Public employers who have become experts at trimming their communities’ annual budgets now are working just as hard at trimming their employees’ waistlines. With health care taking an increasing portion of their expenses, local governments are promoting wellness programs to improve employees’ health and control costs.
Today, two-thirds of public employers offer wellness programs, with 40 percent providing stand-alone programs and 25 percent offering wellness initiatives as part of group health plans, according to the 2007 Public Employee Benefits survey from the Brookfield, Wis.-based International Foundation for Employee Benefit Plans (IFEBP). In fact, wellness education is the most popular public sector initiative, followed by health screenings, health risk assessments, health fairs and subsidized flu shots, according to the survey. “With health care costs still rising, it’s one area where we can still have an impact,” says Catherine Reese, senior benefit analyst for Charlotte, N.C.
Charlotte has developed a Wellness Works initiative that teaches the city’s 6,000 employees how to prevent illness and helps them practice healthy lifestyles. “If we prevent illness, we save money,” says Christina Fath, Charlotte wellness administrator. “And, there’s the public health issue. Wellness is the first key piece. If we can get control of health issues, society will benefit, as well.”
As other communities — like Sarasota County, Fla.; and Maricopa County, Ariz. — join Charlotte in trying to change employee behavior, they are experimenting with incentives and methods that will produce the most positive results. The return on investment still may be difficult to calculate, but the communities believe the efforts eventually will pay dividends.
The reason public employers are looking for ways to cut health costs is easy to understand. In 2004 (the most recent data available), national health care expenditures were nearly $1.9 trillion, more than double the $717 billion spent in 1990 and more than seven times the $255 billion spent in 1980, according to the U.S Department of Health and Human Services (HHS) The year-over-year increase in 2004 from 2003 was 6.8 percent — more than twice the inflation rate.
The 2004 figure represents 16 percent of the Gross Domestic Product (GDP), which is three times larger than the industry’s share in 1960. Per capita health care expenses more than doubled from 1990 ($2,821) to 2004 ($6,280). U.S. health care spending is expected to increase at similar levels for the next decade, reaching $4 trillion in 2015, or 20 percent of GDP.
Healthy bodies, healthy budgets
State and local governments have additional burdens because their employees are heavy users of the heath care system. For example, public employers pay almost double the cost for health insurance than do private sector employers, according to a 2005 study of employee benefit programs by the Washington-based Employee Benefit Research Institute. That is partly because teachers and professors, who are higher paid, have better benefits and are more heavily unionized, so employers pick up more of their health care costs. Even when teachers and professors are not included, though, the costs for other subgroups, such as service personnel, remain significantly higher because they include higher risk professions, such as police and fire.
In addition, mounting evidence suggests that the costs of health care are concentrated in a small segment of the community, and that by reducing that segment’s use of the system, overall health care costs could fall significantly. For example, according to HHS, the top 1 percent of users of the health care system are responsible for almost 25 percent of the nation’s total health care costs, while the bottom 50 percent of health care users, who have little or no health care costs, are responsible for less than 5 percent of total health care costs. By attacking the health issues afflicting the heaviest users of the system, health providers believe they can have the greatest effect on reducing health costs.
Charlotte used claims data from its health care providers to focus on the health issues that appear most predominant, says Anna Ellis, the city’s benefits manager. Charlotte’s Wellness Works initiative incorporates education with activities that encourage employees to know their health risks and take action to combat them. The city publishes articles in the employee newsletter about the benefits of exercise, and it stuffs paychecks, sends emails and mails postcards to workers’ homes with messages about everything from exercise tips to suggestions for healthy breakfasts.
On-site screenings for blood pressure, cholesterol and weight management are scheduled at the locations where many public safety and public works employees work. “The key to success is making it easy for employees to take an interest in their own health and welfare,” Fath says. “We go out to the locations at 5:30 or 6 in the morning to be there when employees concentrate.”
In addition, the city has tried to inject a little fun into the wellness mix, by creating a walking competition. Groups of four employees from all ranks of the city’s work force, including department heads and city managers, were challenged to compete with each other to walk the most miles. The group that walked the most after six weeks received a trophy. “We’re hoping that people will continue to keep walking together,” she says, “and we’re seeing some evidence of that.”
Investing and the returns
If education and competition are not enough to inspire employees to take care of themselves, communities are using financial incentives to encourage them. About two-thirds of public employers offer one or more types of incentives for participation in wellness programs, according to the IFEBP study.
Maricopa County has invested in education and aggressive programs that require significant resources. For example, the county has opened a free gym that is open 24 hours every day, and if employees accept additional personal responsibility, their medical care costs will be reduced. In addition, this year the county is initiating a diabetic management program that would pay for a substantial part of their medical costs — if their doctors’ regimens are met. “If they follow their doctor’s instructions, they will receive free medicine and supplies,” says Pat Vancil, the county’s employee health initiatives manager.
The county currently spends $609,000 on diabetes medicine and supplies, and will add another $229,000 for the new program. The savings for the county, Vancil says, will come with the reduced long-term expenses from the various diabetes-related illnesses, which would only be exacerbated if sugar levels are not monitored and prescribed medications not taken. “We want people to take an active role in their health care,” she says. “If people get involved, they take some control of their own well-being.”
Public officials, while acknowledging the overall health benefits of wellness programs, also are looking for evidence that they are worth the implementation cost. A number of studies indicate that wellness programs can help save money.
Surveys cited by the University of Michigan Health Management Research Center found that wellness programs yielded net savings of $3.44 to $13 for every dollar spent on programming. The university also studied the combined effect of several health risks on health care costs. In the study, a no-risk group (those who never smoked, of moderate weight and walked for at least an hour each day) had average adjusted health care costs of $171, while costs for a group with all three risks were 42.6 percent higher.
By attacking some of the key factors in poor health — smoking, obesity and lack of exercise — wellness advocates argue they can improve the lives of their workers as well as reduce how they affect health care costs. The university study noted that wellness programs yielded the greatest benefits when they included health education, an employee assistance program that focuses on drug treatment and mental health care, early detection programs and a fitness program.
Sarasota County, Fla., is incorporating all of those tactics — including employee incentives for health risk assessments, preventive care and healthy living programs — into its wellness program. The county also has begun targeted intervention — including disease management, outreach and education — for high-risk employees. As a result, county health costs fell to 6.95 percent in plan year 2004-2005, versus 13.7 percent nationally, and they did not increase 2005-2006, versus 12.4 percent nationally.
Ultimately, Sarasota County officials want to educate employees on the relationship between their own health habits and the rising cost of health premiums for the entire work group, showing that healthy habits can go a long way to reducing the overall cost. “Making the connection between medical costs, health risks and personal financial security is the key,” says Steve Marcinko, manager of employee benefits and wellness for the county.
But, while reducing the county’s health care costs is one goal, that is not the primary message, Marcinko says. “First and foremost, wellness is about people and improving the quality of life.”
Robert Barkin is a Bethesda, Md.-based freelance writer.