Why Wellness Makes Financial Sense

Health-Care Costs Rise while Health Deteriorates

Health care costs in the U.S. are increasing at an average rate of 7% per year – fast outpacing inflation. At this pace, we will see U.S. health care expenditures increase from $2.39 trillion in 2008 to $2.72 trillion in 2010. These increasing costs are hurting both individuals and their employers.¹

Even though we are by far the country that spends the most money on health (15.2% of GDP²), the U.S. population is becoming one of the sickest of the developed world:

The U.S. now ranks 37th in the world ranking of population health.³
A full two thirds of Americans are now considered overweight or obese. If these trends continue, by 2030, 86% of us will be overweight and 51% will be obese!⁴ The U.S. Surgeon General estimates that obesity alone causes 300,000 deaths and $117 billion in healthcare costs each year.
36% of Americans suffer from one or more of the most common chronic diseases (cancer, diabetes, heart disease, hypertension, pulmonary conditions, mental disorders or stroke).⁵
A year’s worth of treatment for these conditions rings up a bill of $277 billion. However, the cost in lost productivity due to having 1/3 of the population chronically ill is at least three times higher at $1 trillion.⁵

Fortunately, employers are finding that they can play an important role in slowing the trends in health care costs by offering wellness programs. These companies find that investing in their employees’ health is actually a good investment:

74% of large employers (1000+ employees) are offering wellness and/or disease management programs. ⁶
74% of health care claims can be directly traceable to lifestyle habits. Reasoning would follow that most health care costs can be avoided or reduced.⁷
Employers are saving anywhere between $22 and $157 per employee by reducing presenteeism (people showing up for work while sick).⁸
The average return for every dollar invested in wellness is around $3 because of lower medical costs and between $5 and $6 when you add the improvements in productivity from lower absenteeism.^{9, 10}

But what if you're a small business?

There is more and more research that is pointing to the fact that the savings you get from increases in productivity as a result of your wellness program are even greater than any reductions you would see in claims.

A Welcoa report estimates the savings from improvements in productivity at 2-4 times the annual healthcare spend
One basic productivity measure is absenteeism. 25% of absenteeism is linked to health risks.
Presenteeism is the effect of people showing up for work sick. Therefore, if your wellness programs help improve health, you will see reduced stress, better concentration and decision-making, alertness and fewer accidents on the job, less day-dreaming or "spacing-out", and overall improved morale amongst other productivity effects.

Plunkett Research LTD, Healthcare trends, 2008. http://www.plunkettresearch.com/Industries/HealthCare/HealthCareTrends/tabid/294/Default.aspx, accessed Nov-12-08
World Health Organization, U.S. Country statistics. http://www.who.int/countries/usa/en/, accessed Nov-12-08
World Health Organization, The world health report 2000 – Health systems: Improving performance, 2000. Published by the World Health Organization, Geneva, Switzerland.
National Center for Health Statistics, Chartbook on trends in the health of Americans. Hyattsville, MD: Public Health Service. 2006.
Milliken Institute, An unhealthy America: The economic burden of chronic disease, October 2007. http://www.milkeninstitute.org/publications/publications.taf?function=detail&ID=38801020&cat=resrep. Accessed November 12, 2008.
Deloitte, Reducing corporate healthcare costs 2006 survey, 2006. http://www.deloitte.com/dtt/cda/doc/content/us_chs_red_cor_hea_costs_0106.pdf. Accessed, November 11, 2006
Alderman S. Benicomp study results corrected by IPFW. Indiana University – Purdue University Fort Wayne News Releases, January, 2007. http://www.ipfw.edu/news/archives/2007/Jan/24benicomp.shtml. Accessed July 7, 2007.
Goetzel RZ, Long SR, Ozminkowski RJ, Hawkins K, Wang S, Lynch W. Health, absence, disability, and presenteeism cost estimates of certain physical and mental health conditions affecting U.S. employers. Journal of Occupational and Environmental Medicine, April, 2004; 46(4):398-412.
Aldana, SG. Financial impact of health promotion programs: a comprehensive review of the literature. American Journal of Health Promotion; 2001
Chapman, LS. Meta-evaluation of worksite health promotion economic return studies. Art of Health Promotion; 2003