The University Record, January 17, 1994

Improving employee health habits saves money

By Deborah Gilbert
News and Information Services

A new study of employee health costs confirms what has been only a reasonable hunch. If enough “high health risk” employees—smokers, heavy drinkers, and couch potatoes—take action to improve their health habits, a company’s health care costs can plummet.

The Fitness Research Center began the 10-year study in 1985 for Steelcase Inc. in Grand Rapids. The study is now in its ninth year.

In a company the size of Steelcase, if all high-risk employees adopted low-risk lifestyles, “the savings could amount to roughly $20 million over three years,” Steelcase noted in a report to employees on the study results. High-risk employees had lifestyles that included two or more of the 14 health risks measured in the study.

The study, which includes 4,000 of the 8,000 Steelcase employees in Grand Rapids, is the longest running evaluation of its kind in the country, according to D.W. Edington, director of the Fitness Research Center, and Louis Yen, assistant research scientist in the Division of Kinesiology.

The study correlates health risk and lifestyle assessments with medical claims costs. The assessments focus on controllable risk factors such as smoking and diet, rather than “chance” factors such as family history or gender.

“Our Steelcase data shows that employees who were high-risk in 1985 but had shifted to a low-risk profile by 1988 had much lower medical claims from 1988 through 1990,” Edington said. Average annual claims went from $1,155 in 1985–87 to $537 in 1988–90, a drop of $618. Employees who were high-risk in 1985 and remained so in 1988, saw their average claims rise from $1,155 to $1,677.

Low-risk employees in both 1985 and 1988 saw their average medical claims remain approximately the same, dropping from $655 to $638—a $17 savings, “but the average medical claims for those who slipped from low-risk into high-risk behavior climbed from $655 to $1,513—more than twice as much.” (Medical claims costs are converted to 1993 dollars.)

The U-M study also found that average medical costs of high-risk Steelcase employees were a whopping 75 percent more than those of low-risk employees with zero to one health risk.

“Ten percent of the total employee population is responsible for 80 percent of the company’s annual health care costs,” added Pamela Witting, manager of wellness and disability services at Steelcase.

The researchers also found that many employees had improved their health habits during the study. “For example, the percentage of employees with high cholesterol dropped from 20 percent in 1985 to 13 percent in 1990,” said Witting. Unfortunately, weight trends are not so positive, she added. “In 1985, 27 percent were overweight but in 1990, 30 percent were.”

Savings at different companies would differ according to the makeup of the work force, Edington noted. “The average age in our Steelcase sample was 44 and 75 percent were male. The savings would be different, for instance, at a company with a younger and larger female work force.”

As a result of the continuing study, other corporations have contracted with the Fitness Research Center to conduct similar lifestyle/medical claims studies. They include Michigan National Bank, Michigan Consolidated Gas, First National Bank of Chicago, Continental Bank, Progressive Insurance Co. of Cleveland, the U-M Medical Center, the University’s M-CARE HMO, and Detroit Diesel.

Michigan National Bank and Progressive Insurance also offer incentive “health dividends” to low-risk employees, in the form of lower health insurance premiums. “Given the Steelcase data and the national concern about health care costs, such dividends may become the wave of the future,” Edington said.