How employers can reduce healthcare costs through wellness programs

Employer Experience and Benefits

| July 26, 2024

Control your medical spending and improve employee well-being with a workplace wellness program centered around an employer-sponsored health clinic

Although astronomical healthcare costs disproportionately affect uninsured adults, Americans with health insurance still battle with the burden of payments. About half of U.S. adults find it challenging to afford health care costs, and almost half of insured adults also report struggling to afford out-of-pocket costs. One in four adults report that they or a family member in their household have struggled to pay for health care within the past 12 months. [1]

As an employer, you can play a vital role in managing healthcare costs for your workforce while also reducing the medical expenses at your company by finding solutions that mitigate the financial burden of care.

Continue reading to learn why a workplace wellness program centered around an employer-sponsored health clinic is the solution to controlling the health care costs you need.

In the United States, the average annual cost of health insurance in 2023 was $6,575 for an individual and $23,968 for a family.

How much does medical care cost on average in the U.S.?

With health insurance being the principal indicator of medical care costs, the most recent data shows that the average annual cost of health insurance in the U.S. in 2023 was $6,575 for an individual and $23,968 for a family. [2]

Additionally, the most recent data on general healthcare spending found that in 2022, it reached $13,493 per person, with a 4.1% growth rate. [3]

When it comes to health spend for employers, the average cost of employer-sponsored health insurance per employee increased 5.2% in 2023, reaching $15,797. [4]

Healthcare costs are becoming a massive burden for employers. Some may want to attempt cost-shifting, but they risk putting too much stress on the health of employees who have already shown to have put off or skipped some form of health or dental care in the past year because of cost. One in four adults report that they have postponed necessary health care in the past 12 months due to the cost. [1]

Family premium increases outpace both wage growth and inflation

Why does healthcare cost so much?

At the end of 2021, the Kaiser Family Foundation reported that family premiums for employer-sponsored coverage in the U.S. had increased 47% in the last decade—a rate that outpaces both wage growth and inflation over the same period. [5]

With such a drastic and steady increase, Americans are often left questioning why they are required to spend so much to take care of their health and well-being and that of their loved ones.

Although it is a combination of many factors, some of the most significant drivers of high healthcare costs include:

Silos of care refer to how patients in the U.S. are predominantly treated by different doctors for each medical issue individually rather than by a primary care physician that takes a holistic look at the patient and avoids duplication of costly procedures and tests.
Chronic and mental health conditions, such as high blood pressure, diabetes, smoking, physical inactivity, and obesity, account for 90% of the United States’ $4.5 trillion yearly health care spending. [6]
Pharmaceutical drugs cost nearly four times higher on average in the U.S. than in other similar countries. [7]
Prevalence of low-value care services like unnecessarily ordered MRIs or CT scans for acute issues has been estimated to cost the U.S. healthcare system $75 billion to $100 billion annually. [8]
Lack of cost transparency in the U.S. healthcare system is costly for patients who are unable to make decisions based on price. By having insurance, patients have no idea how much the medical goods or services they purchase actually cost.
Fee for service model of the U.S. healthcare system causes physicians to become incentivized to schedule more appointments and order unnecessary tests for patients because they only get paid when they provide a service.
Administrative fees in 2021 accounted for an estimated 15-25% of total national healthcare spending in the U.S., potentially meaning that a quarter of the costs of your medical care are not even for the care itself. [9]
Provider consolidation across the healthcare industry to expand market share influences companies to increase the cost of their services due to reduced competition.
Increased demand for care as the global life expectancy continues to rise poses a costly burden, with 13-25% of Medicare costs spent by patients in their last year of life. [10]

Whether or not you are witnessing the direct impacts of these factors on the healthcare spending at your company, it is no doubt affecting your bottom line. With many of these factors being controllable, it is imperative that you enact strategies at your workplace that can effectively mitigate the effects of these cost-driving factors and help to reduce healthcare costs for you as an employer.

How can employers reduce healthcare costs?

When it comes to lowering healthcare costs, many employers look to different insurance cost management strategies, such as dropping coverage altogether, changing carriers, self-insuring, or implementing a high deductible plan.

Although these insurance-focused strategies can help, they are often not the best option for your employees or the most effective way to save on your company’s medical costs.

Instead, one of the best ways to reduce healthcare spending is to implement a workplace wellness program centered around an employer-sponsored health clinic on-site or near-site.

Implementing a primary care clinic can be a lucrative plan

What is a workplace wellness program?

A workplace wellness program is an all-encompassing, coordinated set of health promotion and protection strategies enacted by an employer that includes programs, policies, benefits, and more that are designed to improve the health and well-being of employees. [11]

A great way to start a workplace wellness program is to invest in an employer-sponsored primary care clinic for your team, either housed at your worksite or a nearby, convenient location. If you have a remote team or hybrid work environment, you can work with an advanced primary care provider that offers virtual care options through the clinic.

With every $1 invested in primary care saving $13 in downstream costs, implementing a primary care clinic as the focus of your workplace wellness program can be an especially lucrative plan for your organization. [12]

How does a workplace wellness program help reduce costs?

As an employer, investing in a workplace wellness program offers the potential to lower your health care costs and insurance claims by maintaining the well-being of healthy employees and supporting employees with chronic conditions in getting healthier.

Historical data has shown that well-implemented workplace wellness programs can lead to 25% savings each on absenteeism, health care costs, and workers’ compensation and disability management claims costs. [13]

If you partner with an advanced primary care provider that utilizes a clinic as the touch point of your workplace wellness program, you can likely offer your employees no-cost doctor’s visits, mental health support, nurse health coaching programs, and no-cost or dramatically reduced-cost pharmaceutical drugs.

The University of Georgia conducted more recent research on workplace health programs that were studied across two decades and partly funded by The National Institutes of Health and the Centers for Disease Control and Prevention. They surveyed 20 organizations with workplace wellness programs in government, education, financial services, nonprofits, healthcare, and more, with 450 employees total. [14]

The study found that their wellness programs “increased perceived organizational support among employees, directly improving their job stress, burnout, work engagement, and organizational citizenship behaviors. Offering the program during work time, in particular, strengthened the benefits even more.” [14]

How common is employer-sponsored health insurance?

A study conducted from 2020 to 2022 showed that approximately 86% of private-sector workers in the U.S. were employed at companies that provided employer-sponsored health insurance. [15]

In conclusion

Finding ways to reduce your health care costs will benefit you as the employer and your valued team members.

If you decide to implement a wellness program with a health center, your employees will be able to take control of their health and their families with the support, care, and solutions they need to live happier, healthier lives.

Interested in the possibilities of a wellness program for your team?

Delivered through our health and wellness clinics both in person and virtually, our advanced primary care services at WeCare tlc proactively manage your employees’ costly chronic conditions while making long-term financial sense for you as the employer.

“We make people healthier and companies stronger by utilizing employer-sponsored primary care services such as routine doctor’s visits, health coaching, lab services, and medication dispensing at no cost to employees and the dependents on the health plan,” explains Raegan Garber Le Douaron, President and CEO. “In turn, we proactively identify and manage complex, chronic conditions to bend the curve of rising health care costs for employers.”

By creating a culture that values employees, your organization will benefit from increased productivity, improved recruitment and retention, and reduced absenteeism.

WeCare tlc is committed to people healthier and companies stronger

With our identity rooted in being an independent, privately held business, our medical teams are given the tools and freedom to utilize the most effective services to diagnose and treat your employees and their families without any potential conflicts of interest.

Ready to create a healthier workforce?
Contact us today or explore our case studies to learn more.

Sources:

1: KFF (Kaiser Family Foundation) | Americans’ Challenges with Health Care Costs

2: KFF (Kaiser Family Foundation) | 2023 Employer Health Benefits Survey

3: Centers for Medicare & Medicaid Services (CMS) | National Health Expenditure Data – Historical

4: Mercer | National Survey of Employer-Sponsored Health Plans

5: KFF (Kaiser Family Foundation) | Average Family Premiums Rose 4% This Year to Top $22,000; Employers Boost Mental Health and Telemedicine amid COVID-19 Pandemic, Benchmark KFF Survey Finds

6: CDC | Workplace Health Promotion Fast Facts: Health and Economic Costs of Chronic Conditions

7: House Committee on Ways and Means | A Painful Pill to Swallow: U.S. vs. International Prescription Drug Prices

8: NPR | When routine medical tests trigger a cascade of costly, unnecessary care

9: JAMA (The Journal of the American Medical Association) | Administrative Expenses in the US Health Care System

10: National Institutes of Health (NIH) | Medicare Cost at End of Life