"Keeping employees healthy" has become the primary workforce issue upon which organizations base their benefits planning in 2009. Yet as the recession wears on, employers continue to increase employees' share of health care premiums, a new Watson Wyatt Worldwide survey concludes.

In the recent Watson Wyatt survey, approximately 26 percent of employers said they plan to increase employee contributions to health care premiums, up from 24 percent in February. Meanwhile, 29 percent of employers said they have already made such changes and do not anticipate future increases in employee contributions, up from 22 percent in February.

According to Watson Wyatt, health care is "the most relevant item for professionals and the second-greatest payroll cost, second only to salaries." Health care amounts to 7.5 percent to 10 percent of payroll.

Yet, for employers in the United States, poor health among workers is far costlier than they realize, according to a major study published this month.

In the April 2009 issue of Journal of Occupational and Environmental Medicine (JOEM), the multi-year study of 10 organizations, with a total of 51,648 employee respondents combined with 1,134,281 medical and pharmacy claims, indicates that employers who focus only on medical and pharmacy costs in creating employee health strategies may misidentify the health conditions that have the most impact on employee productivity.

These employers are underestimating the impact of other factors as well.

One such factor is "presenteeism," which occurs when workers with health conditions are present at their jobs but are unable to perform at full tilt. The study, one of the largest of its kind, examined the effects of presenteeism and concluded that employees' impaired performance typically creates a greater drain on a company's productivity than employee absence.

In other words, the workers who are there but are functioning at a fraction of their capability can be worse on a company's productivity than workers absent from work. The effect of poor health on productivity impacts all levels of an enterprise, the report determined, though executives/managers seem to suffer high presenteeism productivity-loss related to specific health conditions along with those in non-managerial jobs.

The study, coordinated by the American College of Occupational and Environmental Medicine, the Integrated Benefits Institute and Alere LLC (formerly Matria Healthcare, Inc.), also found that when considering medical and drug costs alone, the top five conditions driving costs are:

• Cancer (other than skin cancer);
• Back/neck pain;
• Coronary heart disease;
• Chronic pain; and
• High cholesterol.

However, when health-related productivity costs are measured along with medical and pharmacy costs, the top five chronic health conditions driving these overall health costs shift significantly to:

• Depression;
• Obesity;
• Arthritis;
• Back/neck pain; and
• Anxiety.

On average, every $1 of medical and pharmacy costs is matched to $2.3 of health-related productivity costs. For some conditions that figure is much greater.

Co-morbidities — employees with multiple chronic health conditions — drive the largest effects on productivity loss. The study calls for further research to better evaluate the impacts of co-morbidities by conditions and combination of conditions.

"The wake-up call for U.S. employers is that simply looking at the costs of specific medical conditions by adding up medical and pharmacy claims costs alone won't give a true picture of the full impact of poor health on the much greater costs of lost productivity in the workforce," said Ronald Loeppke, MD, MPH, executive vice president of Health and Productivity Strategy for Alere and one of the study's lead researchers, said in a statement.

The findings published in JOEM suggest that many employers miss an opportunity to improve productivity and their bottom-line results by failing to recognize and prioritize these health conditions when they develop integrated employee-health strategies and related interventions.

Thomas Parry, Ph.D. and president of the Integrated Benefits Institute, say that employers must move beyond "solutions that focus only on specific medical conditions" and toward the development of "integrated personal health support strategies that deal with multiple health conditions and health risks by focusing on the whole person as well as the whole population."

This is especially true in today's economy, where a healthy workforce is critical to an employer's ability to compete in today's global economy

"It is a fact that medical costs have increased beyond the official inflation rate, and in a period of unfavorable exchange rates for imports, many hospital supplies and medications whose prices are dollar-based negatively affect costs for health care plans," Watson Wyatt said in its Impact of World Economic Slowdown on Health Care Benefits survey. "Therefore, ongoing management of health care plans is even more important, not only to reduce costs, but also to maintain the same cost levels observed before the crisis."

Late last year, both Watson Wyatt and the Kaiser Family Foundation reported that many U.S. residents were delaying medical care until they had serious symptoms because of cost, skipping tests or treatment and not filling prescriptions.

Resources

Effect of the Economy on HR Programs
Watson Wyatt, April 21, 2009

Health and Productivity as a Business Strategy: A Multiemployer Study
by Ronald Loeppke, Michael Taitel, Vince Haufle, Thomas Parry, Ronald Kessler and Kimberly Jinnett
Journal of Occupational & Environmental Medicine, April 2009

Most Employers Underestimate Full Costs of Employee Health on Productivity
Integrated Benefits Institute, April 13, 2009

Impact of World Economic Slowdown on Health Care Benefits
Watson Wyatt, December 2008

U.S. Employers "Must Not Focus on Pharma Costs Alone"
Pharma Times, April 20, 2009