Wellness Programs May Trim Health Costs

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CBS

It's lunchtime at IBM's sprawling headquarters near New York. The fitness center is filling up, there's a basketball game going on and the hallways are so full of power walkers, you might mistake the place for an indoor track, CBS News correspondent Wyatt Andrews reports.

Shari Chiara, an executive assistant, is gearing up to meet her walking team. As her team of regulars tells it, what powers the power walking is cash. IBM pays them to do this.

Over the last two years, she says she has pocketed at least $600.

And it's serious money. IBM has given employees more than $130 million in what are called wellness incentives, or payments to get healthy. If you stop smoking, that's $150. If you exercise three times a week, you get $150. If you fill out a health record, which flags employees to their individual risk of disease, you get another $150.

Last year, Chiara lost 35 pounds, which cured her asthma and back pain, and earned her $300. She says she hasn't had a sick day in more than two years.

And this is not just happening at IBM. Wellness is now corporate America's hot new strategy for controlling health care costs. In exchange for staying fit, other companies might offer you an iPod, or reward points for purchases or a discount on your health insurance premium.

You can also get wellness incentives from some of the nation's biggest health insurers, including Wellpoint and United Health's PacifiCare and Horizon Blue Cross.

But even if your employer or insurer doesn't offer incentives, for almost anyone, getting fit means lower medical bills.

"I know for myself, I'm healthier so obviously I'm costing them less money in health care," Chiara says.

For companies, it's all about the money. Studies show $3 in health care savings for every for every $1 spent on wellness.

"That's a cost reduction to us, it's a cost reduction to the plan, it's a cost reduction to the employees," says Randy McDonald, IBM's head of human resources.

McDonald says the company — and its employees — save by preventing heart attacks and obesity. "We believe that prevention is the right way to go," he says.

Why cash? "Well it's real simple. Cash gets people's attention, and we wanted their attention," McDonald says.

Judging by the gym at lunchtime, the company got their attention. More than 65,000 people — half of IBM's workforce — are in the wellness program.