Wellness is a $6 billion dollar industry in the United States with more than half of all employers with at least 50 employees offering programs to improve the health and well-being of their employees. This figure, however, pales in comparison to the more than $990 billion spent on employee health insurance in 2014 and the $343.8 billion in out-of-pocket expenditures by employees in deductibles and contributions to their own health insurance.[1] With such a large expenditure on a single line item, one would expect that employers would be devoting more resources to reducing that cost through wellness and other programs rather than simply shopping for the cheapest coverage plan. One possible reason for the relatively paltry sums spent on wellness relative to the overall insurance cost may lie in the way these programs are evaluated, with an overemphasis on short-term ROI.

Limitations of ROI as an evaluation mechanism

The criteria for evaluation of most corporate-sponsored wellness programs relies on the return on the investment (ROI) from that program. There are, however, limitations to that approach that may unintentionally skew resources that favor the higher short-term ROI relative to other programs. Indeed, a RAND Corporation study produced just those results- the returns were $3.80 for disease management (short-term) but only $0.50 for lifestyle management (longer-term) for every dollar invested.[2] The long- term lifestyle management results are based primarily on a modest reduction in absenteeism but fail to account for the avoidance of cost in terms of expenditure for employees who do not get sick, or any reduction in insurance company premiums from having a healthier workforce.

 

A more realistic, and possibly less common, method of measuring returns on investment for different programs should adjust the calculation for the time horizon over which the program could reasonably be expected to produce results. This should also capture the lower healthcare costs for employees who do not get sick. Moreover, it should factor in leverage that corporate purchasing power can wield by virtue of being a large buying group. This may produce consistently higher returns over an extended time horizon that traditional ROI calculation methods would not capture. These costs can be quite significant; it now

 

costs $10,000 or more per person annually to treat someone with diabetes than someone who doesn’t, according to an analysis of large insurance company claims data.[3]

 

Employer/Employee Health Expenditures

 

Since 2005, employer-sponsored health coverage for family premiums have increased by 61 percent and the employee share of this cost has risen by 83 percent, placing increasing cost burdens on employers and workers.

Corporations and insurance companies are shifting an increasing share of these costs to the consumer through:

• Higher premiums and higher deductibles for treatment
• Higher co-pay for prescriptions
• CDHP- Consumer Directed Health Plans
• Health Savings Plans