Gary Insurance Group

Tackling the obesity epidemic: scary stats employers should know

By McLean Robbins 

October 30, 2007

More than two-thirds of Americans are overweight or obese, and childhood obesity has tripled in the past two decades, according to Dr. James Rippe, cardiologist and founder of the Rippe Lifestyle Institute. He shared insights about the economic and health consequences of obesity in the workplace during a standing-room only pre-conference session at last week's summit on health, productivity and absence management, sponsored by the National Business Group on Health and the Integrated Benefits Institute.

He also showed employers why they should deal as aggressively with obesity as they do with any other disease.

Why should employers care? It's the 80:20 rule— 20% of the workforce causes 80% of the costs. On average, overweight people have 13.8% higher annual health care costs than those at a healthy weight. That number more than doubles to 37.7% for obese individuals.

But since "obesity is not a reimbursable diagnosis," Rippe explains, it tends to be significantly underreported as a medical condition. Doctors aren't trained to tell patients that their disease is being fat, so they cite specific diseases that often result from excess weight, such as diabetes, heart disease and muscular-skeletal pain, Rippe explains.

In fact, obesity is listed only on 0.3% of claims submitted by physicians, but it causes 40% to 70% of hypertension cases, over 50% of blood lipid problems, over 80% of Type 2 diabetes and almost 100% of metabolic syndrome cases. Over the past decade, the prevalence of obesity has grown by more than 40%, according to Rippe.

People spend more waking hours each day in the workplace than they do elsewhere, Rippe says, and thus the workplace seems a logical place to manage the "obesity epidemic."

Rippe, who partnered with Weight Watchers to write the book "Weight Loss that Lasts," suggests that implementing a weight management program in the workplace, whether outsourced or done internally, can have a significant and nearly immediate impact on productivity, health care costs and absenteeism.

Those interested finding ROI on weight management programs or determining the best commercial program for their business can look to the following studies for more information:

• Annals of Internal Medicine, "Systematic Review: An Evaluation of Major Commercial Weight Loss Programs in the United States"
• Weight Watchers Research Compendium

New study ties lower health costs to employee health, not network procurement

by Bruce Shutan

Why do some employers pay more for health benefits than others?

The 2007 SHPS Health Practices Study revealed that employers with the lowest comparative health costs have strong clinical programs to improve employee health outcomes and manage clinical risk. By contrast, employers who rely on traditional health benefit procurement strategies have the highest comparative health costs.

SHPS researchers examined the experiences of 115 large and midsize companies with at least 1,000 benefit-eligible employees — a survey sample representing a total of 3.7 million members.

"The study reveals that the use or absence of a few core best practices in employee health management could explain cost differences of up to 50% between two otherwise comparable employers," observes Chris Ryan, chief strategy officer for SHPS, a leading provider of health advocacy and health benefits solutions. "In essence, every self-insured employer is managing its own health plan. The employers who succeed at managing health costs do a better job of managing employee health."

Re-evaluating procurement strategies

Ryan was also surprised to find that certain common benefit practices, including effective enrollment and eligibility and health communications, had a strong correlation to lower health costs.

While poor eligibility controls alone can explain major cost differences among firms, he believes that effective administrative practices also facilitate better health analytics and employee awareness. "It's hard to implement health programs that change employee behavior on a foundation of sloppy administrative practices." Ryan noted.

But some common health practices were also associated with higher costs. "We discovered a troubling pattern whereby employers use financial models and network procurement strategies to manage health costs instead of addressing the underlying clinical risks driving the demand for health care," says Rishabh Mehrotra, SHPS' president and CEO. "The implications of these findings are significant. It explains why so many employers churn between health plans and cut coverage, but still can't get relief from long-term health cost trends."

"Employers must re-evaluate their health and procurement strategies, while the industry — health and benefit vendors, brokers and consultants — should consider repositioning traditional health and benefit solutions to focus on employee health," he adds.

What works and what doesn't

Among the five key findings highlighted in the 28-page report:

1) Employers that focus on targeted, clinically based care management programs customized to the needs of their covered population reported an average of 18.2 % lower health care costs, or $1,400 per benefit-eligible employee in annual spending over an unmanaged trend. This includes a comprehensive mix of case management for catastrophic illness, disease management for chronic illness, biometric testing, employee assistance programs and the use on-site physicians.

2) Cash incentives that reward desirable health behaviors strongly correlated to lower health care costs by an average of 15.1%, while consumer-directed health plans, pay-for-performance networks and premium cost-sharing had an insignificant impact. In addition, the study showed that employers using deductibles and co-pay levels as their primary strategy to drive employee health behaviors actually faced 29% higher costs on average.

3) Excellence in benefits administration, including centralized recordkeeping and accurate eligibility management, along with targeted communication, lowered health care costs by 12.7% per benefit-eligible employee when integrated with the delivery of health programs.

4) Wellness promotion and education increased health care costs by 16.9% or $1,300 per benefit-eligible employee when Web-based health portals and telephonic coaching for lifestyle management were used as the primary strategy and substitute for a comprehensive care-management program.

5) Five practices were found to substantially increase health care costs: over-relying on networks to manage cost and quality, leveraging multiple plan design options, using deductibles and co-pays to drive health behavior, using health care benefits to become an "employer of choice" and experiencing undesirable turnover. The presence of just one such practice correlated to an average 21% increase, while all five practices doubled those expenses.

Health and productivity advantages

In his forward to the study, Mehrotra suggests that objective health analytics be used in conjunction with administrative, clinical and financial programs to create a culture that promotes behavioral change and allows covered populations to improve their health.

"The results of our study show that employers already navigating this path have reaped an enormous competitive advantage through improved health and productivity at lower cost," he writes. "In companies where employee health is valued, the employer and employee both benefit."

The 2007 SHPS Health Practices Study can be downloaded in its entirety online at www.shps.com/2007healthstudy.

Employees worried over health care costs

Troubled by escalating health care costs, more Americans are making the link between good heath and lower medical bills, according to a new survey from HR consulting firm Watson Wyatt.

For instance, 61% of workers realized that staying healthy could reduce their deductibles and co-payments, and about 60% took steps to improve their health.

Workers are embracing wellness out of a fear of being unable to afford health care during retirement, the survey shows. Fifty-one percent of U.S. workers are worried about rising medical costs affecting their retirement lifestyle, while 68% think their employers would increase health insurance premiums in the next two years.

Meanwhile, 12% of workers scaled back on contributing to their retirement saving plans, citing current medical costs as the reason; another 18% did the same with other savings accounts, the survey indicates. Overall, 25% of workers feel stressed out over rising health care costs.

“Employees have been getting the message many employers have been trying to send, that improving one’s health pays dividends now and in the future,” says Kathryn Yates, global director of Watson Wyatt’s communication practice. “But the lines of communication go both ways. By listening to their workforce and tailoring programs to meet employees’ needs, employers will be better able to help employees tackle smoking, obesity and other health management issues.”

Health risk assessments reduce medical bills

Wellness programs and health risk assessments can reduce individual health care costs by hundreds of dollars per year, according to a new study from Thomson Medstat, which does consulting and auditing for employers.

Medical costs were between $101 and $648 less per year for Medicare recipients who participated in an employer-sponsored wellness program and used a health risk assessment, Thomson Medstat finds.

Retirees who used a health risk assessment and one other wellness program element, such as telephone-based lifestyle management counseling or on-site medical screenings, yielded an average annual savings of $442. Using a health risk assessment with two additional elements resulted in annual savings of $569, Thomson Medstat reports. Conversely, using such services without a health risk assessment yielded savings of just $30 per year.

“Strategic health care interventions can improve senior citizens’ health and reduce health care costs,” says Ron Ozminkowski, director of health and productivity research at Thomson Medstat.

The study, published in the November issue of the Journal of Occupational and Environmental Medicine, examined the health care costs associated with wellness programs offered to 59,324 retirees and their aged dependants. Researchers assessed the participants’ use of health care services from 1996 through 2002.