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August 01, 2005
Wellness Programs Seen As Cost-Containment Tools

Employers constantly ask themselves: How do we curb healthcare costs, especially when they've been rising at several times the rate of inflation for the past 5 years?

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For many, the answer has been to pass more of the tab along to workers. But a growing number also want their employees to take greater responsibility for lifestyles that may be contributing to those rising costs, according to USA Today.

For proof, the newspaper cites a recent PricewaterhouseCoopers survey of 150 top executives at large U.S. firms. Eight of 10 said the best option for reducing costs is financial incentives to encourage healthier lifestyles.

Already, about 41 percent of companies have incentives aimed at encouraging healthy behavior, up from 34 percent in 1996, according to the HR consulting firm Hewitt Associates. Those "incentives" might consist of nothing more than passing out health brochures and testing blood pressure at annual health fairs. Then again, they might include such steps as requiring workers to fill out health-risk assessments; some employers use these to steer at-risk workers to special diet, exercise, or disease-management programs.

It becomes a matter of ROI--return on investment. For instance, at Pitney Bowes, based in Stamford, Conn., workers can participate in a "Health Care University," which offers various health programs to earn points toward lowering the amount they pay toward their health insurance. The company has medical clinics at many of its sites, promotes exercise, offers healthy food at lower costs than unhealthy choices in its cafeterias, and has disease-management programs for workers with chronic conditions. It also lowered the amount workers paid toward certain types of prescription drugs, such as those to treat asthma or diabetes. The purpose was to encourage use of drugs that prevent conditions from worsening.

The payoff for the company: Participating workers have healthcare costs that run 10 percent below those of non-participating employees.

"There's a lot employers can do to improve employees' health and therefore influence both healthcare costs and workforce productivity," Pitney Bowes CEO Michael Critelli told USA Today.

Wellness programs have also paid off at American Cast Iron Pipe Co. in Birmingham, Alabama. The company provides medical coverage for 8,800 people, including 2,400 active employees and 1,200 retirees; the rest are dependents.

"We spend approximately $600,000 a year for wellness," Rebecca Kelly, the company's wellness coordinator, told USA Today. "We save almost $1.2 million, when you document savings in productivity, health care costs, and the onset of chronic illness. Moreover, these programs have enhanced individual quality of life at our organization, which means a lot. It really is worth it."

ACIPCO will pay $3,450 per single employee and $8,940 per family this year on medical, dental, and wellness programs. It spends another $266 per employee for an on-site gym and bonuses to workers who keep their blood pressure, cholesterol, and weight within healthy limits.

By comparison, the average cost to employers in the South for an HMO policy last year was $3,479 for a single employee and $9,621 per family, according to an annual survey of employers by the Kaiser Family Foundation, a non-partisan research organization. Those costs generally do not include wellness or fitness programs.

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