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Controlling employee health care cost

1.) What do you think about Hagedorn’s approach to controlling employee health care cost? Do you agree with it? Why or why not? Mr. Hagedorn’s approach to control employee health care cost is through providing a wellness facility program for their employees and also creating rules concerning on health and monetary punishments to those who don’t want to follow these rules. From the 20% of the company’s net profits for the health care and health risk assessments, the goal is to limit health care insurance costs.

First, Mr. Hagedorn made a companywide wellness program which is called the LiveTotal Health program and hired a third party, Whole Health Management to run it. Next, he started encouraging his employees to take health-risk assessments and for those who don’t take the health risk-assessments to pay $40 per month more in premiums. And for those employees who found to be moderate to high risk through the assessments and will not comply will pay an additional $67 per month on top of the .

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As we see it, Mr. Hagedorn’s approach is both intrusive and forceful. The employees cannot argue and are forced to comply with his requirements but his company has some rights since they are the one paying the bulk of amount for the premiums.

Employees who surrender to his wellness program facility are forced to do monthly check ups and also quit smoking, drinking and other bad health habits. His approach is also very sudden, he only thought about it overnight and his type of approach needs a lot of adjustments especially for those employees who had already incorporated certain unhealthy habits into their lifestyle.

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His approach in controlling employee health care cost through making a wellness program facility and also letting his employees quit smoking and other bad health habits may also lead to certain losses in their organization in terms of the work/ labor force because there is a possibility that efficient and effective workers are going to be terminated because they can’t cope with this type of approach or they can’t change their habits and lifestyles and also because of the high monetary penalty if the employee can’t abide with his rules/approach. However, our group agrees with his approach because his plan to lower health care cost through providing a wellness program facility is a win-win situation, not only can the company be able to cut costs, but also making employees live a healthier life leads to a more productive performance, improved mobility in doing their jobs and also a happier state.

Being healthy means cutting healthier care spending in the long run. Employees could be more confident and competent in building and interacting with their customers and various stakeholders. His approach is also a motivation for the employees to be engaged in healthy living. Furthermore, they become loyal to the company, as they feel that the company considers them as an important asset to operations, values and cares for them. Mr. Hagedorn’s approach may also attract new competent and potential employees because of the benefits they will get; because a good work environment and a healthy way of living await them in the company.

Also, the program Mr. Hagedorn is offering ranges from offering information to employee’s fitness education and company’s fitness centers. These modes of helping and assessing the employee’s health contribute positive impacts on both, the company and its employees. After all, the welfare of the employee has a direct impact on the success of the company. 2.) What benefits and drawbacks are there to this type of wellness program? (a)employees (b)company (A.1) the benefits of this type of wellness program for employees are:

•Reduce Medical Cost

Through their wellness program facilities, their employees would be able to live a healthier and happier lifestyle which in turn reduces medical expenses for the employees, thus, they can cut off their company’s health care cost in the long run.

•Built sense of camaraderie with co-workers

They will have the chance of doing activities unrelated to the job such spending time together in assessments and physical workouts. Such activities would also encourage them for the possible results of others. The feeling of being part of the team will be emphasized more in this type of program.

•Live healthy while they work.

Employees tend to be healthy while doing the things they need to do at work. It’s more likely, hitting two birds with one stone. Being healthy means being able to do a wide range of activities most especially it relates to work.

•More productivity (Happier)

Being healthy is giving your body the strength and your mind the positive outlooks. Healthy employees tend to accomplish the jobs they were expected efficiently and effectively and they can even engage themselves more in the organization’ activities though it’s not part of their jobs anymore. It can also lower their levels of stress and help them increase their self-esteem and confidence.

•Stays more loyal to the company that treasures them

Wellness programs make the employees feel that they are visible in the eyes of the employer and that they are cared. Also the employees can see that their needs and feelings are met. When they feel these, they are more likely stay in the company because it gives them importance.

•Their life expectancy improves

A healthy employee has a lesser chance of getting sick and probable health problems but with exception to hereditary factors. When you eat healthy foods and do corresponding exercises, you are revitalizing your body and mind and you can also live longer. (A.2) the drawbacks of this type of wellness program towards employees are:

•Invasion of personal space and Health privacy

Since health records are required to strengthen the wellness program facility, the person’s assigned to these areas have to look through the records of each employee and that may breach the health privacy of the employees. The employees might feel unsecured because of the fear that their health privacy might be leak amongst others.

•Health Discrimination

A High possibility of health discrimination could occur since some health information might be leaked and that people now are not only concerned about their health but also about the health of others. So, some employees may feel more discriminated than being cared.

•Limited lifestyle freedom

There will be lots of activities that employees need to engage themselves. They will have certain limitations and constraints on what they would eat, what habits they would have to eliminate and the type of activities they have to avoid with concern to their health.

•Having a Change in Lifestyle needs a lot of Adjustments

Employees really need to cope with the changes in the office. They need to adjust to having regular health check-ups, daily exercises and activities that are offered within the health program and also they need to adjust and try to change their bad health habits to continue working in their workplace. For Employees who refuse to join the program, their salaries would be lessened Because some employees would probably refuse in joining this program, they would be required to pay monetary penalty. The more these employees refuse to join the program, the more they would have to pay to stay in the company and also to avoid conflict within the company they are working. (B.1)The benefits for the company in this type of program are:

•Lower health insurance cost

Because of the new wellness program facility, the cost of the expenses will lower down due to the healthy lifestyle of the employees which results to the reduction of healthcare insurance premiums.

•Raising reflection rates

Attracts more future talented and competent employees because of the program that they offer (Recruiting tools)

Reducing Absenteeism

Because of the healthy lifestyle of the employees, the factor of employees being absent due to might be lessened or eliminated. Reduction in turn-over
In Mr. Hagedorn’s approach, there is a possibility that employee turn-over would occur, either voluntary or involuntary. Some would quit because they couldn’t adjust to the changes while others would simply be fired because of the same reason. Healthier employees make for a Stronger association and Productivity It is already a fact that one of the key factors that affect employee production is their health. Meaning to say, that the healthier the employees the more possibility that their production would improve and that would benefit the company greatly. An improved production results in stronger association and more gained profits.

Employees life expectancy improves

There will be less injuries and illnesses in the workforce. Employee relations will improve, thus helping the organization achieve their goal. (B.2)The drawbacks for the company in this type of program are:

•Deal with the resistance of the employees

It is inevitable that some employees would not agree right away for the said program. Each has his or her own opinion and for the company to create this type of program, they have to deal first with those employees who try to resist against this type of program. They have to find ways to change the minds of their employees or control their resistance.

•Initial cost for starting the Wellness Program

Wellness program facilities are very expensive nowadays; you have to hire a team for that area, buy gym materials and etc… This would be the risky part of creating this type of program, you have to spend a lot of money at first before you can achieve your goal which is to have healthier employees and cut the cost of health insurance premiums in the long run.

•Deal with other people’s backlash

Everyone, especially people outside the company have their own opinions whether positive or negative about this wellness program. Some might say it is a breach to one’s right to health privacy and the right one person in living in his own lifestyle while some would agree with this type of program because it would help both the employees and the company. The company has to deal with the negative opinions of the people as to not influence the reputation of their company; they may find ways for other people to see their goals in another light and to make people understand what their program is for.

•Without extensive employee participation investment may not pay off The biggest risk in this type of program is not only the expense but also the employees. If most of the employees tend to not participate in this type of program then the company would either fire these employees or remove the program.

For Mr. Hagedorn, he found another way for employees to participate which is through monetary punishment/exchange, meaning to say if you do not participate in the program then you would be forced to pay or quit your work.

•Deal with the changes in terms of food being offered in cafeterias The company must also adjust and deal with the changes in the workplace. Because of this type of workplace program, they would have to change the food being served in the cafeteria, their daily activities, how they do things around now that there is also a wellness program provided and also their work schedule, when would they allocate the time for the program and what would they do.

3.) Research company wellness programs. What types of things are companies doing to encourage employee wellness? Are there any things that you found that you might recommend that Hagedorn implement? Describe.

Some type of things that companies are doing to encourage employee wellness are adding community bikes all around the workplace areas when you move from one building to another like what Google has done. Google had also made it easier for their employees to make healthier food decisions in the dozens of cafeterias and small cafes with a simple color-coded label (green for healthy, red for unhealthy) on all offerings. Google has even hacked its 48,584 employees’ eating habits—smaller plates encourage portion control, and putting the salad bar at the entrance and the dessert spread in the far corner makes reaching for the greens a no-brainer. Another is to provide a “Tobacco Quitline” which gives individual counselling over the phone, and the “Ask Mayo Clinic” hotline is a 24/7 medical resource staffed by nurses ready to assess and give advice on health matters for the employees of Mayo Clinic. Companies like Blue Cross and Union Pacific offer smoking cessation especially breathe therapy to their employees to help them stop smoking.

Discounts up to full payment at health clubs is also offered by both Del Monte Foods’ regional headquarters and H.J. Heinz Co. to encourage their employees to live healthier for free. Chesapeake Energy had also made a wellness program where each of its employees is required to smile bright; through smiling bright you can brighten up the mood and also encourage more customers. WELCOA is also providing in-house facilities for their employees. For Union Pacific Railroads, they offer companywide wellness benefits like stop-smoking plans and health risk assessments and also they have regional walking contests. The wellness program in Pepsi Co. has several parts; they have health risk assessments, fitness and diet programs and helping people manage chronic illnesses like diabetes and heart disease. In the Philippines, Unilab provides six months lifestyle modification program to improve their employee’s wellness.

Also, the Maxicare and ABS-CBN partnership has created the “Kapamilya Health and Wellness Fair 2014” which aims to improve the health and lifestyles of their employees through Zumba dances and fun runs. TELUS International Philippines (TIP), a top call center and business process outsourcing services provider, created a wellness and healthy living program for its employees. They held a Healthy Living Sports fest last June 18, 2011. The group recommend these wellness programs that Hagedorn also implement in assessing more of its subordinates health. Like the Union Pacific Railroads, they should offer a walking contest, health and wellness fair like what the Maxicare and ABS-CBN did. This would emphasize more of what the organization really wants in the employees’ health.

This fun fairs would improve the health and lifestyles of their employees. They would also give the employees the change to be engaged in activities unrelated in their job. Like Pepsi Co.’s diet program. Offering healthy yet gastronomic dishes encourages employees to eat and indulge themselves with such foods. Like what the TELUS International Philippines’ sports fest. These activities not only provide an opportunity for the employees to showcase their talent in sports but also help promote teamwork, camaraderie, and sportsmanship.


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Controlling employee health care cost. (2016, Jun 02). Retrieved from

Controlling employee health care cost

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