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More States Employ Wellness Insurance Programs

Can incentives help state workers shed their unhealthy habits and cut health-care costs?

Is your state’s workforce healthy? If it’s like Washington state’s -- and it most likely is -- the answer is no. And that is costing your state a lot of money in health-care costs.

It’s clear to everyone involved in health care that overweight, smoking, sedentary workers are more likely to develop chronic and costly diseases like diabetes, heart disease and cancer. That’s why many states are now embracing the private-sector model of encouraging, and in some cases offering, financial incentives to get employees to break unhealthy habits. By offering a wellness program, states hope to cut costs by helping workers shed pounds, kick tobacco habits and otherwise get in better shape.

Washington -- along with Nebraska, North Carolina, Oklahoma and a few others -- has a wellness component to its health insurance coverage. “Why does anyone purchase health insurance in the first place? So you have a healthy, productive workforce,” says Scott Pritchard, director of Employee Health and Productivity for Washington’s Division of Public Employee Benefits. Using $600,000 from a larger health-care reform bill signed into law about six years ago, his state started a pilot program that first assessed just how healthy its workforce was. It wasn’t -- to a frightening degree.


Currently the state does not offer any inducements for joining Washington Wellness, which works with about 90 government organizations to set up their own internal wellness programs. “Incentives will be rolled out in 2013, which will be a mix of lower premiums and co-pays if you meet the requirements to stay in the plan,” says Pritchard, who is also the Washington Wellness program director. But even without incentives, about 30,000 state employees have already signed up. “The early adopters know this is a really good thing.”

Though it’s too early to tell if the program really saves money in health-care costs, it already has shown improved results in surveys on health-related work performance. Using a Work Limitations Questionnaire to measure the degree to which health problems interfere with specific aspects of job performance, Pritchard’s program found that the employee group participating in the wellness program showed a 24 percent improvement in the overall Work Limitations Questionnaire Productivity Loss score, compared with just a 5 percent improvement for those who did not participate.

Unlike Washington, Nebraska does offer incentives. In 2009, it became the first state to offer public employees a plan that packages a wellness program with lower premiums, says Carlos Castillo, director of the Nebraska Department of Administrative Services. Wellness options include 100 percent coverage for basic preventive screenings, along with lifestyle programs offered by an independent provider. About 30 percent of employees have enrolled, and research shows they already have started to eat better, smoke less, exercise more and feel less stressed or depressed. There also has been a 19 percent increase in the portion of people who went for preventive screenings.

“We have already seen about a 10 percent reduction in risk factors,” Castillo says, based on screenings for high blood pressure, blood sugar, tobacco use and activity level. Payback figures are now being calculated to see whether that translates into lower insurance costs for the state. But Castillo says he has “no doubt” that it does. “We are catching many conditions, like cancer, a lot earlier,” he says. “Those lead to huge cost savings.”

Caroline Cournoyer is GOVERNING's senior web editor.
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