U.S. Employers Spend Nearly 2% of Health Budget on Wellness

Frids Kowmbon 01 February 2010

Most mid-sized to large U.S. companies will continue to invest in health improvement programs for their employees in 2010, according to an employer survey by Fidelity Investments in conjunction with the not-for-profit National Business Group on Health (NBGH).

The survey looked at U.S. companies with over 1,000 employees. These companies overwhelmingly (91 percent) say their willingness to invest in wellness programs will remain regardless of any health care reform changes in Washington. Moreover, employers on average are spending nearly 2 percent of their total health care claim dollars annually on wellness programs.

The 2 percent figure was calculated by dividing the amount of money an employer spends on health improvement programs per employee annually by the total amount of money it spends for claims for doctors’ office visits, medications and hospital stays per employee annually. The figure excludes costs associated with employee incentives, on-site health centers and HR staff dedicated to wellness programs.

Among other survey results:

• Most surveyed companies have an average of 21 programs in place focused on prevention, lifestyle wellness, condition management, communication and education.

• Half (51 percent) plan to implement at least one additional health improvement program in 2010.

• 89 percent expect to maintain the programs they offer.

Unmeasured Outcomes

More than one in four (27 percent) surveyed companies, however, do not measure the outcomes of their wellness efforts, and 65 percent have no measurable goals for their initiatives.

“Wellness programs are now a standard workplace benefit as employers recognize the need to invest in initiatives that help employees to better manage their health, given that health care costs continue to soar,” comments Sunit Patel, senior vice president of Fidelity’s consulting services business, which commissioned the study with NBGH. “However when it comes to measurement, wellness programs are in their infancy. Most employers need help establishing clear program goals and measuring the impact these programs have on the overall well being and productivity of their employees.”

“Offering wellness programs and encouraging employees to maintain healthy lifestyles can be enormously beneficial to any organization as well as to its workers,” adds NBGH President Helen Darling. “Employers, however, won’t see meaningful results from these programs unless they effectively communicate information about them to employees and provide incentives that will motivate employees to participate and focus on taking the necessary steps to improve their own health.”

Employers won’t see meaningful results
without effective communications and
employee incentives.

Unsure of ROI

The study reveals that six out of 10 companies with health-promoting initiatives do not know their return on investment (ROI) across all programs. Companies ranked outcome measurement as their No. 1 challenge, followed by employee engagement and participation.

“Measuring health improvement programs as a suite of offerings, as opposed to individual initiatives, is essential to understanding the true impact of an employer’s investment,” says Patel, adding that employers should be “driving stronger results through greater employee engagement across a range of programs.” (For more on wellness ROI, see Participants in Wellness Programs Had Lower Health Care Costs.)

Incentives Used

In order to encourage participation in wellness programs, more than half (57 percent) of companies surveyed said they use incentives that have a cash value. The most common incentives offered by employers are reducing the employee’s health care premium, followed by contributing cash and contributions to a health savings account (HSA) or a health reimbursement arrangement (HRA).

One out of five companies (20 percent) spends more than $400 per employee a year on incentives alone. Almost one third (29 percent) spend less than $100 per employee. (For more on incentives, see Size and Scope of Wellness Incentives Grow Larger.)

Balancing Prevention and Treatment

Companies are spending almost the same amount of money on programs aimed at prevention and lifestyle wellness (45 percent) as on programs that manage conditions after the onset of disease or illness (43 percent).

The most prevalent programs in the prevention and lifestyle categories are:

• Employee assistance programs (92 percent of surveyed companies offer them).

• On-site flu shots (90 percent).

• Preventive care reminders related to screenings or annual exams (68 percent).

• Stress management (68 percent).

• Smoking cessation (66 percent).

The top condition management programs in use are:

• Nurse hotlines where nurses are available to answer questions via telephone (79 percent).

• Diabetes disease management (74 percent).

• Coronary artery disease, congestive heart failure and asthma disease management (69 percent).


Survey data was collected by NBGH from Sept. 11, 2009, through Oct. 5, 2009, based on responses from a national sample of 121 U.S. companies from industries including transportation, health care, technology, entertainment, consumer products, retail and energy production. The sizes of the companies spanned a range from 1,000 employees to 100,000 employees.

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