Who isn't sick of getting clobbered with huge hikes in health-insurance premiums? Over the past three years Highsmith, a Fort Atkinson, Wis., supplier of library products, has curbed its annual increases to an average of 3%. When Highsmith's carrier informed the company that its 1989 premiums were set to rise 50%, Highsmith sprang into action. The company enlisted both a new carrier and the work force in a strategy to lower costs.

According to Jayne Kibbe, manager of employee development, the company's initial medical screening of its 240 employees in 1991 discovered that unhealthy conditions -- related to smoking, obesity, lack of exercise, high blood pressure, and cholesterol levels, multiplied by intangibles like 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 lifestyle changes for a carrot, and for many people, the carrot is money," says Kibbe.

So the company initiated its voluntary Wellpower Plus program. The program gives employees and their spouses the chance to participate in annual screenings that measure cholesterol levels, blood pressure, percentage of body fat, and general fitness. Based on the test results, each participant is assigned to one of three "incentive levels." Level one, the healthiest group, earns a 50% reduction in health-insurance premiums; level two saves 25%; and level three saves 12.5%. Kibbe says that 75% of employees who are covered by the company's insurance use the program. To help people achieve better health, Highsmith offers on-site exercise, weight-control, nutrition, and smoking-cessation classes.

But what happens to those employees with hereditary or chronic conditions that might 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 certify physical conditions beyond that employee's control.

Highsmith's health-maintenance organization, in recognition of the program's success, has moved Highsmith from its community pool into an "experience-rated" arrangement. "Highsmith's wellness program demonstrated to us that the company was very serious about trying to keep health-care costs down," says DeanCare HMO sales manager Tom Williams. With its new rating, Highsmith pays about 10% less than it did before. According to company president Duncan Highsmith, the annual $35,000-to-$50,000 price tag for the company's health program "is now funded completely by savings in both health insurance and related costs." He adds, "Qualitatively, we have much more energetic and self-reliant employees, and that's the best investment."

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Risky Business
According to a 1991 study conducted by Du Pont, annual excess illness costs per unhealthy employee are nothing to sneeze at.

Origin of Annual Cost
Medical Problem per Unhealthy Employee
Smoking $960

Obesity $401

Excessive alcohol use $389

High cholesterol $370

High blood pressure $373

Not using safety belts $272

Lack of exercise $130

Source: Journal of Occupational Medicine, November 1991.