Catalyst for Payment Reform

The true value of wellness programs

The true value of wellness programs

If you’ve played a role in managing health care benefits in recent years, you’re well aware that “wellness” has been a strategy du jour. Most health and wellness programs adopt a two-pronged approach: lifestyle management and disease management—both designed to promote healthy behaviors among employee populations.

What brought these programs to the forefront? It could be employers citing huge positive results, like Safeway did in a very public way.  In a 2009 Wall Street journal article, the company claimed their wellness program was responsible for holding costs steady between 2005 and 2009 while other employers saw a 38% rise in spending.

With results like that,  it’s no wonder that 85% of corporate employers offer an employee wellness program, and up to 52% now offer their employees incentives to perform annual biometric and health risk assessment (HRA’s) screenings.  Some employers go even further by rewarding employees for positive biometric results or passing on premium rate increases to employees who perform poorly or display high-risk behaviors, such as smoking.  On average, employers are spending up to $12,000 per employee per year on wellness programs.

But is there solid evidence that wellness programs produce the types of returns claimed by some employers?  In Surviving Workplace Wellness and Why Nobody Believes the Numbers; Cracking Health Care Costs, Al Lewis, Vik Khanna, and Tom Emerick found that wellness programs weren’t actually driving meaningful savings, and that cost savings from wellness programs are subjective at best. The salient points of Lewis’ research are:

  • Cost savings of wellness programs are less than 1-to-1 savings to cost—for every $3 spent on employee wellness programs, medical spending is reduced by only $1.
  • Favorable results are often skewed by comparing results between high-risk participants and lower-risk participants.
  • In carefully analyzed cases, the primary source of cost saving was disease management and even then, savings were minimal.
  • It is hard to determine whether participants in wellness programs are obtaining direct benefit resulting from the wellness program, or whether the participant is self-motivated to change behaviors and therefore predisposed to utilize a wellness program such as a smoking cessation program.

The premise for these arguments was backed by an extensive RAND study, which concurred that savings hovered at around $1.50 for every dollar spent and that disease management was responsible for 85% of savings.

While we know that primary preventive services, such as regular screenings for diabetes patients, can significantly reduce the need for hospitalization and more costly measures down the road, biometrics screening raises concerns over unnecessary testing, and the potential for skewed results. For example, an employee may lie on their HRA questionnaire about whether or not they smoke. When looking at BMI calculations, there is no way to tell the difference between muscular weight and fat. Cholesterol screenings alone are proven to be inconclusive as risk indicators for heart disease.

It also remains to be seen whether the lifestyle management component of wellness programs has any real value. These programs are dramatically under-utilized and have very low impact on overall savings. While some lifestyle management programs show benefits to engaged employees, it is almost impossible to measure whether these employees already had a healthy lifestyle or if the program changed behavior.  Kaiser Family Foundation’s Employer Health Benefits Survey found “34% of large firms offering incentives…[said that wellness programs] are “very effective” at encouraging workers to participate and 58% said the incentives are “somewhat effective,” while 7% said the incentives are “not at all effective.” Wellness programs thus have the potential to become a cost-driver rather than a cost-saver.

The value of wellness programs to employers is the “Employee Positivity Factor,” a term coined by group health insurance and employee benefits specialist, Jennifer Schaefer. She suggests that employees see lifestyle wellness programs as a perk. In turn, employers may view wellness programs as a way to foster a positive work environment and as a driver for workplace productivity. HERO, a Health Performance and Productivity Study Committee found that employee wellness contributed among other factors to employee productivity and performance by at least 20%. It does appear that the benefit of offering wellness programs is linked more to employee engagement and workplace satisfaction rather than bottom line health care savings.

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