New Health Care Law Wellness And Prevention Programs

Embedded in The Patient Protection and Affordable Care Act within a section addressing the quality of care and requiring health care plans to submit annual reports to the Secretary, is a paragraph dealing with employee wellness and prevent programs. The paragraph specifies and enumerates 8 areas of concerns or life style factors:

1 Smoking cessation.                 2 Weight management.

3 Stress management.               4 Physical fitness.

5 Nutrition.                                6 Heart disease prevention.

7 Healthy lifestyle support.          8 Diabetes prevention.

It should come as no surprise that significant attention within the Act is paid to wellness factors and attempting to improve the level of employee wellness and the prevention of life-style related issues. Estimates run as high as 70% to 80% of employee health care issues are related to one or more of the life style factors previously listed. Many of the life style factors notated above are linked to one another, e.g., Weight management and Physical fitness, to mention but two.

One clear expectation within the passage of the Act is that through “rewards” for developing a healthier life style, claims and thus health care costs and premiums will be reduced. Lawmakers were so confident that improvements in individual health would result in lowered cost and premiums, the Act directs the Secretary establish a 10-State wellness demonstration project no later than July 2014. Furthermore, if the project proves to be effective, the Secretary may expand it to states beyond the initial 10.

Certainly, it is hard to argue that improvements in life style factors such as smoking, weight, and physical activity would do anything but result in lowered health care cost at both the individual as well as the group level. Currently, organizations have a strong incentive to do what they can to improve employee health as a means of managing the ever-increasing cost associated with health care. Somewhat amazingly, many organizations do little or nothing in the realm of employee wellness. Likewise, health care insurers have much to gain through the improvement in member health and a decrease in life style risk factors. Most carriers have “disease management” programs, and programs associated with high-risk pregnancies, and chronic disease such as diabetes, and other factors. It almost seems un-necessary to mandate employee wellness programs or to demonstrate the effectiveness of such programs over such a protracted period or to “incent” individuals to take action to lower their life style risk factors.

If as estimated, 70% to 80% of employee health care issues are related to life style factors, isn’t the potential Return on Investment (ROI) extremely high for reducing those risk factors? One fast food employer I am familiar with spends about $25,000,000 annually on health care. If 70% of employee health care costs are tied to life style factors that’s $17,500,000 per year. A 10% reduction is $1,750,000 in the first year, which is a 7% decrease in the annual cost. According to the Kaiser Family Foundation Employer Health Benefits Annual Survey for 2009 and PricewaterhouseCoopers, the current medical trend rate is 9.2%. Thus, if an organization could hold their medical trend rate to 2%-3%, they would have gained a significant competitive advantage over their peers in managing cost.