Employees enrolled in a wellness-based health plan offered by Priority Health cost 12 percent less to insure over a four-year period than those who had standard health coverage.
That’s the bottom-line finding of an analysis Priority Health conducted of nine mid-sized, self-insured clients who offer the HealthbyChoice plan as an employee coverage option. At least from Priority Health’s perspective, the analysis provides some answers to the lingering questions of whether workplace wellness works and is worth the time and investment on the part of employers.
“What we found is that these wellness programs do drive medical savings over time,” said Marti Lolli, senior vice president for commercial markets at the Grand Rapids-based Priority Health. “It bends the cost trend.”
The Priority Health study used medical claims data from January 2011 to December 2014 for 4,153 employees who were enrolled in a HealthbyChoice policy, which integrates wellness into benefits packages. Priority Health compared the data to the medical claims of 4,106 employees who had coverage that did not integrate wellness.
The difference in the medical claims trend between the two groups equated to $60 per month per employee, or $1.2 million in avoided costs over four years among the nine employers. It’s an amount that adds up for a company with hundreds of employees, Lolli said.
Participating employers with HealthbyChoice policies paid 6 percent less for employee health coverage in terms of their annual premiums.
“It is a big deal for employers when the alternative is you cover less, you pass on the cost to your employees, or in the most drastic cases employers get out of or are reducing (health benefits),” Lolli said.
In West Michigan last year, a family health plan cost an average of $13,776 across all carriers and product lines, according to an annual cost survey from The Employers’ Association. A one-person health plan had an annual premium of $5,004, according to the survey that included responses from 178 employers in the region.
One interesting “nugget” the Priority Health analysis showed employees enrolled in HealthbyChoice experienced a lower rate or slower progression of costly chronic disease such as depression, diabetes and heart disease, Lolli said. That’s because those employees generally were more aware of their health status, are more involved in actively managing their diseases, tended to live a healthier lifestyle, and accessed preventative care more often.
“By decelerating the onset of chronic conditions and disease, people stay healthier longer, miss fewer days of work and ultimately cost their employers less in premiums and claims. This value is passed on to the employee through lower copays and deductibles, improved overall health and a wellness-focused workplace environment,” according to a white paper on the HealthbyChoice study.
Getting employees more engaged in managing their health generated benefits to employers beyond the direct financial savings on medical claims through lower absenteeism and higher productivity, according to Priority Health.
The results of the analysis can provide the 654,000-member Priority Health with in-house data to pitch HealthbyChoice to employers who increasingly want to incorporate wellness into their health benefits. The product accounts for just 5 percent of Priority Health’s middle-market employer groups, Lolli said. Within three years, Priority Health aims to grow that to 10 percent of employers with 51 to 500 employees.
“We haven’t seen huge growth in it,” Lolli said. “For some employers, they won’t look at wellness without that intangible dollar savings.
“Employers have always said, ‘what am I getting out of this?’ and it’s difficult to show an employer the claim that never happens and prove out the savings to the level we’ve been able to do it.”
‘DIFFICULT TO QUANTIFY’
In the 2015 survey from The Employers’ Association, wellness remained a steady growth area. Forty-two percent of respondents said they now offer some form of a workplace wellness program, up from 33 percent in 2010.
Yet even as more employers embrace wellness, skeptics still question the return on investment, said Ryan McCahill, vice president of The McCahill Group in Grand Rapids, a third-party wellness provider.
Quantifying the ROI of wellness remains a difficult proposition, McCahill said.
“They want to be able to see that you’re at least moving the needle, and they want us to show at the end of the day that whatever we did had an impact,” McCahill said. “The toughest part is actually turning that into a dollar amount for ROI. It’s always difficult to be able to say, ‘Because we did this, we avoided a certain cost.’ It’s difficult to quantify.”
Research nationally over the years has shown wide variances on the ROI for wellness. Priority Health’s analysis did not place specific dollar-to-dollar ratio on the ROI for HealthbyChoice but instead focused on the effect of medical claims trends.
Priority Health this year plans to extend the HealthbyChoice product line with new outcomes-based options.
An outcomes-based wellness plan provides employees an award if they meet a health goal. That could be losing weight, lowering their blood pressure, or reducing their cholesterol level. In return, they may receive a financial reward such as lower out-of-pocket costs or paying a smaller share the monthly policy premium.
The new HealthbyChoice options are available for plan years that start July 1, Lolli said.
IMPORTANCE OF CULTURE
The introduction of outcomes-based plans follows the market trend as employers who have been involved in wellness for years now seek to elevate their programs with measurement mechanisms, McCahill said.
Employers are migrating more toward an attitude that they “should” incorporate wellness into their health benefits, “but at the same (they say), ‘we don’t want to just not have a strategy of how we’re spending dollars,’” he said.
“It’s definitely where a lot of employers are going,” McCahill said. “And that’s where it should go. People really need to take care of their health if they’re costing their company more based on ignoring the risk factors.”
An employer’s success with wellness can hinge on corporate culture, McCahill said. Employers need to ensure that wellness initiatives they have fit their culture and are customized to their workforce, he said.
“They have to kind of take whatever they’re given and make it a little bit different to be easy for people to engage in,” McCahill said.