The Case for Employee Wellness
Employee Wellness first became popular during the economic boom of the late 1980s and early 90s. Programs featured on-Site fitness centers and massages, and were used as recruitment tools for young employees searching for nontraditional work environments. However, when the tech bubble burst, so too did the willingness to spend money on perceived perks, and corporations returned to a more old-school benefit structure focused on managed medical care.
In recent years, as Health Care costs have spiraled out of control, corporations have explored the potential of Employee Wellness as a cost-saving strategy. Companies such as Johnson and Johnson, General Motors, Motorola and Union Pacifi c Railroad have all seen a signifi cant return on investments in employee health (See Case Studies, p.20). Employee Wellness can help reduce the costs associated with:
Health Care premiums – The expense a business pays for medical insurance: According to a 2005 study by Hewitt, the Health Care expense per employee in the United States in 2006 will average $8,046, with corporations absorbing nearly two-thirds of that expense.
Pharmaceutical costs – The price of a prescription plan: According to a 2005 study by Mercer, the average annual prescription costs for sizable corporations grew 11.5 percent, making it nearly a decade straight of double-digit increases in cost.
Short-term disability (STD) – The cost of offering STD insurance to employees: According to a 2004 study by insurance provider Cigna, the average STD claim results in $13,094 in direct disability payments and health care costs. The report also found that 26 percent of claims related to healthcare events were a result of chronic conditions that could likely be mediated through Employee Wellness , and that these cases amount for 56 percent of the STD-related health care costs.
Absenteeism — The cost of missed work: Absenteeism cost corporations $660 per employee in 2004, with nearly one-third of corporations characterizing the trend as a serious concern.
Presenteeism — The cost associated with employees who work at decreased work rate levels: Sixty percent of the total cost of employee illnesses come from presenteeism, according to a 2004 study by the Institute for Health and Productivity Studies at Cornell University.
The evidence is clear that strategically designed Employee Wellness can reduce both direct and indirect Health Care costs. A 2004 review of Employee Wellness revealed that, in total, an investment of $1 by a business in Wellness Programming returned a median cost savings of $2.05 to $4.64.
