Estimating Risk Reduction Required to Break Even in a Health Promotion Program

Abstract

Purpose.

To illustrate a formula to estimate the amount of risk reduction required to break even on a corporate health promotion program.

Design.

A case study design was implemented. Base year (2001) health risk and medical expenditure data from the company, along with published information on the relationships between employee demographics, health risks, and medical expenditures, were used to forecast demographics, risks, and expenditures for 2002 through 2011 and estimate the required amount of risk reduction.

Setting.

Motorola.

Subjects.

52,124 domestic employees.

Measures.

Demographics included age, gender, race, and job type. Health risks for 2001 were measured via health risk appraisal. Risks were noted as either high or low and related to exercise/eating habits, body weight, blood pressure, blood sugar levels, cholesterol levels, depression, stress, smoking/drinking habits, and seat belt use. Medical claims for 2001 were used to calculate medical expenditures per employee.

Results.

Assuming a $282 per employee program cost, Motorola employees would need to reduce their lifestyle-related health risks by 1.08% to 1.42% per year to break even on health promotion programming, depending upon the discount rate. Higher or lower program investments would change the risk reduction percentages.

Conclusion.

Employers can use information from published studies, along with their own data, to estimate the amount of risk reduction required to break even on their health promotion programs.