Making the Business Case for Wellness
With the rising costs of health care we, at Assurance, believe that a “do nothing” approach won’t get you results. What will? Embracing the idea of being proactive with wellness and health risk management. There may be skepticism at first, but I’ve seen it work with my own eyes and I’m here to explain why it matters.
In any given population, you will have a natural stratification of risk into low, medium and high risk health categories. According to the University of Michigan’s Health Management Research Center (HMRC), a typical company’s employee population is made up of:
- 64% in the low-risk category
- 26% in the medium-risk category
- 10% in the high-risk category
There is a progression that happens under the “do nothing” approach that will naturally cause low risk to move to medium risk, then to high risk, equaling high cost. This is what we want to avoid as an employer. The bigger our high-risk pool is, the higher the cost and our exposure. But, that high risk pool doesn’t have to be filled to feel the effects of its cost.
I’m sure many of you have heard of the 80-20 rule. We insurance geeks use this as a rule of thumb in helping our clients understand what and who is driving their health care costs. Generally speaking, at any given time, 20% of a group’s population incurs 80% of the claims. This number is startling, but holds true. With the 80-20 rule in mind, our instant reaction is to try to identify that small 20% group to help mitigate their risk and control costs.
How do you combat those kinds of numbers? Get in front of that cost curve! Improve the health and well-being of your employees through engagement in a wellness and health risk management strategy. Only when this is done, do we have a chance at impacting our medical claims trend and creating a healthier bottom line in the long term.
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