The Diane Rehm show took a look this week at workplace wellness programs – what they are, how they’re working and how they may change under the Affordable Care Act (ACA). These programs are increasingly getting public attention, as more employers are learning about the ACA provisions encouraging financial incentives for workers to participate in wellness programs or meet certain health targets – and some are adopting programs that financially penalize workers who don’t meet the health targets or take a health risk assessment. I was invited to participate as a panelist and to provide an update on our 2012 report for the Robert Wood Johnson Foundation on programs that tie employee health plan costs to attainment of specific health targets such as BMI and blood pressure.
The show covered a lot of ground and we had a robust debate about the risks and benefits of these programs. Here are some highlights from the show.
- Workplace wellness programs have been around for decades, but they really started growing in number in the 1990s and 2000s. Programs can range from something as simple as offering smoking cessation in the workplace or providing a gym membership to using financial incentives to encourage people to change their behavior.
- According to some estimates, only 7% of employers have comprehensive, well-designed programs. To have an effective program, there must be multiple elements, including an organizational structure that supports wellness and resources for workers to improve their health.
- The movement toward more workplace wellness programs is consistent with an overall trend in encouraging workers to accept greater responsibility for their own health, including through so-called consumer-directed health plans with high deductibles, on the theory workers will “shop around” for lower cost health care.
- Of programs that use financial incentives, most provide cash or other inducements. The share of programs that tie health plan costs to achieving health outcomes is small but growing.
- One of the primary accomplishments of the ACA was to prohibit plans from using health status to deny coverage or charge individuals more. However, there is concern that workplace wellness programs can be a back door way for insurers or employers to set premiums based on employees’ health status.
- The rules implementing workplace wellness programs provide some protections against discriminatory design, but they could go further. For example, there is no requirement that programs be evidence-based in order to show they are “reasonably designed.”
There was agreement among the panelists – as there is generally across stakeholders in the debate – that it is both laudable and logical to use the workplace to provide support and resources to individuals in their efforts to improve their health. However, consumer groups have raised concerns that programs that penalize sicker workers with higher health care costs are counterproductive and potentially discriminatory.
A study by Jill Horwitz published in Health Affairs this spring found that there is little evidence that workplace wellness program can easily save money without being discriminatory. The study suggests that savings arise from shifting costs to certain workers, not lowering overall costs. And the health conditions frequently targeted by workplace wellness programs are more prevalent among people with low socioeconomic status.
With the penalties allowed under the ACA, the cost implications can be significant. An individual hit with a 30% penalty on the average premium — $5,600 – would pay $1,700 more. A tobacco-related wellness program can penalize workers up to 50% of the premium, or $2,800. For some workers, that may put coverage out of reach. Penalties can also be applied as higher deductibles, which could make it prohibitively expensive for less healthy workers to get the care they need.
Yet we don’t have evidence that financial incentives delivered as higher health plan costs really work. It’s one of the areas a recent Rand report notes needs more research, noting, “Employers overwhelmingly expressed confidence that workplace wellness programs reduced medical costs, absenteeism, and health related productivity losses. But at the same time, only about half stated they have evaluated their program impacts formally and only two percent reported actual savings estimates.”
Employers have said it is important to allow for innovation in this growing field, and the final rule on workplace wellness program largely allows for that. However, we miss an opportunity to learn from the innovation if we don’t have more transparency around the programs. Knowing more about how incentives are applied and how they affect health outcomes would tell us not only whether the programs are working, but whether they are having a disproportionate impact on certain populations.