Rahul K. Parikh: The changing economics of workplace wellness
Would you be willing to share with your employer how much you eat, drink, smoke or exercise? And would you be willing to make lifestyle changes in return for a break on the cost of your health insurance? The University of Minnesota offered such discounts to its workers. Actions such as completing a health questionnaire, biking to campus or setting personal fitness goals earned insurance discounts beginning at $300. Nearly 6,000 employees accepted the bargain.
But do such programs have the intended effect of healthier employees and lower health-care costs? As more businesses embrace health incentives, these questions are becoming more urgent.
Perhaps the most widely recognized employer wellness program is that of the grocery store chain Safeway. The company’s voluntary Healthy Measures program evaluates four measures of health: tobacco use, weight, blood pressure and cholesterol levels. If employees “pass” all the tests, annual premiums are reduced by up to $780 for individuals and $1,560 for families.
Writing in the Wall Street Journal in 2009, the company’s chief executive, Steven A. Burd, claimed that the program helped Safeway keep health-care costs stable during a period when the cost of health care to other companies rose by 40 percent. Among those who noticed Safeway’s success was President Obama, which led to the addition of “the Safeway amendment” to his health reform law. The amendment will allow employers to tie 30 percent of an employee’s health-care costs to wellness programs beginning next year.
While Safeway’s program remains voluntary (and available only for nonunion employees), other companies, such as CVS pharmacy and Scotts Miracle-Gro, have taken harder-line stances. CVS, for example, recently required all of its employees to submit to a medical exam or pay a $600 fine. Scotts bans smoking, during both work and off hours, as part of its program.
So, do such initiatives work? A 2010 analysis of 36 studies that looked at corporate wellness programs suggested they can be effective. Researchers calculated that employers saved $6 for every $1 spent: $3.27 saved in medical costs and an additional $2.73 gained due to reduced absenteeism. An earlier analysis had found that such programs reduced sick leave, health plan costs, worker compensation and disability costs by about 25 percent.
But not every study has reached the same conclusion. A number of recent studies have cast doubt on both the cost savings and the sustainability of some employee wellness programs.
A series of studies, published recently in the influential journal Health Affairs, looked broadly at the efficacy of employer wellness programs. One study concluded that employers might save money on one aspect of health care but spend it on another.
The researchers, led by an economist at the University of Arizona, looked at a wellness program at St. Louis-based BJC HealthCare, a major hospital. This company launched its program in 2005, targeting conditions such as heart disease and diabetes with a series of insurance discounts. The study found that fewer employees were hospitalized, which certainly saved money on hospital costs. But those savings were offset by higher amounts spent on outpatient doctor visits and prescription drugs.
In a second study, UCLA-led researchers reviewed multiple studies examining a variety of conditions targeted by employee wellness programs, including high blood pressure, smoking and obesity. The study raises questions about some basic assumptions of wellness programs. For example, the authors discovered that “a majority of studies showed no significant spending differences between people who used tobacco, had high blood pressure or cholesterol levels, or got inadequate amounts of exercise, compared with other people.”
The authors also suggest that while incentives may help get employees off to a good start in making changes, sustaining them is more challenging.
In the case of weight-loss programs, incentives helped participants lose weight, but in the long run, they regained it. In 19 trials looking at smoking cessation, only one had significant effects on smoking rates after six months.
For employees, perhaps the most telling red flag from the study is that their employers may be saving money not by making them healthy but rather by shifting health-care costs onto them.
“Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees — those from lower socioeconomic strata with the most health risks — bearing higher costs that in effect subsidize their healthier colleagues,” wrote the authors.
Despite these new findings, many employers remain committed to wellness programs.
Writing in April for the influential policy publication the Hill, a representative from the U.S. Chamber of Commerce was enthusiastic, suggesting that “wellness programs continue to offer an effective way for employers to encourage healthy behavior without having to decrease benefits, reduce wages or close their doors altogether.”
Those are worthy goals, but so far they remain goals.
There may be benefits of workplace wellness initiatives that we haven’t yet measured, such as improved morale and workplace camaraderie.
But it’s clear from the mixed bag of evidence so far that we need to keep studying what works and what doesn’t in order to design programs that will fulfill the hope that they can save money and make people healthier.
Rahul K. Parikh is a physician and writer in the San Francisco Bay Area. He wrote this for the Los Angeles Times.