Testimonies/Reports

Occupational Wellness Programs

Statement by the New York State Nurses Association, Public Forum on Occupational Wellness, Sponsored by State Senator Malcolm A. Smith, May 23, 2005, Albany, N.Y.

The New York State Nurses Association is the professional association representing the interests of over 200,000 licensed registered nurses in New York state. As the oldest and largest union for registered nurses in the state, NYSNA is the collective bargaining agent for more than 30,000 RNs working at more than 150 facilities, including hospitals, nursing homes, clinics, home care agencies, hospices, schools, and public health agencies. Thank you for the opportunity to present testimony today on Senate Bill 3835, which would provide an occupational wellness tax credit for businesses.

NYSNA supports the concept of occupational wellness programs and supports initiatives that reduce safety hazards and violence in the workplace. This legislation would provide businesses with tax credits of up to $100 per employee for whom an occupational wellness program is provided. These programs would promote good health, help to prevent or alleviate acute or chronic sickness or disease, and minimize adverse health consequences due to lifestyle. The Department of Health would develop the components of the program, which would include, but not be limited to, providing employee assistance programs; encouraging or providing opportunities for fitness enhancement; assessing employee health levels; and providing information and guidance on health education, nutrition, preventive health care, stress management, smoking cessation, and other topics.

Benefits of Occupational Wellness Programs

Wellness programs have been known to reduce corporate medical costs, absenteeism, and employee turnover and to increase productivity. Consider these examples provided by the Trinity Health Program (2004):

• Blue Shield of California indicated that a health promotion program for California’s public employees saved $8 million in medical claim costs over 12 months for 54,902 participants.
• General Electric’s 18-month study of fitness program members showed a 38% decrease in healthcare spending versus a 21% increase for nonmembers. Annual costs were $757 per participant and $941 per non-participant, saving the company an estimated $1 million in medical expenses.
• A NASA study reported a 12.5% increase in productivity for exercisers vs. non-exercisers. Exercisers worked at full efficiency for the entire day while non-exercisers lost 50% efficiency for the final two hours. Exercisers also showed greater stamina, performance, concentration, and decision-making abilities.
• DuPont reduced absenteeism by 47.5% over 6 years when 29,315 blue-collar employees enrolled in a fitness program. Participants used 14% fewer disability days, netting 11,726 fewer disability days for the company.
• In 1993, Canada Life Assurance Company of Toronto reported that in its first year of instituting a health and fitness program, the employee turnover rate was 1.8% for those who participated, compared to a company average of 18%.

According to the Employee Assistance Program Association (EAPA), 68% of all workers will at some time experience health problems severe enough to prevent them from coping with their day-to-day duties. The average yearly cost for an employee assistance program (EAP) ranges from $2 to $20 per employee, but EAPA reports that workers compensation costs for a small company were reduced by $75,000 through the establishment of an EAP with an emphasis on safety awareness. According to the EAPA, for every dollar invested employers can expect to save from $5 to $16. A study of one business showed that mental health care costs were 58% less for EAP participants compared to those who did not use EAP (Prochaska, 2003).

Occupational wellness programs can be designed in a number of ways and provide a number of services. Employers can choose to contract with outside organizations or they can choose to bring the services in-house. An article in the American Association of Occupational Health Nurses Journal highlighted a safety, health, and environmental department at a Midwestern manufacturing company run by an occupational and environmental nurse. This department’s role involved safety; occupational health; attendance management; health promotion; and environmental, security, and fire protection. As part of the occupational health role provided through this department, the occupational health nurse provided clinical services such as physical examinations, drug screening, breathalyzer tests, pulmonary function tests and tetanus booster shots, which resulted in a direct cost benefit of more than $1,100 annually (Morris & Smith, 2001).

Programs also can be designed with a narrow focus on individuals with the highest need for medical care. A review of studies on workplace health promotion and disease management programs found that programs that were focused on multiple risk factors were likely to reduce employee risk for chronic diseases (Pelletier, 2001).

The relationship between the high-risk status of employees and high costs was demonstrated through a review of medical claims of employees at the Steelcase Company. Employees were placed in either low-risk (two or fewer factors) or high-risk (three or more factors) categories based on 10 lifestyle/biomedical variables. These included systolic and diastolic blood pressure, smoking status, physical activity level, medication/drug use, illness, absences, alcohol, safety belt use, cholesterol level, and relative body weight. This information was compared with medical claims over a five-year period and showed that high-risk resulted in high costs. As risk status changed, so did the cost associated with the employee. For example, as an employee’s status went from high to low risk, cost decreased by $129 per year. Interestingly, when an individual went from low to high risk, cost increased by $734 per year (Golaszewski, 2001).

Concerns with Senate Bill 3835

While NYSNA supports the concept of occupational wellness programs, we have several concerns with Senate Bill 3835:

• Tax Credit - The legislation would provide a tax credit for businesses that provide these services to employees with priority given to small businesses. The tax credit would be awarded through a competitive bid process. NYSNA is concerned that this process would be an impediment for smaller businesses and would create a disincentive for providing these services.
• Grant versus Tax Credit - We are concerned that small businesses may have limited financial resources to start occupational wellness programs. NYSNA suggests that the legislation be restructured to provide grants rather than tax credits, which are provided after the fact. According to research, these programs must be sustained for three to six months in order to bring about health risk reduction among employees and three to five years to demonstrate cost effectiveness (Pelletier, 2001). After a three-year grant period, a business would begin to reap financial savings and be able to sustain the program from the savings achieved through the occupational wellness program.
• Expand Access - NYSNA believes it is the laudable goal of this legislation to promote wellness and healthy living among employees so businesses can save on healthcare costs. This legislation requires employers to provide occupational wellness programs only to employees. We recommend that the scope be expanded to include services for dependents of employees and retirees as well. Numerous medical insurance surveys have cited the fact that actual medical expenditures for corporations are greatest for retirees and dependents, rather than active employees. This is partially due to the growing ratio of retired versus active employees and to the aging of the overall population (Pelletier, 2001).
• Reduction or elimination of health insurance coverage - NYSNA’s greatest concern about the legislation is that occupational wellness programs may be viewed by employers as substitutes for health insurance programs. We fear that rising cost of healthcare premiums, combined with the tax credit provided in this legislation, will be an incentive for businesses to provide only occupational wellness programs. We know that some employers currently do not provide health insurance because it is too costly, forcing employees to go without health insurance or apply for health insurance coverage through state-funded programs. According to the U.S. Census Bureau, an estimated 15.6% of the population, or 45 million people, were without health insurance coverage in 2003. The percentage and number of people covered by employment-based health insurance fell between 2002 and 2003, from 61.3% and 175.3 million to 60.4% and 174 million. A survey conducted by the Community Service Society in January 2005 revealed that 40% of full-time workers living below the poverty line did not have health coverage through their employers.

While occupational wellness programs add tremendous value to both employees and employers, they should not be viewed as replacements for health insurance coverage. While these programs provide health education and help promote healthy lifestyle choices, employees still need access to healthcare services, medical testing, and treatments, which can only be made affordable through health insurance coverage.

As you deliberate on this bill, we urge you to provide grants rather than tax credits; to expand coverage to dependents and retirees; and to explicitly state that occupational wellness programs are by no means a substitute for health insurance coverage.

References

Golaszewski, T. (2001). Shining lights: Studies that have most influenced the understanding of health promotion's financial impact. American Journal of Health Promotion, 15(5), 332-340.

Trinity Health Program - Corporate Wellness Statistics. (2004). Retrieved May 17, 2005, from http://www.trinityhealthprograms.com/programs/corporate/stats.htm

Pelletier, K. (2001). A review and analysis of the clinical - and cost-effectiveness studies of comprehensive health promotion and disease management programs at the worksite: 1998-2000 update. American Journal of Health Promotion, 16(2), 107-116

Prochaska, S. (2003). Employee assistance programs: What does HR need to know. Alexandria, VA: Society for Human Resource Management.

Morris, J., & Smith, P. (2001). Demonstrating the cost effectiveness of an expert occupational and environmental health nurse. American Association of Occupational Health Nurses Journal, 49(12), 547-556.

For more information, contact Governmental Affairs at 518.782.9400, ext. 283 or by e-mail.