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Wednesday, 25 September 2013 01:49

Wellness Programs Reduce Employer Health Costs

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A 2010 study by Dr. Katherine Baicker of the Harvard School of Public Health found that for every employer dollar spent on disease prevention and wellness programs, health costs fall by six dollars. New provisions in the Affordable Care Act (Obamacare) create incentives for employers to offer wellness programs. Most large companies already offer wellness programs to their employees.

In 2010 a team of Harvard researchers conducted a meta-analysis of the cost savings of employee wellness programs. From existing literature, the researchers examined 32 rigorous studies of both medical costs and absenteeism costs. The analysis found that medical costs fall by about $3.27 for every dollar spent on employee wellness programs, and absenteeism costs fall by about $2.73 for every dollar spent on employee wellness programs. Dr. Baicker concludes, "the wider adoption of such programs could prove beneficial for budgets and productivity as well as health outcomes."

The American Medical Association has officially classified obesity as a disease, with associated national costs estimated at $147B. Starting in 2014, the Affordable Care Act will allow employers to reward up to 50% of the cost of health coverage under health-contingent wellness programs. According to the U.S. Department of Labor, "implementing and expanding employer wellness programs may offer our nation the opportunity to not only improve the health of Americans, but also help control health care spending."

Some have criticized the new laws as shifting the cost or discriminatory. A health-contingent wellness program should be open to all employees, and should not discriminate based on a disability. A wellness program in which all employees receive a reward for maintaining a healthy target BMI is non-discriminatory, allows all employees to participate and does not put a burden on employees.

Most large companies provide wellness programs through their insurer. Safeway's wellness program was mentioned by President Barack Obama as a way to improve employee health and maintain health costs. But not all insurance plans cover wellness programs. Medium and smaller businesses often use third-party providers like California Medical Weight Management for their employee wellness programs.

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