Fostering a healthy workforce isn’t just the right thing to do. It’s good for business.
That’s the key finding of a new study from Avalere Health, commissioned by the U.S. Chamber of Commerce. The study determined that employer-sponsored health insurance and programs will yield a 47% average return on investment (ROI) to employers this year. In layman’s terms: For every dollar an employer spends on workforce health, they get back $1.47 in financial benefits.
Return on Investment for Offering Employer-Sponsored Insurance
The U.S. Chamber of Commerce commissioned Avalere Health to estimate the return on investment (ROI) on employer-sponsored health insurance and programs for employers with 100 or more employees.
The study predicts that the average ROI will grow to 52% by 2026, with businesses that invest more into employee health programs seeing even higher ROIs. The report defines investment into employee health to include health insurance premiums, wellness programs, direct medical expenses, administrative costs associated with processing medical claims, and other costs associated with providing health insurance.
“We’ve always known that there is a great benefit in supporting the health and well-being of America’s workforce, and this research from Avalere helps to quantify the ROI for fostering a culture of health,” said Mike Triplett, president of Cigna's U.S. commercial business. “It also reinforces that healthy workforces are more productive, engaged, and drive better business outcomes through lower direct medical costs, increased productivity, lower recruitment costs, and stronger retention.”
The report breaks down the key drivers of ROI as follows:
- $275.6 billion from improved productivity in 2022, increasing to $346.6 billion in 2026
- $101 billion from reductions in direct medical costs in 2022, increasing to $108 billion in 2026
- $119.2 billion from tax benefits in 2022, increasing to $139.7 billion in 2026.
(Image source: “Return on Investment for Offering Employer-Sponsored Insurance,” Avalere Health, June 28, 2022)
A Culture of Health Lowers Medical Costs
The Avalere research also suggests that there is a value proposition in going beyond simply offering health insurance, noting that companies that provide wellness programs tend to have a healthier employee base. The research estimates that coupling wellness programs with health insurance will yield approximately $101 billion in returns for businesses in 2022, reinforcing the fact that employee health is a main driver of business growth.
Healthy Employees Are More Productive
According to the research, healthier employees who have greater access to care have lower absenteeism, which has a direct impact on business ROI. In fact, Avalere estimates that companies with more than 100 employees who provide greater access to care will see $275.6 billion in ROI this year, and $346.6 billion in 2026.
Today’s Workers Place a Value on Health and Well-being Programs at Work
In the midst of a “Great Resignation,” attracting and retaining the best and brightest talent is a priority for all businesses. The analysis by Avalere finds that companies that put a focus on fostering a culture of health will reap the benefits of lower recruitment costs along with a more loyal employee base (retention). From a recruitment standpoint, employers that prioritize health and well-being will see $141 million ROI in 2022 ($167 million in ROI in 2026). From a retention standpoint, the report finds that healthy work cultures reduce employee turnover, which lowers costs for recruitment, onboarding, and training. The research predicts $20.3 billion in ROI from improved retention in 2022 and $24.3 billion in 2026.
Employee Health: Your New Growth Plan
Pre-pandemic, most businesses considered health benefits little more than a cost to be managed. But the value of health benefits is rapidly changing – and organizations both big and small need to keep up.
Cigna has the expertise to help organizations transform their health benefits and programs from an expense to an investment, helping businesses and their people flourish. After all, healthy employees = healthy business.
Employee Health is Your New Growth Plan
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