The Corporate Responsibility of Health

by Bret Kincaid

We are made aware almost daily that Washington elites are engaged in what will likely be a historic debate over healthcare reform. It is possible that the result of this legislative process—a process that really began in the early 1990s—will be as monumental as the establishment of Medicare and Medicaid in the 1960s. The new healthcare policy has the potential of expanding healthcare access to millions of the 47 million people without health insurance today.

But access is only one of the key problems of the US healthcare system. Another is cost.

It costs about $2.3 trillion to provide healthcare to Americans today. That is almost one-fifth of the gross domestic product! And healthcare costs increase almost three times as fast as general inflation. It doesn't have to be this way, even if the US establishes universal healthcare access, as its Canadian and European counterparts already do, and for much less per capita

An important step toward keeping costs from rising so precipitously, even as the US expands healthcare coverage, is to incentivize health. Apparently, well over half of healthcare costs are attributable to individual behavior. Improving individual behaviors related to health, then, is a sensible way to reduce healthcare costs. One institution that could help serve as an engine to encourage healthy behavior is business.

Increasingly, companies in the corporate world are instituting "wellness programs" that encourage employees to maintain healthy lifestyles. It is in their interest to do so since well-designed programs have the potential to reduce health insurance costs and absenteeism due to health problems while perhaps increasing productivity.

Recently, Safeway CEO Stephen A. Burd described his company's program in the Wall Street Journal (http://online.wsj.com/article/SB124476804026308603.html). Using the auto insurance industry as a model, Safeway accounts for healthy and unhealthy indicators to determine healthcare premium prices charged to non-union, volunteer employees. Premiums are adjusted according to tobacco usage and measures of weight, blood pressure, and cholesterol levels. Burd claims per capita healthcare costs have remained flat over the past four years even as many other companies' healthcare costs have increased almost 40%. And the employees seem to win as well. He reports that these employees' obesity and smoking rates are 70% of the national average. Moreover, almost four out of five of participating employees were pleased with the wellness program.

There are various kinds of wellness programs out there. If you want to know more, take a look at Harvard Public Health Review's recent article. (http://www.hsph.harvard.edu/news/hphr/winter-2009/winter09healthincentives.html). There are privacy issues with these kinds of employer-based wellness programs, and some disease groups, consumer organizations, and unions are lobbying to strike a provision (http://www.medicalnewstoday.com/articles/154438.php) supporting wellness programs from the current healthcare reform legislation. But it seems that this market-based solution to reducing healthcare costs is worth keeping and even encouraging. Those of us who own a business, especially one with many employees, can encourage this endeavor by considering a wellness program for our employees. We can also tell our members of Congress that while they are fighting over government's responsibility for the health of the nation, they should also design healthcare reform to make these market-based solutions work well for employers, employees, and, indeed, the nation.

Bret Kincaid is associate professor of political science at Eastern University in St. Davids, PA.

 

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