High health risks bring high workers’ compensation costs

July 13, 2001
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High health risks bring high workers’ compensation costs

EDITORS: For further information, contact smussich@umich.edu, (734) 764-3556 or Deborah.Napier@usa.xerox.com, (716) 265-7177

ANN ARBOR—If you’re healthy and take good care of yourself, you are not only less likely to get sick, you also stand a lower chance of getting hurt on the job, according to the University of Michigan Health Management Research Center.

That’s the positive spin on the four-year HMR study that also shows that employees with high health risks tend to have the highest workers’ compensation costs.

“As health risks increase—such as smoking, physical inactivity, high blood pressure and cholesterol and life dissatisfaction—so do work related injuries,” said HMRC Research Associate Shirley Musich, writing in this month’s Journal of Occupational and Environmental Medicine.

Musich looked at workers’ compensation costs for 3,338 long-term employees of Xerox Corp. during 1996-99. The study population was 72 percent male, with an average age 55. They all used the same medical plan and had been continuously employed by Xerox in 1981-99.

Personnel records showed that 265 employees filed workers’ compensation claims during the four-year period. Workers’ compensation costs increased as health risk status increased from low-risk to medium-risk to high-risk, the study confirmed.

Significant cost savings were associated with participating in the Health Risk Appraisal (HRA) program, according to Deborah Napier, manager of the Xerox Health Management Program.

“For those employees who filed workers’ compensation claims, HRA participation equated to $1,238 cost savings per person per year,” Napier said. “Over a two-year period, we found a five to one return on investment.”

Xerox was among the first corporations in the country to promote employee wellness, distributing the HRA to its work force in 1981. The HRA is a health assessment tool developed by the Centers for Disease Control/Carter Center, and modified by the HMRC for individual employers. In addition to self-reported age and sex, the current HRA measures biological, psychological and lifestyle risk factors to establish health status. The individual health risks include blood pressure and cholesterol, stress, physical activity, safety belt use, and job and life satisfaction.

In 1995, Xerox began to look more intensively at the correlation between health risks and medical costs and ways to improve employee health and productivity, Napier said. The participants receive educational materials related to their health risks and the opportunity to participate in special subsidized on-site programs such as weight management, back care, and stress management.

“What companies like Xerox want to know is, does this program have value?” said Musich. “What does the company gain by spending money on employee wellness?”

A previous HMRC study with the same Xerox employee subgroup found that high health risk individuals have higher medical care costs than low-risk individuals. Furthermore, people who change their risk status by improving their lifestyle behaviors have been shown to reduce costs. These findings have been confirmed in studies with numerous other organizations.

The latest study indicates that the correlations hold true for injuries as well as illness, Musich said. “It’s a double cost to companies because they are losing the worker’s productivity as well as paying the workers’ compensation claim.”

With widespread industry safety programs, the national incidence rates for occupational injuries (excluding work-related fatal injuries) have declined steadily from 8.3 cases per 100 workers in 1990 to 6.2 cases per 100 workers in 1998, Musich reports. Health People 2010 calls for further reducing work-related injuries to 4.6 injuries per 100 full-time workers.

“Xerox has exceeded this goal and improved its injury rate by 26 percent over the four-year period. However, the over-50 average age of the employee subgroup may be a factor,” Musich noted. “Older employees are less likely to be assigned the more risky and strenuous tasks, thus causing the lower injury rate.”

In 1997, Xerox initiated a “zero injury” program. As it progresses toward that goal, the association of health risks with workers’ compensation costs provides an important strategy, the HMRC researcher concluded.

“We are able to demonstrate from the data that people who participate in wellness programs are healthier. Good health reduces the risk of injury and saves the company money.”

smussich@umich.eduHealth Management Research CenterShirley MusichXerox Corp.Centers for Disease Control