic conditions, for example, are influenced by smoking, obesity, poor nutrition and leading a sedentary lifestyle, and account for more than 60 percent of healthcare costs. Through stress management, weight management and smoking cessation programs, employers can focus on the root causes of these chronic conditions to reduce health risk factors among employees and dependents, which lead to a lower rate of increase in healthcare costs."
The expected worker shortage has also impacted the increase in wellness programs among employers. "In an era when retiring baby boomers are expected to contribute to the skilled worker shortages in the next 10 years, employers are embracing wellness and health promotion programs today to reduce absenteeism," Lerche said. "Some employers value wellness programs as an effective recruitment tool and others believe the programs can reduce disability costs."
Additionally, the availability of wellness programs has increased. More employers are buying these services directly and more carriers are offering wellness initiatives to organizations, according to Lerche.
The survey also shows that employers have added incentives to motivate employees to participate in wellness programs, with 23 percent offering incentives to take health risk appraisals. Twenty percent of employers are providing incentives to employees who complete health risk programs such as tobacco cessation or weight management programs. The type of incentives varies, but about 22 percent of employers offer non-monetary awards such as gift cards and merchandise. Only 10 percent of organizations offer employees a premium contribution reduction.
Tracking and Benchmarking
While employers understand the importance of offering wellness programs
and motivating employees to improve their health, the majority of employers
do not have a process in place to measure program impact or track return on
investment. For example, those organizations do not have a data tracking
-- Overweight employees -- 92 percent of employers
-- Tobacco users -- 87 percent of employers
-- Biometric data as a result of employee screenings -- 79 percent of
-- Participation in its corporate disease management program --
69 percent of employers
"Tracking and benchmarking employee metrics must go hand in hand with implementing wellness programs and must be measured to determine the return on investment and changes in productivity," Lerche said.
According to Aon Consulting, tracking and benchmarking will enable an
-- Evaluate benefit plan performance including health management vendor
-- Identify main reasons for medical costs and implement effective
value-based strategies for new programs.
-- Determine return on investment and the effectiveness of wellness
programs in improving health status and lowering service utilization.
"Effectively communicating data with the workforce also helps establish
a benefits partnership between the employer and employee, as they work
together to influence outcomes and reduce healthcare costs. Employees will
be much more appreciative and engaged if they are presented with data
tracked over time that explains why benefit changes are being made," Lerche
(1) $48,201 according to the U.S. Census Bureau Income, Poverty, and
Health Insurance Coverage in the United States: 2006
Aon Corporation (NYSE: AOC) is the leading global provider of risk management services, insurance and reinsurance brokerage, human capital and management consulting. Through its 36,000 colleagues worldwide, Aon readily delivers distinctive client value via innovative and effective risk management and workforce productivity solutions. Our industry-leading global resources, technical expertise and industry knowledge are delivered locally through more than 500 offices in more than 120 countries. Aon was named the world's "best broker" by Euromoney magazine's 2008 Insurance Survey. Aon also was ranked by A.M. Best as the number one global insurance brokerage in 2007 based on brokerage revenues, and voted best insurance intermediary, best reinsurance intermediary, and best employee benefits consulting firm in 2007 by the readers of Business Insurance. For more information on Aon, log onto http://www.aon.com.
About Aon Consulting
Aon Consulting Worldwide (http://www.aon.com/hcc) is among the top
global human capital consulting firms, with 2007 revenues of $1.352 billion
and 6,335 professionals in 117 offices worldwide. Aon Consulting is shaping
the workplace of the future through benefits, talent management and rewards
strategies and solutions. Aon Consulting was named the best employee
benefit consulting firm by the readers of Business Insurance magazine in
2006 and 2007.
2008 Median Monthly Medical Costs
Source: Aon Consulting's 2008 Benefits and Talent Survey
Monthly Medical Costs
Employee - Employer -
Plan Median Monthly Median Monthly *Total Monthly
Coverage Contribution Contribution* Cost*
2006 2007 2008 2006 2007 2008 2006 2007 2008
Employee only $50 $60 $66 $291 $303 $326 $341 $363 $392
Employee +1 $137 $148 $160 $553 $550 $628 $690 $698 $788
+ spouse $147 $153 $189 $555 $573 $633 $702 $726 $822
+ child $134 $145 $160 $552 $540 $574 $686 $685 $734
+ children $166 $171 $186 $697 $669 $641 $863 $840 $827
Family $203 $222 $260 $777 $787 $863 $908 $1009 $1123
*Total monthly cost was determined by dividing the COBRA amounts by 102%.
Monthly employer contributions were derived by subtracting the monthly
employee contribution from the total monthly costs.
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|SOURCE Aon Corporation|
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