Wellness Equals Lower Insurance Premiums
Fundamentally, a group health and dental program is simply a “cost-plus” arrangement. The “cost” is represented by the claims incurred and the “plus” refers to the administration fees charged by insurance carriers, brokers and related third parties to manage, adjudicate and administer the claims.
These fees may vary from 5% to 30% of claims, on average, depending on company size, carrier and funding arrangement. Of course, there are several ways to reduce the admin fees of a benefits program and comparing options for reducing such fees, over the long-term especially, is without question a top priority. However, too often it becomes the only priority.
The admin fees are simply a percentage of claims. Thus, by directing our energy toward claims management we not only reduce the “cost” but also consequently reduce the “plus.” Furthermore, the National Coalition of Health Care confirms that health insurance costs are increasing more than three times that of inflation. This quickly overshadows any savings from admin fee reductions alone.
That being said, reducing claims is certainly not an easy task. However, most successful claims management programs have employee health and wellness education and awareness rooted at their core. According to the U.S. Surgeon General, 75% of all illnesses can be attributed to lifestyle-related causes that can be prevented through education.
Staff education in the areas of healthy living and eating reduces dependence on drugs, reduces absenteeism, increases moral and promotes happier and healthier employees and their families. A survey of Fortune 500 firms found a focus on wellness could lower employee health and disability costs by as much as 31%.
Quick health facts
• 75-90% of visits to primary care physicians are for stress related problems (American Institute of Stress).
• Up to 75% of antibiotic use is ‘of questionable therapeutic value.’ Patients should be told that antibiotics can damage their health and alternatives can be better (British Medical Journal).
• Depression will be the second leading cause of disability in the world by 2020, trailing heart disease (World Health Organization).
• 30% of all cancers can be attributed to an inadequate or unhealthy diet (Breastcancer.org).
• Type 2 diabetes is largely preventable. About nine cases in 10 could be avoided by eating a healthy diet, controlling your weight and exercising more (Harvard School of Public Health).
The 2010 Telus Health Solutions report indicates that the top three claimed therapeutic classes in Canada were: cholesterol (8.7%), blood pressure (7.6%) and depression (7%). All three can be treated with a proper diet and lifestyle.
To understand the specific cost drivers at the individual company level a detailed claims analysis can be very insightful. With this information, employee wellness programs can be tailored accordingly. If stress is, in fact, the leading cost driver in an organization then a stress reduction or ergonomics seminar my go a long way for both reducing claims and increasing employee moral.
For health and wellness programs to be successful they must be embraced by the entire organization and become a part of the corporate culture.
Examples of easy-to-implement corporate wellness initiatives include the following:
• health and wellness lunch and learns;
• biometric screening clinics with registered nurses;
• online health assessments;
• organized group activities and challenges (i.e., walks to raise awareness);
• on-site practitioners;
• on-site wellness fairs; and
• wellness committee to drive new ideas.
Lifestyle changes cannot be expected to occur overnight however a continuous effort to educate a and create awareness amongst employees will eventually pay healthy dividends.
Peter Demangos MBA, CFP, CLU, is the Managing Director at PDF Financial Group Inc. firstname.lastname@example.org