HR Rules of the Road

Beaver Street Enterprises
Friday, August 28, 2009
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Jacksonville, FL 32216

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Are Rising Healthcare Costs Making You Sick?

by Andee Sparrow

The rise in healthcare costs seems to be the topic on many employers, employees, senators, congressman and any political representative minds lately. As if we don’t have enough on our minds already with the unemployment rate increasing and the fear of job security, we toss in the on-going and ever increasing rates of healthcare costs. Yet most businesses, health insurance providers and our representatives in Washington are not encouraging or implementing any programs that could help alleviate some of these costs.

In fact healthcare spending in the United States is expected to reach $2.2 trillion this year. And if you aren’t scared yet, it is expected to reach $4 trillion by the year 2015. Why is the typical American not taking personal accountability for living a healthy lifestyle? Why are businesses not more interested in vesting in some type of program that could help their employees and help themselves? The main question is what is going on and what can be done to help ease some of these increasing costs?

Well, first of all we need to address the issue of what is contributing to the rise in costs. According to the Milliman survey, currently 95% of healthcare expenditures, including most of the billions of dollars employers spend on health coverage goes to diagnosing and treating diseases that already existed but now have become “problems.” Another scary thought is the fact that 40% of premature mortality can be attributed to factors that are directly related to unhealthy behavior. Do I have you thinking yet?

The United States spends more than $1.3 trillion annually on the treatment of the seven most chronic diseases which include cancer, diabetes, hypertension, stroke, heart disease, pulmonary conditions and mental illness. Most of these diseases, if not all, are preventable with changes in health behavior. By investing in good health habits, we may add billions of dollars in economic growth in the coming decades and decrease healthcare spending.

Another cost of poor health is a reduction in productivity. We all know about absenteeism, right? But have you ever entertained the idea of lost productivity to presenteeism? Presenteeism is when workers remain on the job despite being sick or injured and unable to perform at full capacity. It is estimated that this loss of productivity costs American businesses about 1 trillion dollars a year. One idea that has shown promise in the reduction of health care costs is the institution of wellness programs. Employers who are proactive in helping their employees are also helping their bottom lines. By taking measures to help educate employees on healthy lifestyle choices and implementing a wellness program, employers are showing their employees they are interested in keeping them healthy and decreasing health insurance costs. Businesses and individuals can take the necessary steps to move towards wellness reform. There are several members in Congress who are pushing for tax breaks to businesses if they implement a wellness program. This will then allow individuals a reduction in their premium costs if they can prove they have taken steps to improve their health through the program.

The Healthy Workforce Act of 2009 was introduced in the U.S. Senate in April-|/bss/111search.html|. This bill would help break down the barriers for which small to medium sized companies could make more of an investment in their employees’ well being. A recent change in the federal regulations for group health plans now makes it permissible to reward employees for healthy lifestyles or obtaining specific wellness screenings. These regulations were issued in 2007 by the U.S. Department of Labor. Now I know you are asking yourself, “well doesn’t this go against HIPAA regulations?” Not necessarily. Employers and insurance companies cannot discriminate against individuals based upon health factors like prior illnesses, poor medical histories, filing numerous claims or unfavorable genetic information. But under the new rules, employers can tie rewards to appropriate wellness activities and programs. Incentives can range from tokens of achievement, such as t-shirts, water bottles and sports equipment to more substantial financial rewards, such as cash incentives or co-payment vouchers for the successful completion of a program.

A sample of some employee wellness program ideas are health screenings which include blood tests, skin cancer screening, diabetes testing, cholesterol tests, eye exams, body-fat, flu shots, posture, fitness, and depression screenings. Lifestyle changes or behavior change initiatives may include tobacco cessation, weight management, substance abuse, physical fitness activity and stress management initiatives. There is also safety and prevention initiatives, health education and awareness, stress reliever initiatives, and disease management initiatives.

Some low cost ideas for worksite wellness are:


  1. Encourage employees to walk to a specific location and log individual miles for incentive prizes.
  2. Participate in community walks. Ask the company to sponsor employee participants or to match employee contributions.
  3. Encourage managers to hold walking meetings when meeting with a small number of employees.
  4. Offer incentives for distance parking and for employees who walk or bicycle to work.
  5. Negotiate corporate discounts for health club memberships.


  1. Use vending machine commissions to help fund wellness programs.
  2. Hold recipe contests for the best tasting, lowest calorie recipe.
  3. Celebrate a “free fruit day” by giving out apples to all employees.
  4. Change a donut break to a bagel and low fat topping break at meetings. Plan company functions with heart healthy eating choices in mind.
  5. Conduct support group for weight management. Sponsor company weight reduction programs.

During his press conference regarding the medical insurance overhaul bill on July 23rd, President Obama stated, “an inactive approach will only delay the improvement of individual American health and wellness as well as the protection of U.S. business profits. Start taking action today.” Are you getting the idea? Underneath it all, we all want to live happier, healthier lives. And in doing so we can help contribute to the bottom line and that is our return on investment of ourselves.

Whatever you decide to do, it pays to remember this: The health and happiness of your employees has a direct impact on your company’s financial health and that sure beats the alternative, right?


Andee Sparrow is the Client Services Specialist for McKenzieHR and has a passion for health and wellness. Special thanks to Andee for taking the time to conduct the research for this article.

Thanks for reading the McKenzie Mailer.  Let us know if we can be of assistance in keeping the lawyers away form your door.    

Kind regards,

Bob McKenzie


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