04/27/2007: "Wellness Programs are Winners—for Everyone!"
A half century ago, Merle Travis wrote a song that Sollie “Tex” Williams recorded; it became Capitol Record’s first million-seller. The song? “Smoke! Smoke! Smoke! (That Cigarette).”
Although that song is no longer heard on the airwaves, the sentiment with smokers remains, and the fallout from smoking and other unhealthy lifestyle choices is costing us hundreds of billions of dollars. In fact, the choices a number of us are making are killing us—literally!
Some of the most difficult health care problems and diseases are linked to chronic, preventable medical conditions and lifestyle choices associated with nutrition and exercise, excess weight, alcohol consumption, and smoking. Indeed, cigarette smoking is the leading cause of preventable disease and death in the US. On average, smoking reduces adult life expectancy by approximately 14 years.
Poor health not only affects the quality of life for those who smoke, but it also costs individuals, families, companies, and government entities hundreds of billions of dollars. As the population continues to expand and age, these effects will become even more pronounced unless concerted efforts are made to change underlying behaviors.
According to the Centers for Disease Control and Prevention (CDC), the cost of managing chronic diseases appears to be a major contributing factor to the growing price tag of health care, which is rising at the fastest rate in US history—some three times the rate of inflation. The CDC estimates that 32% of Americans suffer from chronic disease, but their medical costs account for more than three-quarters of the nation’s $1.8 trillion annual health care expenditures.
While residents of the Lone Star State have seen their median earnings climb by almost 11% over the 2000-2006 timeframe, at the same time, the average family’s health care premiums shot up some 80%. Companies are finding it ever more difficult to provide health care coverage, and the percentage of Texans without insurance is larger than in any other state. Illness is, thus, also a devastating financial blow for many families, and the resulting losses in productivity are even greater to the economy than the out-of-pocket outlays for medical expenses.
So, is anyone doing anything about this matter? Certainly. Many businesses and other institutions have established wellness and prevention programs that include exercise (the CDC indicates that less than half of us meet the recommended levels of physical activity), weight loss, stress reduction, health assessments/management, nutrition enhancements, and smoking cessation. There is strong evidence that these kinds of endeavors can be instrumental in reducing the cost of health care and increasing productivity.
Since the US Surgeon General’s 1964 report on smoking which first brought to light the dangers of the habit, there has been a significant decline in smoking, but today almost one out of every five Americans still light up several times a day—slightly more men than women.
The CDC considers smoking cessation programs the most cost-effective health care benefit as they cost about $1.20 to $4.80 per person per year compared to $1,623 per smoker per year in excess medical expenditures.
The Texas House and Senate are both considering legislation that will reduce preventable health-related costs of State programs. Such measures would involve wellness and prevention programs (including smoking cessation) for State-funded employee insurance and Medicaid. Although all the particulars have not yet been fully developed, the implementation of such endeavors would certainly prove highly beneficial, and Texas would see a net gain in economic activity of billions of dollars. In addition, thousands of jobs would be created.
In a recent study performed by my firm, The Perryman Group, we discovered that a comprehensive program for State employees offers notable economic returns on the State’s investment in both absolute and relative terms, with gains in business activity of about $343.4 million in annual spending and nearly 2,500 jobs even after removing the State’s spending required for the programs and accounting for the fact that the money was diverted from other purposes.
Moreover, we found that a comprehensive wellness program for Texas’ Medicaid recipients could be expected to add more than $2.7 billion in annual spending to the economy, generate over $2.5 billion in fiscal resources for the two-year budget cycle, and create 20,000 permanent jobs on a net basis.
Most illuminating is the fact that these programs more than pay for themselves, with net annual fiscal revenues to the State of comprehensive wellness and prevention programs of almost $169.3 million for State employees. Net fiscal revenues for Medicaid recipients for a comprehensive program would be almost $1.3 billion per year. These effects could be realized within a few years of implementation, and studies have shown that wellness programs can pay for themselves quickly; there is every reason to believe a well-crafted program could be revenue-neutral for the State within the first two years.
Wellness and smoking cessation programs in the private sector have been very successful. Texans are generally less healthy than national norms and could clearly benefit from prevention and wellness programs. Such programs dramatically improve the quality of life of those involved. They also have the potential to reduce medical care costs. In addition, their impact on the economy can be highly positive. Wellness programs are a “win-win” and, as such, they are certainly worthy of substantial support.