Indian Industries takes aim at employee health risks; making workers responsible for their own health risks will significantly reduce what Indian Industries pays to insure its workers

Indian Industries takes aim at employee health risks; making workers responsible for their own health risks will significantly reduce what Indian Industries pays to insure its workers

Monica Battagliola

Making workers responsible for their own health risks will signigicantly reduce what Indian Industries pays to insure its workers.

Making workers f i n a n c i a l l y accountable for their own healt care to reduce

costs may be an idea whose time has come. But it’s an area where many employers tend to tread lightly.

Except for Bob Griffin, president and CEO of Escalade Inc., Evansville, Ind. Esclade is a holding company and parent of Indian Industries, a sporting goods manufacturer with some 450 workers and about 725 covered lives. Griffin sought out an insurer to develop a risk analysis in which employees pay an increasing amount of their premiums based on their health risks. In return, Indian Idustries agreed to institute a mandatory health management program in 1988. The profram–backed by its labor union–provides economic benefits to workers who, with their spouses and dependents, eliminate their health risk in four categories: smoking, weight control, cholesterol, and blood pressure.

Results have been significant. When the mandatory program was launched, the company’s average employee and spouse had 1.3 risks; current findings indicate that average has dropped to 0.9. The average cost to provide health care for an employee is $3,968, according to A. Foster Higgins & Co. Inc., New York benefits consultants. “We run probably less than 70% of that,” Griffin says, adding that this year the company expects to pay no more than $2,800 in health care costs per worker. “When started the program, we were pretty much tied in with the national average. Our costs have gradually leveled off as the national average has increased and this year our costs actually have declined,” Griffin said. The company’s health care costs were $1 million last year.

Griffin got the idea after participating in an executive wellness program sponsored by St. Mary’s Hospital in Evansville in 1984. After a complete physical examination and health risk appraisal, doctors and counselors sat down with Griffin and detailed the results. “They explained everything to me about the results as well as the cause of high-risk factors,” Griffin says. “That had never happened to me before and it gave me a whole new lutlook on medical care: Rether than rely on doctors, we need to rely on ourselves because there is a lot we can do to keep ourselves healthy.”

By 1985 Griffin had implemented a voluntary wellness program at Indian Industries patterned after the one he participated in at St. Mary’s. All participants took physical examinations and had health risk appraisals. Griffin hired a health risk consultant to advise employees individually on ways to reduce health risk. Gradually, bulletin boards around the plant advertised fitness, weigh loss, and smoking cessation classes.

“We were surprised at the receptivity of the workforceto do something to lead a healthier life and to actually change their lifestyles,” Griffin says. “But we weren’t getting recognition from our health insurer via a reduction in premiuma. We struggled for the next few years to get companies interested. We shopped for companies that would quote us by risk. The insurance companies would tell us that we were trying to do something that wasn’t done.”

Finally Acordia of Evansville, Ind., a third-party adminstrator and health car management firm that administers programs for self-insured employers, agreed to administer a risk-based insurance plan that focuses on the four factors Indian Industries is measuring. The company also agreed to administer Indian Idustries’ wellness program and to serve as a patient advocate if the company would make the biannual health risk appraisals mandatory for all workers. Indian Idustries accesses a physician network, Physicians Health Network, through Acrdia.

“Until employees see some economic impact as a result of their lifestyles, we won’t get people to focus on their own maintenance and well-being,” says Russ Sherlock, President and CEO of Acocdia. “But an employer need to establish a baseline of data before it can differentiate premiums based on risk.” Which is exactly what Indian Industries did. By first establishing a voluntary program and collecting information about the health status of its employees, the company could price its premiums based on a risk analysis.

In 1988, Griffin proposed that Indian Industries’ health management program make the leap from voluntary with no economic benefits to mandatory with economic benefits. Since the plan had to be approved by the union first, all employees were briefed by executives and health risk consultants in small groups to explain the program and answer questions. The program met with near unanimous approval and was cleared to be implemented and expanded to include spouses for all four risks and dependents for smoking only. All Indian Industries employees and spouses undergo biannual evaluations and there are no plan alternatives. “Workers either belong to this plan or they don’t belong to any plan at all,” Griffin said. Says Acordia’s Sherlock, “Although it’s sometimes perceived as a penalty, the program was constructed as an incetive for those employees with fewer risk factors.” The premium is experience-rated, he explains. “We worked from there to determine how much extra the premium would be for each risk.”

To support a healthier workforce the company built an on-site exercise facility open seven days s week to all employees and their families. The plant also houses a library of video tapes that deal with various medical procedures and preventive care. A quarterly newsletter on health topics published by Acordia is sent to each worker’s family. And as of Sept. l the plant become a smoke-free environment. Employees who still smoke are provided with an outside shelter which they may use on breaks.

The company pays roughly 75% of the premium for an employee with no health risks,” says Griffin. “If a person chooses a lifestyle that has some of those risks, the premium increase comes out of his or her pocket. The idea is that conscientious employees don’t have to pay for others’ bad choices.” Out-of-pocket costs can range from $250 per year per risk up to about $1,250 a year. So far, the number of risks for employees and their dependents has decreased every six months. “We have made tremendous headway in reduction of blood pressure and cholesterol risk, but the tough ones are smoking and weight reduction,” Griffin said. The company will reimburse workers who enroll in and successfully complete an approved smoking cessation program.

The success of the health management program inspired Griffin to take it a step further. “Our total health care costs were still rising because of the number of unnecessary medical procedures being performed,” he says. In agreemed with the union, the company advised workers begining in May that each time they seek medical care other than preventive care, they will have to contribute toward the doctor visit. “The idea is tjo make us better, more informed consumers of health care,” Griffin says The company also now waives copayments and deductibles for preventive measures and for expectant mothers who participate in a prenatal care program. Of the $1 million Indian Industries spent on health care last year, about $175,000 went to ward preventive care wellness, Griffin says.

To help empower its workers, the company hired a patient-advocate nurese who visits the plant two to three days a week and is always available by phone. “She answers questions [about benefits] and helps us intelligently face our physicians,” says Griffin.

As a result, Griffin says, some initially recommended surgical procdures have been avoided and the number of hospital days for Indian Industries’ workers was about 32% less than the national average in 1992.

Getting union cooperation for the mondatory plan wasn’t difficult Griffin says, since it was preceded by the voluntary program. “A number of them had already reduced their risks. That made a big difference. If we had instituted the mandatory plan cold, we might have had a war on our hands.”

Though a union representative agreed that the plan met with widespread approval and is making strides in improving workers’ health, he noted that nearly 40% of the union members smoke and don’t like being penalized for it.

“But we do like the way the insurance company worked hand-in-hand with the union and involved us in every phase of implementing the plan,” says James J. Jones, chief steward for Indian Industries union, The international Union of Electronic, Electrical, Salaried, Mechine, and Furniture Workers. “I wish more union would try it because, though it’s scary thing to begin with, it improves peoples’ health.”

“The whole issue with our health risk program is to develop self-responsibility for health. To shift the responsibility from the doctor or the medical system back to us is our end goal,” Griffin says.

COPYRIGHT 1993 A Thomson Healthcare Company

COPYRIGHT 2004 Gale Group