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Harkin Bill Would Provide Incentives for Wellness Programs

July 9, 2007
Related Topics: Benefit Design and Communication, Health and Wellness, Latest News

An Iowa senator wants to reframe the health care debate so that it concentrates as much on preventing disease as it does on paying for treating those who become ill.

Sen. Tom Harkin, D-Iowa, introduced legislation on Monday, July 9, that would provide tax incentives to companies that establish comprehensive wellness programs for their employees.

Under Harkin’s bill, the Healthy Workforce Act, companies that spend $400 per employee on wellness would earn a tax credit of up to $200 per employee for the first 200 employees and $100 per employee for the remainder of the payroll.

In order to qualify, a company would have to institute an initiative that has three of the following components: a health awareness and education program; a behavioral change program; an employee engagement committee; and incentives for participation, such as a reduction in health premiums.

“In America, we don’t have a health care system, we have a sick care system,” Harkin said at a Capitol Hill press conference. “Corporate America has the expertise, the resources and the enlightened self-interest to change the way we approach health care in this country.”

Unlike broader health care proposals that would likely have to move through the legislative process as stand-alone bills, Harkin’s more modest measure can take a low-key path.

For instance, it could be attached to a Senate tax bill later this fall. Harkin also is trying to find backers in the House.

Harkin’s staff spent two years consulting with companies and business and health groups before writing the bill, so the senator is confident that the idea has wide support.

Dow Chemical Co. is one of the corporations on board. Catherine Baase, global director of health services at Dow, said that 75 percent of the company’s U.S. employees participate in at least one health program each year. The health improvement efforts extend to employees’ families and to retirees.

Dow has instituted a number of health programs, so it’s impossible to determine the return on investment of any particular one, Baase said. But Dow has kept its health care costs at or below the lowest projected national increases since 2004.

“We’re seeing this going in the right direction,” she said. “The sum total of what we’re doing seems to be working.”

Ron Davis, president of the American Medical Association, highlighted specific savings that can be achieved from a focus on healthy living.

He said that General Motors spends an average of $1,600 per employee annually for health care, but that number jumps to $7,000 each year for people who are severely overweight.

“Preventive medicine helps people live longer and better,” he said.

And it can help companies save money, according to advocates. They estimated that for every $1 spent on wellness, a company can save $3 to $4 in health care costs.

Wellness programs also provide intangible benefits, according to a manager at a company that offers them.

Laura Barringer, a quality engineering supervisor at John Deere's, Waterloo, Iowa, facility takes advantage of Deere’s on-site fitness center and will participate July 14 in the John Deere Waterloo 5K race.

It’s “important to be healthy” not only for her employees but also for her two sons and husband—each of whom has participated in Deere wellness programs. Her boys have received immunizations and her husband discovered and overcame a problem with high cholesterol without having to use prescription medication.

Catching problems like high cholesterol before they require more expensive treatments is what Harkin calls “getting upstream” in battling health care costs.

Another important step is promoting healthy lifestyles among children. Harkin, chairman of the Senate Agriculture Committee, has championed programs that provide free fruits and vegetables to students and has fought against placing vending machines in schools.

“These are the kind of things we need to think about in health care reform, not just how you pay the bills,” he said.

He’s pessimistic that a major overhaul can be achieved before 2009.

“I don’t think anything will happen on health care reform before the next election,” he said.

—Mark Schoeff Jr.

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