Who isn't sick of getting clobbered with huge hikes in health insurance premiums? Since the early 1990s, Highsmith, a FortAtkinson, Wis., supplier of library products with about 300 employees, has found a way to keep health insurance costincreases consistently lower than average. The secret? Employee health screening and an incentive-driven wellnessprogram.
Back in 1989, Highsmith's health insurance carrier informed the company that its premiums were set to increase 50%.Highsmith sprang into action, enlisting both a new carrier and its own workforce in a strategy that has lowered costssignificantly over the long haul.
According to Bill Herman, Highsmith's vice president of human resources, the company conducted an initial medicalscreening of its employees in 1991. The results of that screening suggested that unhealthy conditions, such as smoking,obesity, lack of exercise, high blood pressure, and high cholesterol, multiplied by intangibles such as stress and back problems,were costing more than $250,000 a year in excess health care costs. "We felt that some people would make healthy lifestylechanges for a carrot, and for many people, the carrot is money," says Herman.
So the company initiated its Wellpower Plus program. The voluntary program gives employees and their spouses the chanceto participate in annual screenings that measure such things as cholesterol levels, blood pressure, heart fitness, percentage ofbody fat, and general fitness. Each participant is assigned to one of three "incentive levels" based on the test results. Levelone, the healthiest group, earns a 50% reduction in health insurance premiums; level two saves 25%; and level three saves12.5%. Herman says that 75% of employees who are covered by the company's insurance participate in Wellpower Plus. Tohelp people achieve better health, Highsmith offers a number of on-site classes, on topics such as exercise, yoga, weightcontrol, nutrition, and smoking cessation.
But what happens to employees with hereditary or chronic conditions that preclude their assignment to a low-risk group?When the company assigns risk levels, it takes into consideration waivers that each employee's doctor may sign to certifyphysical conditions beyond that employee's control.
In recognition of the success of Wellpower Plus, Highsmith's health maintenance organization has moved Highsmith from itscommunity pool into an "experience-rated" arrangement. Since 1992, Herman says, Highsmith's annual increases in healthinsurance costs have been significantly lower than the HMO's population as a whole.
Herman reports that, by 1997, Highsmith's per-employee health insurance costs were only 68% of the per-participant cost forthe overall HMO. And when Highsmith's claims are less than expected, the company gets a rebate from the HMO. In 1997alone, Herman estimates that the premium savings were about twice the cost of running the wellness program. "We reallythink our wellness program is paying off," he says.