Employers use wellness plans to ease costs

| Thursday, March 27, 2008

Most employers in the Pennsylvania-Ohio-West Virginia region believe employee wellness programs will keep health care costs under control -- even though just a little more than a third of employees with such plans use them, a new survey found.

Employers believe that so-called "high-deductible health plans" aren't the answer to prevent sky-high annual health care cost increases, according to results from Cowden Associates Inc.'s seventh annual Tri-State Area Employee Benefit Survey, released today. Such plans feature high employee deductibles in exchange for lower premiums.

Survey participants offering high-deductible plans in 2007 as their primary plan jumped from 2.5 percent to nearly 9 percent, but a whopping 84.3 percent of companies not offering the plans say they aren't interested.

"I was somewhat surprised in the percentage of companies that have moved to high-deductible health plans, and with the percentage of companies that really don't want anything to do with those plans," said Vince Wolf, executive vice president in charge of the annual survey at Pittsburgh-based Cowden.

"A lot of people have pitched high-deductible plans as being a silver bullet. ... Given these results, it appears high-deductible plans have a serious image problem," Wolf said.

The results weren't expected by David Lagnese, a principal in the Pittsburgh office of benefits consultant Towers Perrin.

"That high a number of employers not interested in high-deductible plans really surprises me," Lagnese said. "Most of our client base either now offers a high-deductible plan, is in the process of bidding out such a plan or is contemplating implementing one."

Lagnese said many companies offer high-deductible plans so employees can use the savings plan that is often attached as a retirement savings vehicle.

This year's Cowden survey included responses from 274 employers in the region, including for-profits and nonprofits, plus government employers. Company size ranged from 100 or fewer employees, to more than 10,000 workers.

The survey found that employers do view wellness programs as a way to hold down annual cost increases. This year's survey found that 50.3 percent of companies surveyed have wellness programs in place, up from 49 percent one year ago.

About half (53 percent) of those companies that don't have wellness programs indicated they are considering them. Such programs include exercise, smoking cessation, weight management, nutritional programs, stress management and help with substance abuse.

"We saw the increased use of incentives to get employees to use wellness programs, 36 percent, almost triple the number (13 percent) last year," Wolf said.

Incentives employers use to get their workers to exercise, quit smoking, lose weight and better handle stress include gift cards, used by 26 percent of companies using incentives; cash, 22 percent; reduced employee contributions, 21 percent; and other incentives such as vacation days and prize drawings.

Even with incentives and employers widely approving of wellness programs, someone seems to have forgotten to tell employees, as just 37 percent of employees at companies with wellness programs use them.

"We're beginning to see a move toward mandatory wellness programs, where it's either the employee takes part or they will pay more for their health care," Wolf said. "If the mandatory approach is used, that should push up employee participation."

The Cowden survey indicated that the annual health care cost increase averaged 5.7 percent in the three-state area, down from 6.3 percent one year ago. The average cost for individual health care coverage this year was $4,440, and $12,502 for family coverage. Employees on average pay 20.5 percent of individual coverage and 24.9 percent of family coverage.

Additional Information:

Healthy behavior

Encouraging healthy employee behavior is one way employers try to hold down health care costs, Cowden Associates' annual survey found.

• 36 percent of survey participants, up from 13 percent last year, offer incentives to employees to participate.

• 37 percent of employees actually participate.

Incentives used:

• Gift cards, 26 percent

• Cash rewards, 22 percent

• Others such as vacation days, prize drawings, 33 percent

Wellness programs by most frequently offered:

• Exercise, 72 percent

• Smoking cessation, 71 percent

• Weight management, 70 percent

• Nutrition programs, 60 percent

Source: Cowden Associates Inc.

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