CAPITAL HUMAN SKILL S. Benefits, Rewards and Importance of Health HEALTH AS. Health as Human Capitol Foundation

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1 Benefits, Rewards and Importance of Health Health as Human Capitol Foundation MOTIVATION REWARDS HEALTH SKILL S HEALTH AS HUMAN CAPITAL Wendy D. Ly nch, Ph.D. H ar old H. G ar dner, M.D. A r thur M elkonian, M.D. Nathan K leinman, Ph.D. Brief Report from the Health as Human Capital Survey 2007 M ay 20 07

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3 Brief 2: Benefits, Rewards and Importance of Health Results from the Health as Human Capital Survey 2007 What makes health important to employees? Health is a human-capital asset. Health belongs to the worker and is part of the package of capabilities that he or she brings to the employment marketplace. It follows that one s health contributes to one s success. But to what extent do workers value their own health? Consider these responses: To what extent do workers value their own health? Staying healthy is really important for me to be successful in my career. Strongly agree = 28% Moderately agree = 38% 1 Disagree or neutral = 29% What makes a person believe that investments in and protection of one s own health matters? Results from the 2007 Health as Human Capital Survey indicate that health benefits do not positively influence one s perception of health importance. But direct rewards for performance do. The current approach Large corporations invested significantly in health promotion and disease management programs in the past decade. Their interest in health programs follows large increases in health care costs and an urgency to manage costs. The logic of investing in health programs is based on the well-documented premise that improved health status and health behavior lead to lower costs. Fewer than onethird of workers felt strongly that good health was important to success. The question remains however: Is there a reliable link between health programs and actual improvement in health status? By far, the greatest hurdle in health-related programs is their ability to attract and engage sufficient workers to produce meaningful change. Indeed, participation rates for voluntary programs often fall short of 10% of eligible workers. As a result, employers offer incentives (of cash, merchandise or reduced benefits cost sharing) to entice greater employee participation. Programs offering incentives as high as $50 per month have demonstrated participation rates in health assessments of 95% or more. Thus, standard practice has become to pay workers to participate in health-promoting activities. Yet these types of rewards have some restrictions. Because of regulations, there are legal limits in the flexibility of awarding prizes for actual behaviors, instead requiring that all employees have equal opportunity to earn rewards. This means that a person who attempts to lose weight must have the same opportunity for a reward as a person who actually does. As a result, companies have limited ability to attach incentives to outcomes that are most directly tied to medical costs the reason they invested in programs in the first place. 1 Five percent said it was not applicable. 1

4 Health as Human Capital Research Group Does enticing participation in health improvement programs miss the point? Though not often questioned, one might consider whether, despite good intentions, the notion of enticing participation in such programs misses the point. Employees have high health care costs in part because they are unhealthy and, in part, because they do not have to pay directly for most health care services. In general, employees do not value their own health and are not required to share most financial consequences of illness. Their lack of voluntary participation indicates they do not value onsite health programs, either. Offering $50, $100 or $1,000 does not instill a greater appreciation of personal health. It buys a very specific behavior or, (in a HIPAA regulated system) buys an attempt to change an outcome. What does make health important? Survey Will offering programs or paying for health behaviors cause employees to place greater value on their own health? Or are we asking for a small external incentive to influence a significant internal belief? Have we focused on the symptoms of undervalued health, rather than asking why health is not valuable to begin with? Have we focused on the symptoms of undervalued health, rather than asking why health is not valuable to begin with? This report describes the results of a survey that asked questions related to the importance of health in work. It included items about the types of work conditions and circumstances associated with a stronger belief that health is important to work success. The 2007 Health as Human Capital Survey tested the concept of human-capital motivation by asking a national sample of employed individuals a series of questions about their work environment, their perceptions, and their behaviors. Specifically, they responded to the questions about the following: Health status: Rate their personal health status. Beliefs about the importance of health in work success: Rate their agreement to the statement that improving my health would make me more successful at work. Shared rewards scale: An average score on seven items, all pertaining to the fairness of rewards and the degree to which performance is recognized and rewarded by the organization. Number and types of benefits: Coverage by their employer of a list of different benefits. Bonus eligibility and determination: Specifics of bonus eligibility, size and methods by which they are determined. Benefits utilization: Use of specific types of benefits. Key Findings 1. High health status is associated with a stronger feeling that staying healthy is important to success. 2 Brief 2: Benefits, Rewards and Importance of Health

5 Having more health benefits did not make health more important. Individuals who knew exactly how their bonuses are determined rated health as more important. 2. More health benefits (a number based on medical insurance, paid sick days, LTD, and STD) do not correlate with a higher rating of health as more important. 3. The percent of one s earnings that were from bonuses is positively associated with higher ratings of health as more important. Percent Rating Health as Important to Work Success What Makes Health More Important? Variable Pay 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% Figure 1 0% 10% 20% 30% 40% 50% Controlling for age, gender, company size P=.06 Bonus Relative to Salary 60% 70% 80% 90% 100% 110% 120% 130% 140% 150% Controlling for other work factors, 65% of those earning no bonus rated health as important. Comparatively, 75% of employees earning a bonus worth 50% of salary and 90% of those earning bonuses of 150% of salary rated health as important to business success. 4. Knowing how bonuses are determined has a positive influence on perceptions of health as more important Of those eligible for bonuses, individuals who knew exactly how their bonuses are determined were significantly more likely to believe health is important to success than those who did not know how bonuses were determined. Health Is Important by Level of Knowledge About How Bonus Is Determined (adjusted for age, gender, salary and company size) Probability of Health is Important 80% 70% 60% 50% 40% 30% 20% 10% 0% Figure 2 57% I don't know 62% I know very little about the process Bonus Knowledge 67% I know generally how they will be determined 72% I know exactly what I can earn and what I need to do 3

6 Health as Human Capital Research Group Summary Fewer than one-third of survey respondents felt strongly that maintaining good health was important to success in their careers. The strongest predictor of this response was being healthy healthy individuals valued their health more. Interestingly, having more health benefits was not significantly associated with feelings that health is important. However, the size of a performance-related bonus and knowing exactly how a bonus can be earned were associated with feeling that health is important. When employees experience and understand how their performance at work directly influences their earnings, health is perceived as more important. If performance is not tied to rewards, health is less important. This is the second of four brief reports analyzing data from the Health as Human Capital Foundation s 2007 Employee Productivity, Compensation and Job Satisfaction Survey. An overview of survey methods and summary results can be found in the Overview Report. For a more survey results, see Brief 1: Human Capital Motivation and Productivity Brief 3: Worker Perceptions and Company Size, and Brief 4: Predictors of Workers Intent to Quit. Study Limitations Although survey responses were obtained from a large, diverse sample of respondents, findings should not be generalized to specific work settings or jobs. The survey sample included a wide range of ages, equal gender representation, and an array of industries and company sizes. However, the sample was more educated than the general population, motivated to respond to surveys, and computer literate. Whether these characteristics influenced their opinions is unknown. 4 Brief 2: Benefits, Rewards and Importance of Health

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