Employer Biometrics – Worth the Cost For Health Care Cost Reduction?

As employers throughout United States are trying to stave off rising healthcare costs, there is much talk and lots of creative action to lower healthcare premiums and increase the health of our workforce. As many employers embark on a employer centric “wellness program”, often, they think that the most important first step is to encourage and provide an easy venue to gather basic biometrics… these often include, in addition to weight, BMI, and blood pressure, lipid panel and fasting cholesterol.

And it isn’t a bad idea. Getting individuals to “know their numbers” that can indicate a propensity for high risk diseases such as cardiovascular disease, diabetes, etc. can be critical to the individual personally engaging in his or her health and taking steps to getting healthier. In addition, because these prevalent high risk diseases are creating much of the health care costs for any employer, getting employees to know their numbers is a great first step to start a wellness program. However, running tests costs money. There are many terrific biometric companies who can now bring licensed health care professionals to the workplace to run these tests for employees…making it convenient and increase the odds that employees will participate. Depending on which tests are included, these tests will generally cost between $30-$50 per person tested.

But these costs add up. If you are leading a 200 person company, you don’t have an extra $10,000 to run tests that may or may not prompt healthy action by your employees. And to boot, for those employees who are getting their annual physicals as they should, their physician is likely repeating most of the same tests…the cost of which you are also paying, either through insurance premiums or through costs passed to you if you are self-insured. Some companies are also questioning the need and wellness advancement effectiveness of running annual biometrics programs. For employers with employees under the age of 35, many advise that it is purely a waste of money to test biometrics annually. There is just not much likelihood of significant change in measurement in a younger population.

And the bigger question about effectiveness is whether taking measurement in and of itself will actually prompt any action for individuals. Most smokers know they smoke and merely having their biometrics taken and taking a health risk questionnaire will likely have no impact on causing any behavior change whatsoever. Many companies who embark on a “wellness program” by taking biometrics and using a health risk questionnaire, thinking that employees make take it from there once they have information, are merely wasting their wellness investment unless those assessments are coupled with some tool that also inspires behavior change. People simply do not change their behavior as a result of information, they need some other motivation. And note, many Health Risk Questionnaires do not REQUIRE employees to put in specific biometrics.

You can get started with digital tools by having employees complete all the lifestyle information and estimate their biometric levels. In this way, if your digital tools also include behavior change modules, your employees can get going on behavior change, the REAL outcome that the employer wants to promote in the first place, right?!

Starting this fall, there is more reason to question the potential redundancy of employers paying for a separate biometrics gathering for their employees. Under new legislation, employer health plans MUST fully cover many preventive services and tests…meaning that even co-pays for these services will be going away for employees. So, employees will be further motivated to engage in preventive physicals and testing because it is “already paid for ” in the premiums that employees are sharing. A recent article in the New York Times explained this new legislative mandate: http://www.nytimes.com/2010/07/15/health/policy/15health.html?_r=3.

So back to the question: Should you, the employer gather the biometrics of your employees? Of course, it depends! Consider the following:

1) Are you ready for the doubling up of costs because those employees who are or will likely be engaged in annual physicals that you will likely be duplicating paying for tests?
2) Are you going to DO something with the biometrics to motivate employee behavior change?
3) Are annual biometrics really necessary for a majority of your employees due to the age range of your employee population?

Remember, it IS important to consider the goals of your wellness initiative and exactly WHAT you, the employer, want to accomplish. Then, consider what the most cost-effective way is to get started to motivate your employees toward permanent healthy behavior change. Measuring health metrics is a good baseline activity, but be aware that it will add duplicate costs and it will likely require additional investment in behavior modification motivations for your employees in order to have any real effectiveness.

Small Business Planning Must Include Health Care Costs

Based on what little is known about the new health care bill that was just passed, it will have a huge effect on small to mid-sized businesses. One of the line items, as reported in a summary by the Wall Street Journal, is that in 2013 companies with over 50 employees must provide “affordable” health care or face a fine of $3,000 per employee (excluding the first 30 employees). It doesn’t state what “affordable” means.

In the same paragraph it states that the insurance industry must pay an annual fee of $8 billion starting in 2013 and rising in subsequent years.

I guess it’s lost on me how an industry can pay $8 billion in annual fees and still provide affordable insurance packages to small business.

I don’t know all of the intricacies of the proposed bill. I guess that makes me about as smart as the folks who passed it, they didn’t read it either. What I do know as a mid-sized company CEO for over 15 years affordable health coverage is in the eye of the beholder.

I cannot think of a single year where our health care costs were not increased to one of my companies. Every year we scrambled to try and balance plan benefits against rising costs while trying to keep employee contributions down.

Large corporations have bargaining power and volume, and are able to secure better pricing. The small and mid-sized business owner has no such advantage. While the new plan talks about Insurance exchanges to allow small business the opportunity to shop their coverage I don’t see that as any different than what they do currently. We had to shop our coverage every few years to keep costs in line.

The bottom line of all of this is costs for business will increase, and employers will take a harder look at hiring full time employees. Prudent companies will consider health care costs in their strategic planning process, deciding whether to make investments in automation vs. full time employees with an ever increasing cost base, It will make the playing field even more uneven with countries such as China where benefits and regulation are not a concern.

Health care reform is certainly needed. It’s unacceptable that so many Americans, especially the “working poor” as they are called, are without health care. The United States spends roughly twice as much as other developed countries on health care and millions are uncovered. There simply has to be a better way. But history has shown us that a government mandated and controlled program isn’t it.

One of the chief reasons why we spend so much on health care is the cost the insurance companies and health care companies absorb trying to deal with government bureaucracy. To see government health care effectiveness you don’t have to look any further than the VA and how our veterans are treated.

The full impact of this bill on business is unknown, even by those who passed it.

How Human Resources Management Can Reduce Rising Health Care Costs

With two thirds of all health care costs associated with poor behaviors, changing the behaviors of employees would be a logical and sensible way to reduce or control rising health care costs. Yet, these costs continue to out pace the rate of inflation and drain the bottom line.

Many businesses have the best opportunity to reverse this trend through their human resource departments. Of course this may mean those within and outside of the department may to change their beliefs.

The major belief to be changed is knowledge is power. Having knowledge alone will not change the results. Individuals need to apply what they have learned and may need to do this numerous times before it become a habit where the action happens almost subconsciously without it appears any thought.

By changing this belief to applied knowledge is the source of sustainable power is the first step. Then and only then can the actions (behaviors) changed to deliver the desired results.

Many in human resources management are responsible for Employee Assistance Programs (EAP). These programs range from childcare to exercise to even grief counseling.

The EAP can be the vehicle to dramatically reduce health care costs when the focus turns to behaviors. A secondary reason to focus on behaviors is to look at published studies in health care on preventive care services. The New England Journal of Medicine in a 2008 article found “slightly fewer than 20 percent of [preventive] services that were examined save money, while the rest add to costs.” Other studies from the American Heart Association and American Cancer Society suggested even lower savings of 10% for preventive services such as blood pressure monitoring to measuring cholesterol of high risk heart disease people.

Preventive care does not reduce rising health care costs because it is not directed to the behaviors causing these well-being issues. With three quarters of all healthcare cost associated with one of these four diseases cardiovascular, cancer, diabetes and obesity, the focus on behaviors is the only logical way to reduce this enormous profit draining liability.

One of the best solutions is to put everyone through a self-leadership development process where the focus is on changing beliefs (attitudes) combined with goal setting and goal achievement. When a plan of action is put into place that has been highly emotionalized for the individual, amazing results do happen. Many employees have never invested the time to plan their future. Actually most of these folks along with upper management place more value on the everyday written grocery list than they do for their future plans. These individuals are living for the moment much like the overweight Wimpy character in Popeye who said: “I gladly pay you on Wednesday for a hamburger today.”

What would happen if a organization of 50 employees with half married and half single reduced their estimated annual premiums of $435,000 by $150,000 in the first year and then continued to reduce the premiums? Using the National Coalition on Health Care (NCHC) 2008 statistics, an annual premium in 2008 for a single employee was $4,700. If the employee was married and had two children, the premium increased to $12,700. This fictional company would have an estimated health care premium of close to a half a million dollars that is continually rising at twice the rate of inflation according to the NCHC. Seventy percent of $435,000 is $304,500 and half of that is $150,000.

If the EAP focused on behavior changes through a self leadership development process with an investment of $1,500 per person, this would deliver a 2 for 1 return on the investment. Even if additional reinforcement was put in place such as executive coaching, the changes in behavior would justify the financial investment.

The Human Resource Department can become the value driven and cost reduction center of any organization by reducing health care costs. Of course it may not be easier, but the results of having a healthy workforce along with increased profitability and potentially a high performance work culture are well worth the effort.