Wellness Program Incentives

During the past several years healthcare insurance costs have climbed steadily. This is taking a toll on the bottom-line of corporations, cutting into earnings, limiting growth and forcing a reevaluation of a once sacred employee benefit system. According to a projection by McKinsey & Co., at the present rate, by 2008 health benefits will eclipse earnings at the average Fortune 500 organization.

Corporations, through private healthcare insurance employers, are the leading provider of healthcare services in America. In 2004, 59.8 percent of American citizens were covered by a company-based healthcare insurance program, accounting for 88 percent of all private healthcare insurance. Yet the escalating costs of Medical Care, ever-growing drug prices and a steady rise in chronic diseases have brought the corporate world to a breaking point.

For many companies the increasing burden has become too difficult to carry. Over the past five years healthcare insurance premiums have raised an average of 11.6% annually, more than four times the average rate of inflation and employee earnings over that time.3 Not surprisingly, this growth in costs has caused the number of companies offering Medical Care services during that time to drop from 69% to 60%.4 In addition, in 2005,  healthcare insurance premiums jumped 9.2%, more than three times the rate of inflation – and that was the lowest increase in the past five years.

In this environment organizations need to discover innovative ways to stem the rising costs of Health Care coverage. Seemingly, the easiest strategies to accomplish this goal would be to cut benefits coverage or pass on arising burden to staff members and retirees. Greater than 80% of organizations have chosen one or both of these options in the past few years and almost half of all large organizations are likely to increase the amount staff members pay in 2007.5

However, these options do nothing to address the fundamental causes of rising premiums, one of which is a population that needs increased healthcare. To make a lasting and meaningful impact on premiums and overriding health, corporations need to look beyond a old-school reactive-based approach.