Prevention Is Key To Reducing Health Care Costs For All Employees, Even Those With Chronic Conditions


Cost savings associated with health risk reduction begin accumulating in as little as one year, particularly for those with chronic conditions, according to a recent study from StayWell Health Management and Towers Watson. Furthermore, the study, Association Between Changes in Health Risk Status and Changes in Future Health Care Costs: A Multiemployer Study, found that while a reduction in employee health risks leads to immediate cost savings, the accumulation of additional health risks soon leads to substantially higher medical and pharmacy costs. Such findings are important for employers to consider as they evaluate their strategies for engaging employees in changing unhealthy behaviors and assess their investments in workplace health management programs.

Specifically, the study found the following:

  • With a reduction in health risks, lower costs begin accruing quickly. In fact, there was a reduction in health care costs in the same year risks decreased, according to the study. Coupled with prior research showing employers can “break even” on their wellness investment in year two and achieve up to a 3:1 return on investment in year three, this immediate savings from risk reduction makes the financial case for prevention even stronger.
  • The financial implications for prevention may be even greater than for risk reduction. For every health risk added, costs increased by 45 percent above the cost savings that resulted from eliminating a risk. This means that if organizations prevent individuals from adding new health risks over time, their cost savings will be greater than if they focus on eliminating a health risk after it emerges.
  • A long-term solution is better than a quick fix. The study found a greater immediate savings was realized from reducing health risks for people with chronic conditions than for the average employee. After controlling for differences in age, gender, and company, those with chronic conditions who added health risks doubled the cost burden compared to those without a chronic condition. Cost savings were four times greater for those with chronic conditions compared to those without chronic conditions. The study stressed that although there always will be a highest-cost group, an ongoing focus on prevention can benefit the entire population by avoiding chronic disease altogether in some cases or slowing the progression and diminishing the severity of chronic disease. All of these potential outcomes from prevention will improve the company’s total health care spending.

“The bottom line for employers is that if you start to change employee behaviors, you will start seeing health care cost savings very quickly. In fact, an employer can save an average of $100 in health care costs per employee per health risk eliminated in the year of the change, and $105 per risk reduced in the year following the reduction,” said Steven Nyce, senior economist at Towers Watson. “But if you don’t keep healthy people healthy and employees start accumulating new health risks, you not only negate this savings but stand to add health care costs of $145 per employee per health risk added within just one year.”

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