Pub. 3 2012 Issue 2

summer 2012 17 I t is no secret that Employee Benefits is one of the most evident factors in rising costs to an employer. For example, here are some recent West Virginia statistics (based on 2011 Gallup Healthways Ranking): • Worst in the nation in 10 of 12 high risk categories. • More than 1 out of 3 West Virginians (35.3%) are now obese. • West Virginia leads the nation in obesity, high blood pressure, high cholesterol, diabetes, depression, heart attacks, and cancer. Over the last ten years we have seen un- precedented medical inflation, and it is leaving many employers asking, “What else can I do to control my costs and increase my employees’ productivity?” Wellness programs have been around for a number of years. As benefit cost pressures continue to grow, it leaves many employers coming to the realiza- tion that the only way to truly address rising costs is to lower the employer and employee risks. Employers and employees are running out of options as the traditional methods used to control cost are only so effective. Employers have shopped the market on a regular basis; shifted cost to employ- ees; decreased benefits; and introduced consumer-driven models and spousal carve-outs, to name a few. These are all areas that reduce the supply side of healthcare. Wellness and Population Management is the only cost contain- ment strategy for reducing the demand side of healthcare. Decreased claims means better utilization; better utiliza- tion means more favorable pricing and market attractiveness to other carriers. There are several different vendors that offer Wellness initiatives and programs for employers, but what is the right choice for you? Wellness for employers needs to be a very personal and customized experi- ence. Not every company has the same risks. Rather than just focusing on employee health cost, should we not start looking at the advantages of im- proving your employees’ risk score? The employer/employee risk score takes into account more than just physical health. The idea is to take into consideration all the “risk” factors and potential ex- posures which could result in increased claims or decrease the overall “health” of the company. It makes sense that companies with Property/Casualty and Workers’ Compensation programs are addressing these risks by implement- ing Return-to-Work or robust safety programs to help reduce and control these costs. Why are we not taking the same approach with our employees to address and improve employee health? The data is staggering. Depending on where you look and find your informa- tion, a well-run Wellness program can provide a return of 3-to-1. In some in- stances, you have companies reporting a 6-to-1 return on investment. A ho- listic approach that manages employee risk vs. personal health would generate higher returns as the Wellness and Risk Management initiatives integrate into your specific work culture. As healthcare reform changes come down the line, one of the most impor- tant pieces of this legislation is the ability of the employer to incentivize an employee, or, to penalize an employee for unhealthy lifestyle choices. In the Life Insurance world it has been done for years. If you are a smoker, you pay more. If you are overweight or mor- bidly obese, you pay more. If you have an unhealthy lifestyle (smoking, smoke- less tobacco, high cholesterol, diabetes) and you are not addressing these issues, you pay more. While increasing the cost of those who do nothing may offset the direct claims costs to insurance Wellness: Is It a Fad or the Answer to Controlling Employee Benefits Costs? By Geoff Christian, Senior Vice President, Commercial Insurance Services  Wellness — continued on page 20