In an attempt to hold down spiraling health-care costs, many companies are paying employees to lose weight or get in better shape. Employers are doling out bonuses, insurance discounts, vacation days and even gift cards.
Highmark, a Pennsylvania Blue Cross/Blue Shield licensee, offers a health and fitness program called Lifestyle Returns that pays $225 each year to employees agreeing to medical assessments and free health and nutrition coaching. The program is open to all employees, whether they are fit or fat. Because, as Highmark Vice President Anna Silberman puts it, not only do they want to move people from high to low risk, they also want to "keep low-risk people at low risk."
"We know that 70% of chronic conditions are preventable," Silberman says. "If we can prevent adverse health effects, this is a win for the insurance company and a win for the employee."
Freedom One Financial Group, a Michigan provider of 401(k) plans, jump-started its fitness program in 2005 by offering a free four-day cruise to Jamaica for employees who met certain weight loss or body fat reduction goals. At the end of the three-month challenge, 36 of its 70 employees had together lost 310 pounds, and 21 employees were given the free cruise. Now that so many of its employees are participating in its wellness challenges, it has begun offering trips, gift certificates and other prizes to the winners of certain in-house fitness contests.
"The employees are really keen to stay on the program and stay focused," says John Young, Freedom One executive vice president of marketing, who helped launch the program and lost 64 pounds in the process.
The size of the problem
An estimated 65% of adults are overweight or obese, according to the Centers for Disease Control and Prevention, putting them at greater risk for serious ailments including cardiovascular disease, diabetes, depression and certain forms of cancer. The tab associated with obesity cost American companies $56 billion in 2000 alone, the CDC estimates, and that burden is continuing to rise, experts say, as a larger chunk of Generations X and Y is weighing in heavy."One of the greatest concerns now for employers is the problem of obesity" and the toll it is taking on productivity and health-care costs, says Bill Whitmer, president of the nonprofit, employer-sponsored Health Enhancement Research Organization.
In 10 years, health care is expected to account for $1 of every $5 spent in the U.S., according to economists at the Centers for Medicare and Medicaid Services, up from $1 of every $6 now. And over that decade, the cost of health insurance is expected to rise at a rate of 6.4% annually.
The problem took center stage a couple of years ago when General Motors tagged the increased cost of employing its obese workers -- estimated to comprise 26% of its work force -- at $1.4 billion annually.
Analysts say companies are smart to dangle some kind of economic incentive to get workers motivated to lose weight. Money is a great motivator, and it's a drop in the bucket compared with what they will wind up paying in the long run.
"The younger work force is getting fatter faster than the older work force," says Thomas B. Gilliam, a corporate health consultant who co-authored the book "Move It. Lose It. Live Healthy: Achieving a Healthier Workplace One Employee at a Time." "Instead of having to pay for obesity-related diseases from age 50 to 65, they will now pay from 25 to 65," he says.
Gilliam has observed this firsthand, overseeing health screenings for about 35,000 new corporate hires each year, mostly for physically demanding blue-collar jobs.
In 2000, he says, 29% of all new-hire applicants were obese. By 2006, the percentage of obese applicants had jumped to 39%, he says. It's not only straining health-care costs, he says, it's also costing companies in lost productivity and greater wear and tear on their equipment.
Weigh less, pay less
Last year, Michigan auto parts maker Affinia Group began offering an economic payoff to get more of its 4,500 U.S. employees to commit to a healthier lifestyle.The company offered a $1,000 reduction in health insurance premiums to employees who agreed to participate in its StayWell health-management program, which includes medical screenings, weight management, smoking cessation and physical fitness plans. The tack worked. A whopping 99% of employees and their spouses now participate in the program.
Officials say the investment is just starting to pay off. In 2003, before StayWell started, 33% of its U.S. employees were considered high insurance risks. By 2006, that percentage was down to 14%. Similarly, its "low risk" group went from 12% to 21% of employees. And its medical and prescription drug costs per employee dropped between 2005 and 2006, the company says.
"We are meeting or beating the averages of health-care costs for other companies our size," says Mark Trinske, Affinia's director of investor relations.
Likewise, Blue Cross and Blue Shield of North Carolina pays its employees a $480 medical premium rebate for participating in health risk assessments. It also offers gift certificates and other prizes for employees who take part in its nutrition and fitness challenge.
Shannon Bethea, a 32-year-old claims adjuster, says she started the Blue Cross program to help lower her weight -- which had swelled to 334 pounds -- and reduce her extremely high blood pressure.
Bethea says she is happy about the insurance discount and loves competing for the prizes. But the real payoff is the way she feels now that she is 27 pounds lighter.
"I can really tell a difference," she says. "I don't have as much pain in my knees and lower back." And she says she can walk up stairs without collapsing.
Professional motivators
A cottage industry is springing up around companies looking to shrink their employees and get them in better shape. The latest player to enter the fray is Virgin Life Care, a health-incentive company started last year by Richard Branson. Virgin's program, which they administer for other corporations, gives employee participants pedometers with a USB cable to hook up to their computer to track steps. Special kiosks are set up on common areas of each company to track blood pressure, body fat and weight. Employees are rewarded each time they meet certain goals, with the payoff -- as much as $400 -- dispensed to a gift card of their choice. Participants also are offered discounts on health-related items such as weight-loss plans and gym memberships."If you can reward people, that helps change their activity," says Christopher Boyce, chief executive of Virgin Life Care. Boyce tells company executives that he can save them $2,400 in health-care costs annually for each employee who goes from inactive to active, and help them make their employees more productive. In his company's view, sedentary behavior costs companies more, on the whole, than obesity.
Kristin Yannick, a 25-year-old employee benefits administrator for Jacksonville, Fla.-based Regency Centers, started the Virgin HealthMiles program in January. While she's not overweight, she was considered inactive by several health industry standards, taking only 3,000 steps a day.
Now that she's joined the program, she's doubled the number of steps she takes to 6,000, a move she hopes will pay off in more ways than one. She wants to get in better shape and land a gift certificate to Spa Finder or Best Buy at the conclusion of the program.
"That's pretty strong motivation right there," she says.
Of course, health consultant Gilliam says, companies do have to be careful about how they manage these programs, so overweight employees don't feel picked on, alienated or discriminated against. And they have to be sensitive to employees' concerns about privacy.
To assuage its employees' worries about how health screening information is used, Highmark hired third-party vendors to take over the process, assuring employees that Highmark would be given information only about its employees as a whole, and not use the information to deny them coverage for certain conditions in the future.
"We told them that no one would be singled out," Silberman says. "The work force is trusting us with this information."
Gaining that trust will be important, analysts say, because the obesity problem isn't going to go away anytime soon. Serious weight-loss efforts take years, Gilliam says. And companies are still experimenting to see what approach works best.
However, it appears that at least in the short run, dangling some dollars for employee efforts isn't a bad idea.
"People respond to money," Gilliam says with a laugh.
Published March 16, 2007
