Double-digit increases in the cost of health care insurance? Bill Herman, vice president of human resources at Highsmith Inc., shrugs them off. A decade ago, he saw the same. Back then, instead of merely following the corporate pack's moves away from traditional indemnity programs and toward managed care and health maintenance organizations, Herman tried to get at what he saw as the cause of the escalation: a system focused on getting sick employees well rather than on keeping healthy employees from getting sick.

In the early 1990s, Herman helped his company, a privately held school and library supplier with about 230 employees and $60 million in sales, introduce a wellness program that addressed everything from expanding walking trails at the company's corporate offices in Fort Atkinson, Wis., to hiring a part-time exercise instructor and installing ergonomic workstations. Perhaps most important, Highsmith dangled a tempting monetary incentive in front of employees willing to make staying healthy a priority. For those who stopped smoking, received regular screenings for breast or prostate cancer and took other common sense health measures, the company agreed to pick up 75% of their health insurance tab, compared with 60% for others. That offer prompted 90% of Highsmith employees to opt for health.

The payoff? Highsmith's workers' compensation bill in 2001 was close to 9% lower than it was in 1993, and even in today's cost-pressured environment, Herman says he faces only a 3% increase in company health care premiums instead of the more commonplace multi-year, double-digit hikes that other companies are having to digest. "We made a decision that we would manage health care and not let health care manage us," Herman says.