By Daniel Wolfson

More and more employers are starting to make the connection between the costs associated with a health benefits plan and the underlying health of their employees.

In the benefits and insurance world, we (as insurance advisors) are tasked with delivering renewals.  For some clients, renewals can be challenging as they can face double digit increases in their health and dental benefits.  As advisors we can recommend tactical claims management strategies such as changing a coinsurance variable (from 100 per cent to 80 per cent), increasing deductibles or changing the entitlements.  While important, these tactical changes impact the plan member’s entitlement for benefits, which can change the employee’s claim spending behaviour—but do not really address their underlying health issues, which are the cost drivers.

The cost driver in a benefits plan is not the premium; the premium is the symptom.  The cause of the problem are employees claims (drug, medical, dental). Drug claims in general are symptomatic of disease; more drug claims reflect more employees dealing with health related issues.  While some issues are temporary or acute, others are chronic.  Typically chronic health conditions such as diabetes, depression and heart disease will get worse over time and are already considered epidemics in many circles.

Tactically, benefits consultants can address the plan entitlements to affect change in costs.  More employers are looking for strategic long term cost containment strategies to positively address employee health and reduce their long term costs.

I approached Antonio Zivanovic, of COS (Corporate Occupational Solutions, www.thinkcos.com) a leading wellness provider in Vancouver to discuss how employers can strategically focus on claims management strategies that will over the long term reduce their health care costs.  Elements of our conversation can be found below:

Q: I find there is a lot of misconception in the employer market place about promoting fitness and wellness in the market place.  What is the difference between a perks-based fitness program and a corporate wellness program?
A: A perk-based program has minimal employee and employer accountability.  Employees submit receipts they believe are connected with fitness.  As a result of reduced employee accountability, a perks-based fitness program does not often meet objectives of the company.  It lacks measurable results-oriented components.  A program like this loosely serves the needs of individuals it was designed to serve.

Strong wellness programs should include elements that can be objectively measured to produce results. First develop program objectives, an evaluation plan, then collect data, analyze and compare this info and other important statistics to the health and drug costs (that can be provided by the group insurer.

How do employers initiate a wellness program?
I’m a big fan of running pilot projects.  A great first step is to speak with their benefits consultant and to determine if the wellness provider and broker can work together and share empirical data (from the insurer).  Start small with a clear budget in mind.  Track and measure results and then expand the offering to meet the needs of the employees.

What are the components of a successful wellness program?
A successful wellness program should consist of employee education sessions, Biometric appraisals, ergonomic assessments, online elements and various initiatives with a focus on health promotion.  The characteristics of a solid program will reduce risk to the client and increase productivity.  The program should be delivered on-site and be complemented by on line services. At the end of the program it should be evaluated to determine if it met the objectives that were initially laid out.

I understand the need for a wellness program in a large employer with thousands of employees. Why would a small to medium size employer start a wellness program?
A wellness program will reduce risk, increase profitability and productivity, as well as improve recruitment and retention of top candidates.  It helps a business differentiate itself as a top employer.  A wellness program will provide a strategic long term, cost containment strategy, while affording employees to take an active part in managing their own health care issues.  As they become more aware of those issues, they can take corrective action to minimize drug related costs and improve their health.

What risk is an employer minimizing by sponsoring a wellness program?
Very simply, spiralling health care costs.  Many employers are faced with double digit increases each year. If health care related costs increase 15 per cent each year, the employers cost will double in about five years.  Unless something is done to address employee health, an employer will be faced with an untenable situation.

What prevents an employer from initiating a wellness program?
Most companies fear that they are going to throw money haphazardly at a program or launch a wellness program that gets everyone excited only to have it wither a few months later.  The majority of programs we see today lack cohesive objectives which are the foundation for success.  HR and management frequently perceive they will have an increased responsibility and workload.  A great wellness program will actually decrease the workload on HR and management by making it simple and streamlining efforts.

What is the benefit of a biometric assessment?

What is the benefit of an ergonomic assessment?
Many employees often see a highly trained and skilled paramedical practitioner (such as a massage therapist) to treat their symptom (back pain).  The treating therapist often does a great job at treating the symptoms. However, more often than not the root cause of upper back pain and strain of a sedentary office worker can be related to a functional limitation or faulty ergonomic set up.  An ergonomic assessment can help address the root causes and reduce long term paramedical costs by removing these challenges for an employer. I think it’s safe to say that most of us have experienced discomfort from working at the computer for extended periods of time”.

Where are wellness programs trending?
Programs are trending away from giving an employee an allowance.  Wise employers are moving towards educating their employees around the value of their benefits program and compensation package.  A wellness program can help employees understand the cost pressures associated with their health status.  It is imperative to link objective assessments and biometric appraisals to certain cash incentives.  This will help employees become aware of their current health status and take ideally take responsibility for their lifestyle choices moving forward”.

I firmly believe that by implementing a wellness program even small- to mid-size employers can help stem the tide of double digit renewal increases.  A wellness program can provide a long term strategic cost containment tool in our benefits toolkit.

Dan Wolfson, Associate Group Benefits, BFP Bajus Financial Partners, is a benefits specialist living in Vancouver, BC, part-time writer and full-time father of four active boys.  He provides benefits and insurance expertise to a number of leading companies in BC.