Potential Health Myth Two: Wellness Programs Save Money

Note: This is the second blog from my ThinkPiece article in the Des Moines Business Record. Here is the previous blog.

Workplace wellness has become over a $6 billion industry in the U.S. Employers offer these programs with the intent to improve the health and well-being of their employees, which may increase their productivity and also reduce and control costly chronic diseases. Most programs use financial incentives to motivate employees to monitor and improve their health, often through lifestyle-modification programs, such as lowering blood pressure and cholesterol. Common incentives can include discounts on health insurance to employees who complete health risk assessments, or perhaps charging employees more for smoking or having a high body-mass index. There are many different incentivized approaches employers take with wellness programs. But, to avoid discriminatory practices, they must be careful when complying with various federal regulations.

During my years as an employee benefits consultant, I often observed that wellness programs were being ‘sold’ to employers with a great deal of positive hype, usually establishing an unrealistic expectation that by merely implementing wellness basics within the workplace setting, rising health costs would soon abate and save employers money.

Do wellness programs save employers more than the cost of implementing them in the workplace? It depends. Contrary to the hefty claims made by wellness vendor studies (which are typically non-peer reviewed and often unable to produce valid causal savings estimates), many national studies that are peer-reviewed generally suggest wellness programs have little, if any, immediate effects on the amount employers spend on healthcare.

One important study that resulted from the PepsiCo Healthy Living program suggests that evidence-based wellness programs that target specific diseases, such as asthma, coronary artery disease, stroke, hypertension and low back pain, may possibly provide savings, but only after several years following implementation. Another example, the Rand Wellness Program Study in 2014 concluded that “employers who are seeking a healthy return-on-investment (ROI) on their programs should target employees who already have chronic diseases.” Rand found the ROI for disease management programs were $3.80 for every dollar invested.

When wellness programs are implemented more broadly and focused only on lifestyle management (e.g. smoking, obesity and fitness), which are typical wellness components, savings do not materialize, at least in the short term. Rand found the ROI to be $0.50 for every dollar invested. Evidence-based lifestyle programs, however, may reduce absenteeism and improve productivity, but the ROI may be marginal at best. Given the lack of financial return for lifestyle programs, employers might opt to avoid the cost of screening all employees for health risks, but instead, offer healthy food choices and initiate educational campaigns to use the stairs, bike to work, etc.

The Skinny: A great body of evidence suggests that implementing just any wellness program by employers will not reduce overall health care spending. However, if a program is designed with specific targeted diseases, some savings may happen in the long run, but not by focusing merely on lifestyle changes. Employers must have realistic expectations and demonstrate a strong organizational commitment for any long-term savings to materialize.

NOTE:  As an exercise enthusiast who is insured with a $10,000 family-medical deductible accompanied by a health savings account, my comments may possibly suggest that I am an opponent of wellness initiatives and high deductible health plans. I am not. But I do believe employers must have realistic expectations about the shortcomings of wellness and cost-sharing plans.

Next week’s blog will review the third myth, ‘reforming’ Obamacare.

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