Benefits Administration | Health and Wellness

ADP Research Institute®

Health and Wellness Programs: A Promising Strategy For Controlling Health Care Costs

This insight is from: "Why You Should Care About Wellness Programs"



Our recent survey of large (1,000+ employees) and midsized (50-999 employees) companies revealed that wellness programs appear to be of value to employers as they seek to address employee health, rising health care costs, and employee morale and satisfaction. Survey findings confirmed that employers are very concerned about the cost of providing health care benefits and that they have executed strategies to offset this escalating expense — sometimes with potential downsides. The survey sought to assess employer adoption of employee health and wellness programs, understand their underlying motivations, and determine actual or perceived value.

Controlling Health Care Costs: A Business Imperative

For nearly four decades, the cost of providing health care has risen consistently year after year and presents a major challenge in benefits administration. Our survey results align with this upward trend; more than half of participating companies reported a significant or moderate increase in the cost of providing health care benefits to employees over the last year. Given this finding, it’s not surprising that reining in health care costs has become a business imperative. In fact, the vast majority of HR/benefits decision makers surveyed cited controlling costs as a medium or top priority.

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Taking Steps to Offset Rising Health Care Costs

As the cost of providing health care benefits continues to skyrocket, employers cannot expect to maintain profitability without taking steps to offset this ever-increasing budget line item. Our survey findings confirmed that companies are using the following strategies to control costs:

  • Reducing the number of employees
  • Eliminating expensive plan designs in favor of less costly options
  • Shifting costs to employees

While these strategies may help boost the bottom line, do they have an unintended negative impact on employee satisfaction and retention? Survey findings suggest it’s likely. Thirty-five percent of the HR/benefits decision makers surveyed in midsized companies and 51 percent of those in large companies indicated that shifting the cost of health care to employees has had a negative effect on employee morale and job satisfaction. Does this mean employees will seek other jobs? Employers don’t think so, but they should be mindful of the importance employees place on benefits and their costs.

Employers Are Betting on Wellness Programs

Employers appear to be turning to wellness programs as their “next best hope” for achieving specific workforce-related goals, most notably improving employee health and controlling health care costs. In our survey, just under half of midsized companies and more than three-fourths of large employers reported offering wellness programs. But are employees participating? Even though participation is voluntary, in the overwhelming majority of companies surveyed, half of employees in midsized companies and over a third of employees in large companies are taking advantage of wellness programs. Companies surveyed differ in the number and range of components and interventions offered, but most wellness programs include at least five and are most likely to include:

  • Employee Assistance Programs
  • Health promotional materials
  • Health screening or biometric testing
  • Smoking cessation programs
  • Access to a Nurse Help Line
  • Exercise and weight management programs

Wellness Programs Get a Thumbs Up

Participation levels indicate that wellness programs are viewed positively by employees, but are employers getting sufficient bang for their buck? While Return on Investment (ROI) is still the gold standard for assessing the value and effectiveness of a wellness program, our results show that no more than a quarter of companies surveyed currently measure ROI. Equally telling, a quarter or more of the companies that offer wellness programs have no plans to measure ROI moving forward. Nonetheless, data indicates that employers are keeping track of what senior executives think, and more often than not, wellness programs are meeting or exceeding expectations for reducing health care costs.

In summary, employers appear to perceive value in wellness programs as they strive to improve employee health and control the rising cost of health care. Participation levels suggest that employees view wellness programs favorably. What’s more, employers indicate that wellness programs are delivering the results that their senior executives expect — even if formal ROI measurement is not widespread.

*A complete list of sources and citations can be found in the full report.

- Workers' contributions to health insurance premiums increased 160%. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2011. Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation, 1999-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999-2011.

About This Report: Report data and conclusions are based on a recent HR/Benefits Pulse Survey conducted by the ADP Research Institute, a specialized group within ADP that provides insights for leaders in both the private and public sectors around issues of human capital management, employment trends and workforce strategy. See full report for details on research methodology.

Keywords: Benefits Administration

Business Types: Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

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