Heathcare Cost Checkup

Lowering Employer Costs by Encouraging Healthy Behaviors

By Joe Martin

Fall 2018 Catalyst

The value of having healthy employees is indisputable. Healthy people use less medical care, disability benefits and worker’s compensation. They have increased productivity and decreased absenteeism. For many health plans, it is estimated that a staggering 60 to 70 percent of costs are due to conditions related to modifiable personal health behaviors, such as physical inactivity, poor diets, smoking and problem drinking.


According to population health experts, actual medical care accounts for only about 10 to 20 percent of the health of the population.  So for most, their well-being comes from outside the health care delivery system.  But poor employee health can have a significant impact on the bottom line for many businesses.


Wellness programs are popular with employers because they are the epitome of common sense.  But we are a long way from a culture of wellness in the United States, when only 3 percent of the population exercise regularly, eat properly, don’t smoke, wear seatbelts and have a healthy body mass index. 


Poor Nutrition, Physical Inactivity

National data indicates that the prevalence of obesity in the United States continues to increase in children and adults. Obesity affects almost 1 in 5 children and 1 in 3 adults, putting people at risk for chronic diseases such as diabetes, heart disease and some cancers. Over a quarter of all Americans in the 17 to 24 year age range are too heavy to join the military. Obesity costs the U.S. health care system $147 billion a year. Furthermore, according to the American Diabetes Association, the annual cost of Diabetes in 2017 was $237 billion in direct medical expenses and $90 billion in reduced worker productivity.


Americans have a terrible relationship with food. We are happy to take our statins (cholesterol reducing drugs) on our way to Burger King.  We’re happy to chow down at the all you can eat buffet, and prefer that Uncle Sam, state government or their employer pay for the Lipitor.



Cigarette smoking is the leading preventable cause of death in the U.S. The CDC reports that more than 16 million Americans suffer from at least one disease caused by their cigarette habit. Statewide tobacco control programs that are evidence-based, comprehensive, sustained and accountable have demonstrated success in reducing the number of people who smoke, as well as tobacco-related diseases and deaths. Nearly $170 billion in direct medical costs could be saved annually if youth are prevented from starting to smoke and every person who smokes quits. Just in Pennsylvania alone, 22,000 adults die from smoking-related illnesses each year. Every dollar spent on tobacco prevention can reduce tobacco-related healthcare costs and hospitalizations by up to $55.


Problem Drinking

Untreated alcohol problems can increase business costs through greater use of worker’s compensation and disability benefits, accidents, increased turnover, diverted supervisory time, co-worker friction, increased liability and theft/fraud. Excessive alcohol use, including underage drinking and binge drinking (drinking 5 or more drinks on an occasion for men or 4 or more drinks on an occasion for women), is responsible for 88,000 deaths in the United States each year, including 1 in 10 deaths among working-age adults. Binge drinking is responsible for over half the deaths and three-quarters of the costs due to excessive alcohol use.


Chronic disease

Chronic (ongoing) illnesses among employees have a significant impact on direct medical costs to employers as well as lost productivity. Many of the leading causes of death and disability in the United States are largely preventable through early detection, intervention and behavior changes. According to the National Center for Chronic Disease Prevention and Health Promotion, 86 percent of the nation’s $2.7 trillion in annual health care expenditures are for people with chronic and mental health conditions. One in two adults in the U.S. has a chronic disease, and one in four adults has two or more. Most chronic diseases are caused by a short list of risky behaviors: tobacco use, poor nutrition, lack of physical activity and excessive alcohol use.


The number of deaths from heart attacks in the U.S. is falling. Yet, while 90 percent of these events are preventable, 750,000 Americans suffer at least one annually, making it the number one cause of death. The number of people living with heart failure — who often feel they are suffocating daily because their hearts cannot pump enough blood for a healthy, comfortable existence — is on the rise, up to 6.5 million in 2011-2014 from 5.7 million in 2009-2013.


And the costs of treating these problems are dramatic. PHC4 recently issued an important study about heart failure. In examining just 20 percent of the health care market, PHC4 estimated a total cost of care for heart failure patients to be close to $1 billion in just one year. 


So should we consider wellness programs a nice idea that just doesn’t work? No. If anything, employers should redouble their efforts to help employees get healthy. But the health care delivery system needs to change as well. In order to create a culture of wellness, the way in which we pay for health care must change to reward providers for focusing on health, prevention and wellness, rather than on tests and procedures.


Joe Martin is executive director for the PA Health Care Cost Containment Council.