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A Challenge with a Solution

Businesses face many challenges and expenses. The largest of these expenses are tied to employee health and on-the-job productivity. Employees in poor health add to business expenses through skyrocketing insurance premiums, more frequent sick days, and decreased productivity.

Health Issues We Face

Today our country is facing growing health concerns. The cost of dealing with these concerns is being transferred to you, the business owner. Below are statistics illustrating current healthcare issues and how those issues are impacting your business and your bottom line:

  • Chronic illness including obesity, heart disease and diabetes accounts for 75% of health costs as reported by the American Public Health Association.
  • 70% of all illnesses are linked to lifestyle related causes that can be controlled, such as physical inactivity and obesity (Source: CDC and U.S. Department of Health and Human Services).
  • 65% of Americans are overweight, and 33% are considered clinically obese (about 62% of women and 71% of men). This translates to more than 90 million overweight people in the Unites States! In less than 5 years, this is a 7-10% increase in the obesity rate. A Johns Hopkins University team estimated that by the year 2015, 75% of adults will be overweight and 41% obese.
  • 60% of adults report they get essentially no exercise at all. Only about 15% regularly engage in vigorous physical activity.
  • The RAND Corporation reported that obese individuals spend more on health care than those who smoke daily or drink heavily.
  • Health care spending in the United States has continued to rise at the fastest rate in history. In 2007, total national health expenditures were expected to increase 6.9 percent — two times the rate of inflation!
  • Total healthcare spending in 2007 was $2.3 TRILLION, $7600 per person (healthcare costs per capita have more than doubled since 1993, rising from $3,470 per person).
  • In 2005 healthcare spending represented 16 percent of the gross domestic product (GDP), 4.3 times the amount spent on national defense! By the year 2016, healthcare spending is expected to reach $4.2 TRILLION, or 20 percent of GDP.
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The Resulting COST to Your Business

Health insurance is the largest, and the fastest rising business expense. The McKinsey Quarterly reported in September 2004 that health insurance costs are beginning to overtake business profits. In 2005, total costs of providing U.S. employees health benefits exceeded Fortune 500 corporation profits. The average Fortune 500 Company may spend as much on health benefits as it earns in after tax profits.

Poor employee health dramatically increases health insurance costs and employee benefits expense.

Employees with chronic illness or obesity have more frequent claims and greater healthcare expenses. Annual per capita health care costs can increase $2,500 per year for obese employees. For a company with 1,000 employees that can amount to $285,000 per year.

Indirect employer costs relating to sick time usage, retention, and employees’ energy level and morale represent a substantial amount of time and money.

The following statistics illustrate fast-rising business and employee insurance costs in the U.S.:

  • Employment-based health insurance premiums increased 100 percent since the year 2000, compared to 24 percent cumulative inflation and 21 percent cumulative wage growth in the same period.
  • Employer health insurance premiums increased by 6.1 percent in 2007- twice the rate of inflation. Small employers saw their premiums increase an average of 5.5 percent. Businesses with fewer than 24 workers experienced a 6.8 percent increase.
  • Annual premiums charged to employers for a health plan covering a family of four averaged $12,100 in 2007. Annual single coverage premiums averaged over $4,400.
  • According to the Kaiser Family Foundation and the Health Research and Educational Trust, employee-sponsored health insurance premiums in the United States are rising four times faster on average, than employee earnings since the year 2000.
  • On average, employees contributed nearly $3,300 or 10 percent more in 2007 than they paid in 2006. At $10,712, annual premiums for family coverage significantly eclipsed gross earnings for full-time, minimum-wage workers.
  • Employees now pay $1,400 more in premiums annually for family coverage than they did in 2000. Average employee contribution for employer-provided health insurance has increased 143 percent since 2000. Co-payments for medications, out-of-pocket deductible costs, and co-insurance for hospital and physician visits rose 115 percent during the same period.
  • Annual health insurance premiums continue to increase 9-13% annually.
  • The number of Americans under age 65 paying more than $2,000 a year on out-of-pocket health care expenses rose from 37.3 percent in 1996 to 43.1 percent in 2003.

The impact of these costs on business profitability is staggering and requires an immediate solution.