Employers and Employees:



By Dianne O’Connell

Employers can slow the rising costs of providing health care for employees and their families through providing incentives for people to stay healthy.  Private insurance companies, such as Premera Blue Cross Blue Shield of Alaska, are expanding such wellness initiatives in response to growing pressure arising from the nation’s new health care reform legislation and because studies show that health and wellness programs do substantially reduce medical costs.*              With these points in mind, two of Alaska’s largest employers, Providence Health and Services Alaska and the University of Alaska, have chosen to develop their employee wellness programs a step or two further.   Two Providence administrators and a university union leader offer details.



Providence Health and Services Alaska launched its I Choose Health initiative in October 2009, according to Tamara Green, Regional Director, Health Management Services, Providence Health, speaking of a new outcome-based incentive program Providence is integrating with its employee health insurance plan. 

Demographic studies show that healthcare workers are actually less fit and less healthy than comparable groups within the general population.  They often need a little extra nudge to work on their own physical well-being, in addition to caring for others.

“Just like the airlines tell you, you’ve got to ‘put on your own oxygen mask first’ before you can effectively help anyone else,” Green says.

During the I Choose Health project’s first year, employees were offered credit incentives against the cost of their 2010 healthcare premium for filling out a Stay Well Health Assessment (HA) and for voluntarily participating in biometric screenings for measuring blood pressure, cholesterol, body mass index and tobacco use. The credit was given for participation, not for what the employee values were.

The program is part of Providence’s effort to contain the costs of providing health care for its 4,000 plus employees and to promote wellness among employees and their families.  Fifty-four percent of those covered by Providence’s health care plan chose to participate and receive the credit.

Providence Health and Services is the state’s largest private employer.  As a self-insured company, Providence believes that it is able to exercise more impact on the costs of employee health care than an employer who purchases employee insurance through a third party. Providence does use a third party administrator, but the administrator is the Providence Health Plan, a whole-owned not-for-profit insurance company, part of the Providence “family” of health services.

“We want to be leaders in all aspects of keeping people healthy, not just healthcare after a person becomes ill,” Ms. Green explains. Providence also hopes to eventually share what it learns from the project with other employers. 

Moving into 2011, Providence employees will be encouraged to utilize multiple kinds of resources available to them through Providence’s onsite Health and Wellness Center, as well as multiple telephonic and online services.  These resources include such services as health coaching and chronic condition management, weight management programs, telephonic health coaching and online education programs.  They also provide primary care to employees at the wellness center.

Providence sees its I Choose Health program as impacting an array of traditional management concerns, such as employee productivity, retention, turnover, and absenteeism, all of which cost the employer money.  It’s just the beginning, as far as Green is concerned.

“We have a gym which is open twenty-four hours a day to employees,” she notes. “We also encourage employees to take the stairs rather than the elevators, to walk from the far side of the parking lot, walk the sky bridge and enjoy the view, any way to work a little more physical activity into their days,” she says.




“Participating in University of Alaska’s wellness program is something you have to want to do for yourself,” says Colin G. Clausson.  “We don’t at the moment receive cash or credit incentives for participation.  However, if we avoid one heart attack, one instance of by-pass surgery, or get one guy off insulin, everybody benefits.”

Clausson is secretary-treasurer for the Alaska Higher Education Crafts and Trades, Local 6070, Alaska Public Employees Association, American Federation of Teachers, AFL-CIO.  He is a union negotiator currently in contract talks with the University of Alaska and a member of the union-management Joint Health Care Committee.      

“The university currently pays $1,200 per month to cover each employee and family member, with the individual employee paying the remaining portion.  Our union represents 260 of those employees and their families,” Clausson explains. “The cost of health care for both the employer and the employee is very important to us.” The actual percentage that each party pays is currently on the bargaining table and therefore cannot be discussed at this time.

The university, like Providence Health Systems, is self-insured, which according to Clausson, is “the most efficient model out there, even with the 1.5 percent the university pays to Blue Cross to administer the program.”

At the end of the year, the total cost for healthcare for the employee group is added up and divided by the number of covered lives.  This is the number that the next year’s premium is based on.  A reduction in the cost of healthcare one year through wellness efforts will be reflected in the premium for the following year; therefore, says Clausson, “it benefits you, if your buddy on the job stays healthy.”

“I don’t laugh if I see one of our plumbers doing tai chi during his break.  But I may raise an eyebrow when I see a friend chow down a double dripping cheese burger with fries and barbeque sauce followed by a cigarette and a couple of beers after work.  Of course, the unhealthy lifestyle member has concerns about the costs of a healthy guy breaking his leg in a ski accident. Compare the cost of most one-time accidents against a chronic illness like diabetes or another lifestyle related disease like cancer, and the one-time accident is far less expensive to the health care system.”

There is no doubt that life style choices – nutrition, smoking, obesity, alcohol, drugs, couch-potato status -- are driving the cost of health care.  These are controllable components.  Some things are less controllable. 

“When I started working for the university the average age for my employee group was much younger; most of us were single and childless.  Today, the average age is 55 and most of us have families.  The average age for the university’s teachers is even higher,” Clausson says, “and the cost of healthcare sky-rockets after the age of 50.”

The union leader maintains that the university insurance program is recognized as one of the best plans in the state. It includes a wellness program, exercise programs, counseling.  If an employee wants to get healthy, there’s a way, on the three main campuses in Fairbanks, Anchorage, and Juneau, although some of the wellness services aren’t available on the more remote campuses.       

There could be changes on the horizon, however, and some of them are worrisome.

“We have a Cadillac plan now,” Clausson says. “As a result of the new health care reform bill, we may end up being taxed on some of the employer contributions to the premiums.  If we don’t do everything we can to help contain costs, someday – and I hope it is a long way away – we may have to cut benefits.  It’s a much better idea to keep people healthy.”




            Improving population and individual health is a major component of the Patient Protection and Affordable Health Care Act of 2010, otherwise known as the health care reform bill. In some ways, the nation, like Providence and the University of Alaska, will be reaping some of the cost-saving components of a self-insurance plan, while partnering with health care providers and insurance companies. 

“Providence Health Systems supported this legislation because we are mission driven and believe that health care is a basic human right,” says Joel Gilbertson, Vice President for Government and Public Affairs, Providence Health and Services. “This bill will extend coverage to some thirty-two million Americans, bringing access to health insurance to ninety-four percent of our country’s legal residents.”

Gilbertson recognizes that the legislation is not a perfect bill, but rather a work in progress.  A significant amount of regulations will need to be rolled out in the next four to five years to make it work.  Working on passing and implementing health care reform legislation has been his main focus these days.          

Gilbertson worked for Providence in Alaska for five years before re-locating to the health system’s corporate offices in Seattle.

“There are a number of relatively fixed costs in health care: labor, technology, buildings,” he says.  “Where we as employers and providers can become more efficient and save money is through improved quality of patient care, care coordination and utilization practices.”

The health care reform act redesigns the financing of health care to provide incentives for such things as care management, shared information and coordination among providers, fewer emergency room visits, and fewer unnecessary or repetitive medical procedures.

“Right now, health care providers are only reimbursed when the patient comes in the door, already sick. Under the new law, providers can also be reimbursed for providing more coordinated care, as well as care management efforts that promote healthier people.

Another incentive: reimbursement payments will be more directly linked to the quality of care. To put it bluntly, providers will receive less money if patient outcomes are bad, for example if a patient is re-admitted to the hospital for reasons which could have been prevented, or if they experience a hospital-acquired infection.

“The final legislation was largely an insurance reform bill,” Gilbertson explains. “Private insurance companies will no longer be able to deny access to health insurance for people with pre-existing conditions or engage in other practices which limit access to insurance coverage.  This component was pretty popular and had bi-partisan support.  As a consequence, the individual mandate (providing subsidies for the uninsured to purchase required, but affordable insurance) was necessary so that people don’t wait until the day they became sick to buy insurance. In order for an insurance system which guarantees coverage to work, be cost effective, everyone has to be in the system, even healthy people.”    


If controlling the rising costs of healthcare is the goal, all must partner together -- from the individual choosing a healthy lunch, to an employer establishing a wellness incentive program, to a union representative at the bargaining table, to policy setters, insurance companies, and health care providers.  The year 2010 has brought some important first steps.


* See “Evolving Employee Benefits: New Options for Insurance and Retirement Plans,” by Peg Stomierowski, Alaska Business Monthly, August 2010, p. 90.

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