Corporate Healthcare Costs and Smoke-free Environments GEORGE
R. LESMES, Ph.D., Chicago,//his
Results from two studies were combined to assess potential market impact for programs to reduce health risks, as well as to define how small businesses can better control their healthcare operating expenses, widen their profit margins, and increase their productivity. The most effective solutions resulted from partnerships among the medical, business, and patient communities for the joint implementation of intensive smoking-cessation programs. In the first study, the chief executive officers of 1,100 small businesses in the Chicago area were polled regarding their opinions on healthcare costs. During the 4-year study period, 1986-1990, we observed a significant increase in their recognition of the impact of employee smoking on rising healthcare costs. From this study we identified three‘ profile attributes of small-business leaders. First, these leaders possess a weak knowledge base regarding healthcare cost-containment methods; second, they understand the magnitude of the impact rising healthcare costs have on corporate profitability; and third, they have a strong level of confidence (85%) that lifestyle modification programs for their employees, such as smoking cessation, can help control healthcare costs. In the second study we found that smokingcessation programs with physician involvement, addiction assessment and treatment, and behavioral training and follow-up are preferred by those who want to stop smoking. Such programs have also enjoyed the highest level of sustained success.
From the Center for Cardiovascular
Research, Northeastern
Illinois University,
This research was funded in part by the Committee for Organized Research. ter for Cardiovascular Research, Northeastern Louis Avenue, Chicago, Illinois 60625.
lA-48S
July 15, 1992
Illinois University, 5500 North St.
The American Journal of Medicine
mall businesses have accounted for 50-80% of all new jobs in the United States since the mid1970s [ll. The Corporate Outreach Program at Northeastern Illinois University in Chicago assists the small-business community-specifically, local companies with ~300 employees-in assessing opportunities for improving employee health benefits and risk-prevention programming. Over the past 6 years, representatives from the university have met regularly with chief executive officers (CEOs) through a local network. Typically, the companies represented are 20-30 years old and stil1 have the original senior management team. They share an interest in balancing their responsibilities for employee well-being with the corporate long-term goals of financial growth and profitability. While these business leaders have traditionally valued the welfare of their employees and have provided liberal benefits packages, spiraling healthcare costs have begun to force them to make difficult kinds of benefits decisions.
S
PROFiLEOF.THE SMALL-CORPORATION LEADER The executives we studied had a limited knowledge of healthcare economics that was based on personal exposure to their own doctors and to television, newspapers, and popular news magazines. From a business standpoint, this level of understanding does not serve them well in assessing methods of reducing costs. In fact, many business leaders have historically assumed that healthcare premiums were just another cost of doing business, and most of those interviewed did not clearly understand their own, companies’ healthcare plans. Many executives were not aware of specific insurance options or of the terminology of managed-care contracting. For example, many were still doing business with the same insurance company they started with 20 years before, out of tradition. On the basis of our interactions with.these business leaders, we were able to make three basic assumptions and thus profile the executives of small corporations for subsequent studies. We found that (a) the knowledge base of small-business leaders regarding methods of controlling healthcare costs is similar to that of the average consumer’s; (b) executives understand their profits are being eroded by
Volume 93 (suppl 1A)
SYMPOSIUM
ON SMOKING
CESSATION / LESMES
TABLE I Percentage of Business Leaders Supporting Health-Promotion Programs During 1986-1989, Insurance Companies Supporting the Same Programs in 1990
Compared with Percentage of
Percentage Endorsing Effectiveness Business Leaders (n = 1,100) Type of Program Smoking cessation Alcohol and drug abuse Nutrition (lipids) Hypertension screening Exercise
insurance Companies (n = ZOO) % Change
1990
1986
1987
1988
1989
71
75 47
80 51
82 48
15 14
75
42 63 47
68 48
72 53
72 53
14 13
65 61
n
81
85
85
10
81
NA
‘om Center for Cardiovascular Research, Northeastern Illinois University survey research [27].
substantial yearly increases in health insurance premiums; and (c) executives are very interested in investing in methods that will reduce their healthcare costs, which constitute a large share of operating costs. Further, our opinion data show a high and increasing level of leaders’ confidence in the success and utility of lifestyle modification programs in reducing healthcare costs.
TAPPINGBUSINESSLEADERS’OPINIONS In 1986 we formed our own focus group of 1,100 CEOs from businesses in DuPage and Kane counties, Illinois, to conduct survey research. This area lies just west of Chicago and is one of the nation’s fastest-growing corridors of corporate development. In the first study we asked executives to choose from a list those risk-prevention programs they thought could be most effective in reducing healthcare costs. The top six programs chosen were smoking cessation, treatment of alcohol and drug abuse, nutrition, hypertension screening, exercise, and periodic health examinations. Opinion data from this focus group show that over the 4-year period of the study, employers’ views on smoking-cessation programs changed. In 1986, 71% of the 1,100 business leaders polled said that smoking-cessation programs were effective, but by 1989 that percentage had increased to 82%. Over this time period the percentage of business leaders endorsing effectiveness also increased similarly for the other five programs. As an adjunct to our focus group, we polled insurance companies to see what health-promotion programs they supported for their own employees. As shown in Table I, the results were similar to the opinion scores of the business leaders. Further analysis of the focus group data showed that leaders felt they had limited influence over employees’ exercise and eating habits, apart from
providing encouragement and education. They felt even less able to affect drug and alcohol abuse because of the difficulties of penetrating an addicted employee’s denial systems. On the other hand, corporate leaders clearly believed they could favorably influence employee smoking patterns.
SMART SPENDINGOF SHRINKINGRESOURCES Corporations are bearing the lion’s share of healthcare costs in this country, a burden that increased lo-14% per year between 1986 and 1989 and 21.6% from 1989 to 1990 [2]. This pattern will ultimately yield a $1.5 trillion national healthcare cost by the year 2000 [3]. The Department of Health and Human Services estimated the U.S. healthcare bill to have been approximately $600 billion in 198’7 [3], or 13% of the gross national product. In comparison, the nation spends $295 billion on defense and $280 billion on transportation annually [4]. Although only 30% of U.S. citizens are smokers, they account for a substantial percentage of all direct healthcare costs, an estimated $65-90 billion a year [5-71. With so many options in riskreduction and intervention programs, and with corporate resources becoming increasingly scarce, leaders are seeking solutions that will attain the greatest reduction in healthcare costs for the money invested in these programs. The factors affecting life expectancy can be divided into four major categories: lifestyle, environment, human biology, and the healthcare system [81. Paradoxically, we find an inverse relationship between government spending and the impact of the factors. Of the total of available resources, 90% are spent on the healthcare system itself, a factor that has only a 10% effect on life expectancy. A total of 7% of the available resources are spent on improving the environment, which has a 16% effect on life expectancy; 2% on improving human biology (e.g., research on genetic predisposition to disease,
July 15, 1992
The American Journal of Medicine
Volume 93 (suppl 1A)
lA49S
SYMPOSIUM
ON SMOKING
CESSATION / LESMES
TABLE II Factors in Life Expectancy Versus Current Federal Health Expenditure by Category Factorsin Life Expectancy
vs
Current Federal Health Expenditures (“IO)
0 50 24
1 2
Lifestyle Human biology Environment Healthcare
16 10
1 90
From Centers for Disease Control [8]; Office of the Surgeon General [25].
finding new cures and vaccines), which affects 24% of life expectancy; and only 1% on decreasing the impact of the most influential factor, lifestyle, despite a 50% effect on life expectancy (Table II). These data suggest that corporations need to make better financial decisions with regard to improving the welfare of their employees while reducing their healthcare expenditures. Of the 16% of environmental factors related to life expectancy, cited previously, the Environmental Protection Agency and independent scientific panels conclude that environmental tobacco smoke (ETS) is central to the discussion. It is the major contributor to indoor air pollution and a group A carcinogen [9]. Recently, employees have begun making claims for unemployment insurance and workers compensation for ETS-related illness and injuries [lo-121. In addition, the legal issue of employee hypersensitivity to environmental tobacco smoke may be a vulnerable area for employers. Since 19’76, courts have heard cases relating to an individual’s constitutional right to a smoke-free environment [ll], employers’ duties to provide a safe work place under Occupational Safety and Health Administration (OSHA) regulations, violation of statutory and contractual rights, protection from wrongful discharge, and entitlement to early disability [12]. There may also be a trend toward classifying tobacco-addicted workers as handicapped under state and federal rehabilitation acts [13]. These legal questions and resulting claims burden the corporation with yet another added cost created by employees who smoke. On the national level, industry-by-industry figures are available on per employee healthcare expenditures. In some industries, such as textile manufacturing, transportation equipment, and electrical machinery manufacturing, healthcare bills have almost doubled from 1987 to 1990 [14]. Overall, average per employee medical and medical-related costs jumped 36.3% between 1987 and 1989 and 46% between 1987 and 1990 [15]. The U.S. Chamber of Commerce survey data of employee benefits show that public utilities spent the most on medical and medically related benefits lA-50s
July 15,
1992 The American Journal of Medicine
or $4,60Wemployee in 1990. This figure includes the broader scope of employee and retiree hospital and medical benefits, short- and long-term disability benefits, and dental and vision benefits. Rubber, leather, and plastics; transportation equipment; and chemical manufacturing industries also exceeded the $4,000 mark per employee medical and medically related costs for 2 years in a row [15]. General Motors, however, is one example of how the automobile (transportation equipment) industry is proactively addressing the behavior of employee health benefits costs in order to control them better in the future. Selected General Motor’s facilities have initiated programs for screening employees for hypertension, hyperlipidemia, and smoking, with the focus on disease prevention [16]. Table III shows that the average annual medical costs to corporate employers tripled between 1980 and 1990, despite the inroads into cost-containment made by Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and other types of managed care. The outlook for healthcare costs is even more alarming, because the annual cost per employee is expected to increase to $5,500 by the year 2000. The average increase in premiums for small businesses is approximately Bl%lyear, with the cost of healthcare benefits to corporations absorbing as much as 26-30% of net earnings [ 151. Increasing healthcare costs are an important issue in business planning. For example, an entrepreneur seeking to start a new business with 100 employees in 1990 had to build into the financial projections 100 times $3,100, or $310,000, just to cover employee healthcare costs, not counting premiums for dependents or any other benefits. Projections for 1992 are $3,900 per employee [15]. As an alternative, corporations are realizing the economic need to shift the responsibility of payment for healthcare services, usually by increasing deductibles or copayments or both. One company in our group increased its deductible within the past 5 years from $200 to $1,500. Growing numbers of smaller companies are unable to bear healthcare costs even with such shifts and face the decision to
Volume 93 (suppl 1A)
SYMPOSIUM
close or simply discontinue health coverage. Played out on a nationwide scale, this could add to our already enormous unemployment problems and inadequate health coverage.
PARTNERSHIPS Managers of U.S. corporations are extremely concerned about the cost of healthcare, since 90% of industry (small business) work with profit margins of only 7-10%. When healthcare costs rise by ZO30% each year, profit margins are severely reduced. Employers are increasingly regarding the smoking employee as a significant factor in reducing company profitability. This highlights the need for partnerships among providers, clients, and corporations to find ways to contain employee healthcare costs. Already, the AFL-CIO has recognized the necessity of working with management on these issues, because premium increases are, in fact, preventing the union from negotiating the kinds of salary increases members have enjoyed in the past. From 1986 to 1990, union shops’ incidence of strikes due to cuts in health benefits more than quadrupled [17]. The AFL-CIO estimated that every 10% increase in company healthcare premiums would result in a 1% reduction in wages. A 30% increase in premiums would cost the average worker with a yearly income of $25,000 about $1,200 [17].
IMPACTOF SMOKINGON PRODUCTIVITY In 1981 Weis [18] calculated that smokers were absent from work 2.2 more days, or 50%, more than nonsmokers. In 1985 Weis and Miller [19] reported that figure had increased to 73.5% more absenteeism for smokers than nonsmokers, suggesting increased prevalence of smoking-related illnesses. Kristein’s absenteeism rate for smokers was 3345% above that of nonsmokers 1201. Using a weighted average of available data on lost productivity (8-280 minutes/day), Weis and Miller [19] also found that smokers spent 7.5% of their work day absorbed in the smoking ritual itself. Our data showed that smokers are absent approximately 6.5 days more per year than nonsmokers and, similar to Weis’s findings, spend 8% of their time on the smoking ritual. Our data further showed that smokers utilized the healthcare system about six visits more per year than nonsmokers, and dependents of smokers utilized it about four visits more per year than nonsmokers. When corporations impose smoking restrictions rather than smoking bans, people spend 8% or more of their time smoking in the smoking areas and continue to incur health-related expenses and reduce productivity. One of our clients decided to calculate
ON SMOKING
CESSATION I LESMES
TABLE III Average Annual Employer Medical Cost per Employee, 1980-1990 Year
Cost in Dollars
1980
1,015 1,151
1981 1982 1983 1984 1985 1986 1987
1,306 1,570 1,806 2,077 2,236 2,521 2,700 2,850 3,100
1988
1989 1990 Source: Center for Cardiovascular Research, Chicago, IL [27].
the number of hours that his department (40 people) was losing just from the time that smokers spent walking from the office to the smoking area: almost 800 hours in a month. In our opinion, it is a mistake for corporations to have restricted smoking areas rather than a complete ban. Kristein’s data show that smoking costs $208500/year in lost productivity [201. The Congressional Office of Technology Assessment says industry spends about $95 billion annually in direct smoking-related costs [21]. Smokers take approximately 50% more sick leave and use the healthcare system 50% more often than nonsmokers [18-201. Weis [181 estimated that smokers cost employers $400-800/year (1984 dollars). Even with these inconclusive figures, it is no wonder corporations are beginning to view smokers as major economic liabilities.
IDENTIFYINGHIGH-RISKINDIVIDUALS Identifying persons predisposed to preventable illness, i.e., high-risk individuals, in the corporation and helping them to change modifiable risk factors can be cost-effective, since 16% of employees generate 80% of healthcare costs. However, statistics do not indicate that employees are making significant lifestyle changes. Several years ago, 35% of the total U.S. adult population smoked; our data show that, today, 34% of the population in the Chicago area smokes. Of the total U.S. population, 20% is either obese or suffers from hyperlipidemia, and up to 30% has hypertension [221. Alcoholism affects 20% of the population directly 1231 and up to 60% of the population indirectly, when families, coworkers, and friends of the alcoholic are included. These figures are consistent with the three most prevalent modifiable health risks that industry and epidemiologists have identified: high blood pressure, high cholesterol, and cigarette smoking [24].
July 15, 1992
The American Journal of Medicine
Volume 93 (suppl 1A)
lA-51s
SYMPOSIUM
ON SMOKING
CESSATION I LESMES
In 1987 the National Institute of Occupational Safety and Health rank-ordered the most prevalent work-related injuries and diseases [25] and showed that occupational lung disease ranked first. We found that 62% of the people utilizing the healthcare system for occupational lung disease had a history of smoking. This indicates that the market potential and growth opportunities for smokingcessation programs are tremendous.
THE SUCCESSFULSMOKING-CESSATION PROGRAM Smoking-cessation programs have experienced a wide range of documented success. We evaluated the contributors to success to determine which type of smoking-cessation program clients preferred and
constructed the following analysis of consumer priorities. The most successful smoking-cessation programs are conducted in a specified place and within a set timeframe. In our second study, opinion data of 865 smokers indicated that if employees needed, wanted, or were required to enter a smoking-cessation program, they would prefer to attend sessions in a medical office or at the work site. The same group of smokers preferred programs with physician involvement. We also found that, because of employee time constraints, on-site corporate programs consisting of a l-hour weekly session for 1216 weeks were the most regularly attended and successful. The length of the program correlates very well with data regarding critical periods when 70
’ 60
r
0 M.D. advice and follow-up
M.D. advice, follow-up, and education
M.D. advice, skill training, and nicotine polacrilex
Figure 1. Summary of success rates of smoking-cessation programs for patients with minimal intervention (
R. LESMES, Ph.D., Chicago,//his
Results from two studies were combined to assess potential market impact for programs to reduce health risks, as well as to define how small businesses can better control their healthcare operating expenses, widen their profit margins, and increase their productivity. The most effective solutions resulted from partnerships among the medical, business, and patient communities for the joint implementation of intensive smoking-cessation programs. In the first study, the chief executive officers of 1,100 small businesses in the Chicago area were polled regarding their opinions on healthcare costs. During the 4-year study period, 1986-1990, we observed a significant increase in their recognition of the impact of employee smoking on rising healthcare costs. From this study we identified three‘ profile attributes of small-business leaders. First, these leaders possess a weak knowledge base regarding healthcare cost-containment methods; second, they understand the magnitude of the impact rising healthcare costs have on corporate profitability; and third, they have a strong level of confidence (85%) that lifestyle modification programs for their employees, such as smoking cessation, can help control healthcare costs. In the second study we found that smokingcessation programs with physician involvement, addiction assessment and treatment, and behavioral training and follow-up are preferred by those who want to stop smoking. Such programs have also enjoyed the highest level of sustained success.
From the Center for Cardiovascular
Research, Northeastern
Illinois University,
This research was funded in part by the Committee for Organized Research. ter for Cardiovascular Research, Northeastern Louis Avenue, Chicago, Illinois 60625.
lA-48S
July 15, 1992
Illinois University, 5500 North St.
The American Journal of Medicine
mall businesses have accounted for 50-80% of all new jobs in the United States since the mid1970s [ll. The Corporate Outreach Program at Northeastern Illinois University in Chicago assists the small-business community-specifically, local companies with ~300 employees-in assessing opportunities for improving employee health benefits and risk-prevention programming. Over the past 6 years, representatives from the university have met regularly with chief executive officers (CEOs) through a local network. Typically, the companies represented are 20-30 years old and stil1 have the original senior management team. They share an interest in balancing their responsibilities for employee well-being with the corporate long-term goals of financial growth and profitability. While these business leaders have traditionally valued the welfare of their employees and have provided liberal benefits packages, spiraling healthcare costs have begun to force them to make difficult kinds of benefits decisions.
S
PROFiLEOF.THE SMALL-CORPORATION LEADER The executives we studied had a limited knowledge of healthcare economics that was based on personal exposure to their own doctors and to television, newspapers, and popular news magazines. From a business standpoint, this level of understanding does not serve them well in assessing methods of reducing costs. In fact, many business leaders have historically assumed that healthcare premiums were just another cost of doing business, and most of those interviewed did not clearly understand their own, companies’ healthcare plans. Many executives were not aware of specific insurance options or of the terminology of managed-care contracting. For example, many were still doing business with the same insurance company they started with 20 years before, out of tradition. On the basis of our interactions with.these business leaders, we were able to make three basic assumptions and thus profile the executives of small corporations for subsequent studies. We found that (a) the knowledge base of small-business leaders regarding methods of controlling healthcare costs is similar to that of the average consumer’s; (b) executives understand their profits are being eroded by
Volume 93 (suppl 1A)
SYMPOSIUM
ON SMOKING
CESSATION / LESMES
TABLE I Percentage of Business Leaders Supporting Health-Promotion Programs During 1986-1989, Insurance Companies Supporting the Same Programs in 1990
Compared with Percentage of
Percentage Endorsing Effectiveness Business Leaders (n = 1,100) Type of Program Smoking cessation Alcohol and drug abuse Nutrition (lipids) Hypertension screening Exercise
insurance Companies (n = ZOO) % Change
1990
1986
1987
1988
1989
71
75 47
80 51
82 48
15 14
75
42 63 47
68 48
72 53
72 53
14 13
65 61
n
81
85
85
10
81
NA
‘om Center for Cardiovascular Research, Northeastern Illinois University survey research [27].
substantial yearly increases in health insurance premiums; and (c) executives are very interested in investing in methods that will reduce their healthcare costs, which constitute a large share of operating costs. Further, our opinion data show a high and increasing level of leaders’ confidence in the success and utility of lifestyle modification programs in reducing healthcare costs.
TAPPINGBUSINESSLEADERS’OPINIONS In 1986 we formed our own focus group of 1,100 CEOs from businesses in DuPage and Kane counties, Illinois, to conduct survey research. This area lies just west of Chicago and is one of the nation’s fastest-growing corridors of corporate development. In the first study we asked executives to choose from a list those risk-prevention programs they thought could be most effective in reducing healthcare costs. The top six programs chosen were smoking cessation, treatment of alcohol and drug abuse, nutrition, hypertension screening, exercise, and periodic health examinations. Opinion data from this focus group show that over the 4-year period of the study, employers’ views on smoking-cessation programs changed. In 1986, 71% of the 1,100 business leaders polled said that smoking-cessation programs were effective, but by 1989 that percentage had increased to 82%. Over this time period the percentage of business leaders endorsing effectiveness also increased similarly for the other five programs. As an adjunct to our focus group, we polled insurance companies to see what health-promotion programs they supported for their own employees. As shown in Table I, the results were similar to the opinion scores of the business leaders. Further analysis of the focus group data showed that leaders felt they had limited influence over employees’ exercise and eating habits, apart from
providing encouragement and education. They felt even less able to affect drug and alcohol abuse because of the difficulties of penetrating an addicted employee’s denial systems. On the other hand, corporate leaders clearly believed they could favorably influence employee smoking patterns.
SMART SPENDINGOF SHRINKINGRESOURCES Corporations are bearing the lion’s share of healthcare costs in this country, a burden that increased lo-14% per year between 1986 and 1989 and 21.6% from 1989 to 1990 [2]. This pattern will ultimately yield a $1.5 trillion national healthcare cost by the year 2000 [3]. The Department of Health and Human Services estimated the U.S. healthcare bill to have been approximately $600 billion in 198’7 [3], or 13% of the gross national product. In comparison, the nation spends $295 billion on defense and $280 billion on transportation annually [4]. Although only 30% of U.S. citizens are smokers, they account for a substantial percentage of all direct healthcare costs, an estimated $65-90 billion a year [5-71. With so many options in riskreduction and intervention programs, and with corporate resources becoming increasingly scarce, leaders are seeking solutions that will attain the greatest reduction in healthcare costs for the money invested in these programs. The factors affecting life expectancy can be divided into four major categories: lifestyle, environment, human biology, and the healthcare system [81. Paradoxically, we find an inverse relationship between government spending and the impact of the factors. Of the total of available resources, 90% are spent on the healthcare system itself, a factor that has only a 10% effect on life expectancy. A total of 7% of the available resources are spent on improving the environment, which has a 16% effect on life expectancy; 2% on improving human biology (e.g., research on genetic predisposition to disease,
July 15, 1992
The American Journal of Medicine
Volume 93 (suppl 1A)
lA49S
SYMPOSIUM
ON SMOKING
CESSATION / LESMES
TABLE II Factors in Life Expectancy Versus Current Federal Health Expenditure by Category Factorsin Life Expectancy
vs
Current Federal Health Expenditures (“IO)
0 50 24
1 2
Lifestyle Human biology Environment Healthcare
16 10
1 90
From Centers for Disease Control [8]; Office of the Surgeon General [25].
finding new cures and vaccines), which affects 24% of life expectancy; and only 1% on decreasing the impact of the most influential factor, lifestyle, despite a 50% effect on life expectancy (Table II). These data suggest that corporations need to make better financial decisions with regard to improving the welfare of their employees while reducing their healthcare expenditures. Of the 16% of environmental factors related to life expectancy, cited previously, the Environmental Protection Agency and independent scientific panels conclude that environmental tobacco smoke (ETS) is central to the discussion. It is the major contributor to indoor air pollution and a group A carcinogen [9]. Recently, employees have begun making claims for unemployment insurance and workers compensation for ETS-related illness and injuries [lo-121. In addition, the legal issue of employee hypersensitivity to environmental tobacco smoke may be a vulnerable area for employers. Since 19’76, courts have heard cases relating to an individual’s constitutional right to a smoke-free environment [ll], employers’ duties to provide a safe work place under Occupational Safety and Health Administration (OSHA) regulations, violation of statutory and contractual rights, protection from wrongful discharge, and entitlement to early disability [12]. There may also be a trend toward classifying tobacco-addicted workers as handicapped under state and federal rehabilitation acts [13]. These legal questions and resulting claims burden the corporation with yet another added cost created by employees who smoke. On the national level, industry-by-industry figures are available on per employee healthcare expenditures. In some industries, such as textile manufacturing, transportation equipment, and electrical machinery manufacturing, healthcare bills have almost doubled from 1987 to 1990 [14]. Overall, average per employee medical and medical-related costs jumped 36.3% between 1987 and 1989 and 46% between 1987 and 1990 [15]. The U.S. Chamber of Commerce survey data of employee benefits show that public utilities spent the most on medical and medically related benefits lA-50s
July 15,
1992 The American Journal of Medicine
or $4,60Wemployee in 1990. This figure includes the broader scope of employee and retiree hospital and medical benefits, short- and long-term disability benefits, and dental and vision benefits. Rubber, leather, and plastics; transportation equipment; and chemical manufacturing industries also exceeded the $4,000 mark per employee medical and medically related costs for 2 years in a row [15]. General Motors, however, is one example of how the automobile (transportation equipment) industry is proactively addressing the behavior of employee health benefits costs in order to control them better in the future. Selected General Motor’s facilities have initiated programs for screening employees for hypertension, hyperlipidemia, and smoking, with the focus on disease prevention [16]. Table III shows that the average annual medical costs to corporate employers tripled between 1980 and 1990, despite the inroads into cost-containment made by Health Maintenance Organizations (HMOs), Preferred Provider Organizations (PPOs), and other types of managed care. The outlook for healthcare costs is even more alarming, because the annual cost per employee is expected to increase to $5,500 by the year 2000. The average increase in premiums for small businesses is approximately Bl%lyear, with the cost of healthcare benefits to corporations absorbing as much as 26-30% of net earnings [ 151. Increasing healthcare costs are an important issue in business planning. For example, an entrepreneur seeking to start a new business with 100 employees in 1990 had to build into the financial projections 100 times $3,100, or $310,000, just to cover employee healthcare costs, not counting premiums for dependents or any other benefits. Projections for 1992 are $3,900 per employee [15]. As an alternative, corporations are realizing the economic need to shift the responsibility of payment for healthcare services, usually by increasing deductibles or copayments or both. One company in our group increased its deductible within the past 5 years from $200 to $1,500. Growing numbers of smaller companies are unable to bear healthcare costs even with such shifts and face the decision to
Volume 93 (suppl 1A)
SYMPOSIUM
close or simply discontinue health coverage. Played out on a nationwide scale, this could add to our already enormous unemployment problems and inadequate health coverage.
PARTNERSHIPS Managers of U.S. corporations are extremely concerned about the cost of healthcare, since 90% of industry (small business) work with profit margins of only 7-10%. When healthcare costs rise by ZO30% each year, profit margins are severely reduced. Employers are increasingly regarding the smoking employee as a significant factor in reducing company profitability. This highlights the need for partnerships among providers, clients, and corporations to find ways to contain employee healthcare costs. Already, the AFL-CIO has recognized the necessity of working with management on these issues, because premium increases are, in fact, preventing the union from negotiating the kinds of salary increases members have enjoyed in the past. From 1986 to 1990, union shops’ incidence of strikes due to cuts in health benefits more than quadrupled [17]. The AFL-CIO estimated that every 10% increase in company healthcare premiums would result in a 1% reduction in wages. A 30% increase in premiums would cost the average worker with a yearly income of $25,000 about $1,200 [17].
IMPACTOF SMOKINGON PRODUCTIVITY In 1981 Weis [18] calculated that smokers were absent from work 2.2 more days, or 50%, more than nonsmokers. In 1985 Weis and Miller [19] reported that figure had increased to 73.5% more absenteeism for smokers than nonsmokers, suggesting increased prevalence of smoking-related illnesses. Kristein’s absenteeism rate for smokers was 3345% above that of nonsmokers 1201. Using a weighted average of available data on lost productivity (8-280 minutes/day), Weis and Miller [19] also found that smokers spent 7.5% of their work day absorbed in the smoking ritual itself. Our data showed that smokers are absent approximately 6.5 days more per year than nonsmokers and, similar to Weis’s findings, spend 8% of their time on the smoking ritual. Our data further showed that smokers utilized the healthcare system about six visits more per year than nonsmokers, and dependents of smokers utilized it about four visits more per year than nonsmokers. When corporations impose smoking restrictions rather than smoking bans, people spend 8% or more of their time smoking in the smoking areas and continue to incur health-related expenses and reduce productivity. One of our clients decided to calculate
ON SMOKING
CESSATION I LESMES
TABLE III Average Annual Employer Medical Cost per Employee, 1980-1990 Year
Cost in Dollars
1980
1,015 1,151
1981 1982 1983 1984 1985 1986 1987
1,306 1,570 1,806 2,077 2,236 2,521 2,700 2,850 3,100
1988
1989 1990 Source: Center for Cardiovascular Research, Chicago, IL [27].
the number of hours that his department (40 people) was losing just from the time that smokers spent walking from the office to the smoking area: almost 800 hours in a month. In our opinion, it is a mistake for corporations to have restricted smoking areas rather than a complete ban. Kristein’s data show that smoking costs $208500/year in lost productivity [201. The Congressional Office of Technology Assessment says industry spends about $95 billion annually in direct smoking-related costs [21]. Smokers take approximately 50% more sick leave and use the healthcare system 50% more often than nonsmokers [18-201. Weis [181 estimated that smokers cost employers $400-800/year (1984 dollars). Even with these inconclusive figures, it is no wonder corporations are beginning to view smokers as major economic liabilities.
IDENTIFYINGHIGH-RISKINDIVIDUALS Identifying persons predisposed to preventable illness, i.e., high-risk individuals, in the corporation and helping them to change modifiable risk factors can be cost-effective, since 16% of employees generate 80% of healthcare costs. However, statistics do not indicate that employees are making significant lifestyle changes. Several years ago, 35% of the total U.S. adult population smoked; our data show that, today, 34% of the population in the Chicago area smokes. Of the total U.S. population, 20% is either obese or suffers from hyperlipidemia, and up to 30% has hypertension [221. Alcoholism affects 20% of the population directly 1231 and up to 60% of the population indirectly, when families, coworkers, and friends of the alcoholic are included. These figures are consistent with the three most prevalent modifiable health risks that industry and epidemiologists have identified: high blood pressure, high cholesterol, and cigarette smoking [24].
July 15, 1992
The American Journal of Medicine
Volume 93 (suppl 1A)
lA-51s
SYMPOSIUM
ON SMOKING
CESSATION I LESMES
In 1987 the National Institute of Occupational Safety and Health rank-ordered the most prevalent work-related injuries and diseases [25] and showed that occupational lung disease ranked first. We found that 62% of the people utilizing the healthcare system for occupational lung disease had a history of smoking. This indicates that the market potential and growth opportunities for smokingcessation programs are tremendous.
THE SUCCESSFULSMOKING-CESSATION PROGRAM Smoking-cessation programs have experienced a wide range of documented success. We evaluated the contributors to success to determine which type of smoking-cessation program clients preferred and
constructed the following analysis of consumer priorities. The most successful smoking-cessation programs are conducted in a specified place and within a set timeframe. In our second study, opinion data of 865 smokers indicated that if employees needed, wanted, or were required to enter a smoking-cessation program, they would prefer to attend sessions in a medical office or at the work site. The same group of smokers preferred programs with physician involvement. We also found that, because of employee time constraints, on-site corporate programs consisting of a l-hour weekly session for 1216 weeks were the most regularly attended and successful. The length of the program correlates very well with data regarding critical periods when 70
’ 60
r
0 M.D. advice and follow-up
M.D. advice, follow-up, and education
M.D. advice, skill training, and nicotine polacrilex
Figure 1. Summary of success rates of smoking-cessation programs for patients with minimal intervention (
