Reducing Business Costs With Wellness Programs

By Samuel Greengard

It’s difficult to trek through a day without reading a headline about people getting fatter and unhealthier. More than one-third of American adults are now categorized as obese. Not only does this impact the state of overall health care, it costs businesses a chunk of money through higher health insurance premiums.

But now technology is coming to the rescue. A growing number of employers are turning to fitness trackers such as the Fitbit and Jawbone to augment their wellness programs. The goal? Motivate employees to lose weight and be healthier. In some cases, this can result in a cost reduction in the thousands of dollars per employee. As a result, some firms are trimming hundreds of thousands of dollars from their annual bill.

The concept works like this: an employer offers a fitness tracker for free or at a reduced cost, an employee wears it and presumably exercises. If the person hits predetermined goals, he or she sees a reduction in the premium or the copay. The Affordable Care Act allows businesses to spend up to 30 percent of annual insurance premiums to reward employees for healthy behavior and receive incentives.

A growing number of high-profile companies have signed onto the trend, including BP. In 2013, BP gave 14,000 employees, 4,000 retirees and 6,000 spouses free Fitbit trackers as part of its wellness program. The result? BP has reduced its health-care costs to less than the average growth rate of U.S. insurance premiums of 6 percent. Advocates say this approach brings inherent fairness to a previously unfair system by customizing risk data and costs.

But the concept also treads into controversial waters. Privacy advocates are alarmed and dismayed by the growing ability to collect personal data. In the case of fitness trackers, this could soon mean connecting digital dots about heart rate, blood sugar, body temperature and other functions to understand when a person may be sick—or about to wind up with a serious disease. It’s not unreasonable to think that some employers—and other parties—will misuse or abuse the personal data.

The critical issue—and something that will be a theme across all facets of business over the next decade—is that society, and CIOs, must find ways to use technology to benefit a business, employees, partners and customer—without stepping over any ethical lines. Technology should reward, not punish, individuals. Push too far or abuse private data and you’re likely to see some very healthy pushback.

About the Author

Samuel Greengard is a contributing writer for CIO Insight. To read his previous CIO Insight blog post, “Everyone Wins When Businesses Treat Employees Well,” click here.