Many companies see their health insurance premiums rise by 10 percent or more, year after year.
These costs often seem uncontrollable, and that frustrates CEOs.
So when a company reports that its health costs have increased by an average of less than 2 percent per year over the past decade, it makes for an interesting case study.
That type of success has been enjoyed by Valdosta-based The Langdale Company, which mainly produces wood and forest products but also has car dealerships among its 23 businesses.
The manager of Langdale’s benefits, Barbara Barrett, and the company leadership have aggressively tackled costs in several ways in the health plan, which covers about 860 employees. The company’s tactics include a combination of wellness and disease management programs, incentives and freebies.
Among the most effective strategies, Barrett says, is using a health advocate to work with employees who have chronic diseases.
“Many times he’ll go to the doctor’s office with them,” Barrett says. “He encourages them to become compliant [with medications and doctor visits].”
Nationally, wellness programs have increased steadily among larger employers.
They’re not targeting only those who are unhealthy, says Joey Dizenhouse, an Atlanta-based consultant with consulting firm Towers Watson. Employers are also focusing on “the people who are healthy today but have risky habits,” such as smoking and drinking, he says.
Many employers, including the privately held Langdale, charge smokers higher premiums.
And by targeting chronic disease such as diabetes, employers using independent consultants can focus on where the major costs are, says John Brown, an attorney and health benefits expert with Arnall Golden Gregory in Atlanta.
Disease management programs can bring a return on investment of $3 for every $1 invested in the first year, Dizenhouse says.
Ken Thorpe, a health policy expert at Emory University, points out that 75 percent of U.S. health spending is associated with patients who have one or more chronic health conditions.
Some consumer advocacy groups are troubled by programs that let healthy workers pay less for medical care. They say such programs may discriminate against those who may be less healthy for a number of reasons that are not necessarily their fault, including pre-existing conditions, genetic disposition or socioeconomic status.
Meanwhile, more companies are considering giving rewards, such as cash and gift cards, only to employees who demonstrate action and results, according to a Towers Watson survey, the Los Angeles Times reported last year. “Employers see unhealthy lifestyle as the biggest barrier to providing affordable health care coverage,” LuAnn Heinen of the National Business Group on Health told the Times.
And Medicare, the government program for people 65 and older and the disabled, is also offering free preventive health screenings and a free annual ”wellness exam” to beneficiaries.
Langdale’s successful program has earned praise from health care analyst Brian Klepper, the editor of Care & Cost. Klepper, digging into the Langdale numbers, found the company produced a ”nine-year savings of $29,000 per employee, or an average of $3,200 per employee per year lower than the national average.” And that’s without reducing benefits or moving the cost burden to employees, Klepper wrote in a post last year.
Langdale’s offerings to employees include:
*A discount program for fitness centers.
*A health risk assessment that collects biometric data and can identify unhealthy habits or chronic disease.
*An annual physical that’s free up to the first $500 in cost.
*Identifying hospitals and physicians who provide good quality at a good price, and steering patients to them.
*A free smoking cessation program where “employees take classes on company time,” Barrett says. Patches and other anti-smoking aids are also free.
*Free flu shots.
“The disease management and wellness programs go hand in hand,” Barrett says. ”We saved $4.80 for every $1 spent in 2010.”
Barrett credits support from Langdale’s corporate owners and employees for the success of the health plan. She also cites the ”face-to-face interaction” of the health advocate, who comes from the Lowndes County Partnership for Health, a nonprofit organization whose mission is to improve the health of the community.
The advocate uses data from a medical management company to help him in his interactions with Langdale employees.
“The health advocate had to work with some folks for a year or more before they changed habits,” Barrett says. “He keeps going back to them.”
The programs have brought results: Langdale has seen a year-to-year reduction in employees’ weight, blood pressure, smoking and cholesterol levels, while exercise has increased.
And Barrett is thinking of new ways to control costs.
Langdale currently has a system that lets employees win points for good safety practices, and cash them in on Amazon.com.
“We’re looking at implementing that for our health and wellness program,” Barrett says.