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(Health Affairs Blog)

March 18, 2015

When It Comes to the Value of Wellness, Ask About Fairness, Not Just About Effectiveness

Photo by vitaliy_melnik/Fotolia

by Soeren Mattke

After a short truce, the wellness wars are raging again on Health Affairs Blog, with some voices hailing workplace wellness programs as cost-effective means to better public health and others questioning their value.

Our own data show that both have a point. We have found that program participation is associated with statistically significant improvements in biometric markers, like BMI, and health-related behavior, like smoking and exercise. But we also find that those changes are not large enough, and the relationship between health risks and spending too weak, to result in reduction of health care cost, let alone in return of investment.

Doing the Math

A back-of-the-envelope calculation confirms that our findings are plausible. Bolnick and colleagues estimated that total eradication of all health risks that the programs target would eliminate about 18 percent of health care spending in working-age adults. In other words, if we all stuck to perfect, healthy diets and spent our days on the treadmill, an average of $900 would be saved annually, assuming $5,000 cost of individual coverage.

Our results suggest that program participation eliminates only about 10-25 percent of the risk burden, which suggests possible savings of $90 to $225 per year. Our national survey shows typical participation rates less than 20 percent. Program vendor costs alone are typically $150 per participating employee per year, not counting employer-internal cost. Combined with the small size of the prize, “bending the curve” with wellness programs as currently designed is an elusive goal.

As I have said before the lack of a financial return does not rule out value in wellness. The workplace is an excellent setting to improve health habits. If a company decides that it makes business sense to invest in a meaningful program, I'm all for it. We call it an employee benefit for a reason.

But the problem is that most employers did not invest in wellness to make the organization a happy and healthy place. They invested because vendors and benefits consultants promised lofty returns. Now that those expectations are not materializing, I fear that employers will draw dangerous conclusions.

Looking Beyond Engagement

A frequently voiced argument in defense of wellness programs is that the main obstacle to return on investment is lack of employee participation (“engagement” in industry-speak). So we need incentives and other nudges to ensure that employees have “skin in the game.” Program vendors have the luxury to be quite enthusiastic about incentives, as they typically get paid per participating employee but are not responsible for the cost of getting an employee to participate.

There is nothing wrong with small rewards and penalties to steer health-related decisions. Higher co-payments for branded than for generic drugs and for out-of-network care make sense. So do $20 gift cards to entice staff to attend a health fair. But employers are turning to more powerful weapons. The Affordable Care Act allows employers to increase cost sharing for health coverage by 30 percent for employees with health risks and 50 percent for smokers, if they offer a wellness program. Of note, those penalties are not for mere participating but for meeting a so-called health-related standard, like normal BMI.

In our 2012 survey, only 10 percent of employers used incentives tied to a health standard and the maximum value of those incentives was less than 10 percent of cost of coverage. For 2015, recent survey data from the National Business Group on Health and benefits consultant Towers Watson suggest that 46 percent of employers might offer such outcomes-based or health-contingent incentives. Agreed, many of those targeted health risks are a consequence of poor choices, and people need to be held accountable for them. But there is also a genetic and, most importantly, a social component: Poor health habits and poor health are correlated with low socioeconomic status.

In his excellent recent post, Princeton economist Uwe Reinhardt laid out the regressive nature of employer-sponsored health coverage in the United States as a consequence of high-deductible health plans and the tax treatment of premiums and flexible spending accounts. Allowing employers to differentially shift up to 50 percent more of the cost to employees with poor health choices will substantially increase that regressive nature, by increasing cost sharing or nudging people to drop coverage.

In my mind, exposing the most vulnerable employees to that level of pressure would be sound policy if, and only if, workplace wellness programs were powerful enough to reverse years of deeply engrained behaviors. Yet our data show that they are not even attracting more than a quarter of employees and have a modest impact on those who participate. That is why I believe it is time to start rethinking workplace wellness, and come up with models that are both fairer and more effective.

Why do employees, and in particular those at high risk, choose not to participate? We do not yet have the evidence or insight to understand and convincingly answer that question. When we do, we will be able to design attractive and accessible programs. In the meantime, we should not penalize vulnerable employees who are reluctant to join marginally effective programs.


Soeren Mattke is a senior scientist at the nonprofit, nonpartisan RAND Corporation.

This commentary was first published on March 18, 2015 on Health Affairs Blog. Copyright ©2015 Health Affairs by Project HOPE — The People-to-People Health Foundation, Inc.

Commentary gives RAND researchers a platform to convey insights based on their professional expertise and often on their peer-reviewed research and analysis.