Employer Wellness Programs That Reward Healthy Behaviors: Shifting Costs?

Today’s Managing Health Care Costs Indicator is 20%

The second article on workplace wellness programs in this month’s Health Affairs uses empiric data and theory to question the effectiveness of programs that provide financial or other incentives to encourage workers to improve their health behaviors. 

The authors ask three questions:

1)    Can the program identify and target incentives to employees at risk?

2)    Will the incentives change behavior?

3)    Will changed behavior lead to health care cost savings?

They conclude that

A)   Evidence that employees “at risk” had higher near-term medical costs was inconclusive

See the chart below

B)   Evidence that employees change their long-term behavior as a result of short-term incentives is lacking
In well-designed studies, behavior changes have been small and often unsustained; a few studies have shown more intensive risk factor management is associated with higher costs

C)  Evidence that decreasing risks is associated with short-term cost savings is poor.  Many studies assume that those who have improved their health behaviors will have costs similar to those with “good health behaviors in the first place, but this is often untrue. (For instance, ex-smokers have costs similar to smokers for the first years after quitting.)

HiPAA currently prohibits employers from a health plan cost differential more than 20% for health behaviors; this increases to 30% in 2015 (because of the Affordable Care Act), and HHS has the discretion to increase this to up to 50%. 

The authors conclude that the real cost savings for employers are likely to be due to cost shifting to the employees who will pay penalties, rather than from healthier employees.   This is a powerful argument against raising the allowed differential for those who exhibit healthier behavior.

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