PITNEY BOWES

Pitney Bowes

Pitney Bowes

a) Why was Pitney Bowes spending so much on employee health at a time when most organizations were cutting health benefits?

The employee benefit plans that provide retiree, health, and other welfare benefits to unionized workers and retirees are generally struggling to survive the current economic and regulatory environment in the United States. Rising health care costs have jeopardized the benefit trust, resulting in diminished or eliminated employee health care coverage. The increasing number of employees and their covered dependents that do not avail themselves of recommended age-related preventive health services (well child visits, well adult visits, immunizations, screenings, etc.) has lead to higher health care costs and could put employees and their covered dependents at risk for a life-threatening or debilitating illness. Pitney Bowes spent over $150 million on health care in 2008, more than $140 million of which were for employee and retiree claims, payments to ASOs and carve-out vendors, and fully-funded plan premiums (Kritz, 2006). The remaining $10 million was dedicated to on-site clinics, health and wellness programs, Hewitt Associates services, and benefits staff. Per capita health care costs had increased more than 70% in absolute terms between 1996 and 2007, a growth rate of around 6%. The rate of increase for Pitney Bowes' dispersed population consistently exceeded that of employees at company sites. Over the same period, Medstat benchmark costs per capita for other large employers more than doubled, with a CAGR of nearly 8%.

b) How did the company's health and wellness programs add value?

The Health and Wellness plan of Pitney Bowes added value to the company. Pitney Bowes monitored and evaluated the collective impact of its health benefits. While program evaluations were conducted, the firm did not try to calculate return on investment for individual initiatives. The firm estimated that in aggregate, ...