America's Best Health Plans
28 05 08 - 14:03
Desperate to control healthcare costs, employers are rolling out wellness programs with teeth
By Michelle Andrews
Posted October 25, 2007
Discounted gym memberships. Free cholesterol screening. Movie passes for completing a personal health Q&A. Traditionally, most corporate wellness programs have relied on a variety of small perks like these to nudge employees to pay better attention to their health.
Despite such efforts, healthcare costs continue to rise, and most employees are getting no healthier. Straining to contain costs and looking ahead to worse as the workforce ages, employers are beginning to introduce wellness programs with teeth. Feel-good corporate self-interest is taking a back seat to employee accountability, with heftier rewards for those who toe the line-or painful bites taken from paychecks of workers who don't. And instead of simply urging workers to exercise and engage in other health-promoting activities, companies are focusing on specific benchmarks for weight, blood pressure, and cholesterol, for example, that they expect employees to meet to get the lowest-priced healthcare coverage.
This bottom-line focus on "workplace wellness" stands to benefit workers as well as employers, of course, and could go some distance toward brightening the nation's overall health picture, too. A study released by the Milken Institute in early October concluded that reorienting our health system toward preventing rather than treating disease could stave off 40 million cases of cancer, heart disease, and other chronic illnesses during the next 15 years. That would shrink the cost of medical care and lost productivity by $1.1 trillion, an amount equal to half of all healthcare spending in the United States in 2005.
Without some kind of sea change, the bill for treating the chronically ill will inflate even more rapidly. Spending on diabetes and other obesity-related maladies alone drove 34 percent of the increase in U.S. medical spending between 1987 and 2004, according to research by Kenneth Thorpe, professor of health policy at Emory University.
Healthy penalty. But incentive-based programs can be lightning rods. Clarian Health Partners, a large Indianapolis-based healthcare system, earlier this year found itself on the defensive after announcing that starting in 2009, 13,000 employees at five area hospitals would face a surcharge of up to $30 per pay period if they smoked, didn't fill out a health-risk questionnaire, or fell short of targets for weight, blood sugar, cholesterol, and blood pressure-a $5 penalty for each. Sheriee Ladd, vice president for human resources, says that as a healthcare provider, Clarian wanted to take a leadership role in encouraging healthful behaviors.
But employees rebelled, even though the company offered free lifestyle and nutrition coaching, stop-smoking programs, fitness centers, and other wellness activities. "We couldn't get people to hear the message because they were so stuck on the charges," says Ladd.
Clarian reversed course. Rather than being penalized for falling short of health targets, employees who meet them will receive up to $30 extra in every paycheck. "Now the package is more tolerable for employees to hear and digest," says Ladd.
Marsha Vorhis didn't object when Clarian announced the original wellness penalties. A patient visitor representative in the surgery waiting room at Clarian's Methodist Hospital, she has shed more than 40 pounds since the beginning of the year with the help of a Weight Watchers program offered at the hospital at a slightly discounted $144 for 12 sessions. She figured she was already on track to meet the proposed BMI target of 30 or below, and as she lost weight, her other health markers were dropping into the normal range as well. Coworkers, however, were less than enthused. "They thought it was very invasive," says Vorhis; some talked about quitting.
Those charged with overhauling employers' healthcare policies generally are sensitive to backlash; health policy experts say Clarian's experiment with "going negative" is an exception. Companies that offer financial inducements generally reward rather than punish, most often by offering a break on healthcare costs. At Johnson & Johnson, employees get $500 off their premium for completing a health risk assessment and working on health problems with a counselor. IBM employees can earn up to $300 in cash by exercising, eating right, not smoking, and filling out a health risk questionnaire.
Among activities that typically qualify for rewards, smoking cessation, use of onsite fitness centers, and weight-loss programs are the big three. Each is offered by about a third of large employers that provide insurance, according to a 2006 employer health benefits survey by the Kaiser Family Foundation.
Healthcare plans are responding by fitting wellness programs into more of their corporate coverage packages. Minnesota-based HealthPartners, for example, offers counseling courses by phone on topics like stress management and healthy pregnancy. Participation entitles employees to a break on their copayments or deductible. The movement by plans to incorporate incentive-based wellness programs is too new and the results too uncertain, however, to be factored into the U.S. News "America's Best Health Plans" rankings.
This is uncharted territory. Privacy is one concern, and ironclad reassurance that your employer won't have access to your health information is hard to come by. "It's a really complicated legal area, and there's no bright line where a person can say, 'I'm definitely protected,'" says Joy Pritts, a health policy analyst at Georgetown University's Health Policy Institute who specializes in privacy. "What it comes down to is whether or not you trust your employer."
Pocketbook pressure. To many employees, discrimination is a hot button. Federal law bars employers from requiring employees to take part in wellness programs. But consumer advocates worry that building sizable financial inducements into these programs could unduly pressure employees who might prefer not to participate—and once they take part, they could become discrimination targets.
Federal regulations that took effect in July added another wrinkle: Programs that offer rewards or penalties tied to particular standards can do so only if an alternative-going for daily walks, for example, instead of maintaining a BMI under 30-is offered to get the reward or avoid the penalty to employees who can't or shouldn't meet them. Such employees might include someone with a genetic predisposition toward high blood pressure, perhaps, or on a drug for which weight gain is a side effect.
The new regulations also stipulate that the value of rewards and penalties can be as high as 20 percent of an individual's total employee and employer outlay for health plan premiums. Consumer advocates argue that healthy employees will find it much easier to take advantage of incentives than those with chronic conditions or other illnesses. They also worry that 20 percent can represent such a substantial sum that employees may feel unfairly compelled to jump on the wellness wagon. A typical family policy costs roughly $12,000 a year: a 20 percent reward or penalty would hit $2,400. "When an employee who fails to participate in a wellness program is significantly worse off financially than an employee who does participate, there is very little voluntary decision making involved," says Jeremy Gruber, legal director for the National Workrights Institute, an advocacy group.
Garry Mathiason, senior partner at Littler Mendelson, an employment and labor law firm, expects litigation down the road as employers test how hard they can prod employees. But he says lawsuits won't check the trend-"it's like building a dam against a tsunami." Hundreds of companies contacted Littler Mendelson after the company published a paper this spring exploring the legality of such aggressive approaches as penalties for nonparticipation.
Opinions are strong but evidence weak on carrot vs. stick as more likely to change behavior. At Pitney Bowes, the mail technology company in Stamford, Conn., the choice is to accentuate the positive. Besides the usual weight-loss, smoking-cessation and health-education programs, the amount employees pay for drugs for chronic conditions like diabetes and asthma has been lowered.
The company hoped when the program was initiated in 2002 that employees would be likelier to stick to their drug regimens if offered the carrot of reduced cost-which should lower overall healthcare expense for employees and employer alike. Sure enough, spending on employees with asthma and diabetes has declined by 15 percent and 8 percent respectively, says Jack Mahoney, Pitney Bowes's director of strategic healthcare initiatives.
This year the company added osteoporosis and seizure medication, blood thinners and drugs to prevent breast cancer recurrence. Employees with diabetes and heart disease get free cholesterol-lowering drugs. "We don't want to be a police state," says Mahoney. "When you start weighing people and doing blood tests it sends a message that you don't trust your employees."
Behavioral psychology suggests that Pitney Bowes-style programs could indeed change employees' behavior—to a point. "In general, we know from behavior modification that you reward behaviors that you want people to continue and ignore what you don't want them to continue," says Michael O'Donnell, editor-in-chief of the American Journal of Health Promotion and director of health and wellness at the Cleveland Clinic. "Punishment rarely works." The catch, says O'Donnell, is that external motivators rarely change behavior permanently. For that to happen, O'Donnell says, people must decide to change for their own benefit.
That's what Betty Gravelle did. An energy-monitoring coordinator for Hannaford Bros., a supermarket chain in the Northeast, she had struggled with her weight for years, but when she took the company's health risk assessment this year, "my numbers were way at the wrong end of the chart"-including a cholesterol reading of 291. "That was the final shock," she says.
Gravelle took drastic action, and it has paid off. Through a combination of an online Weight Watchers program, "spin and tone" classes at the on-site gym, and company-sponsored healthful cooking and nutrition classes, she has dropped 90 pounds. Her BMI, formerly almost 43, is now just over 28.
Future muscle. Financial incentives from the company didn't play a big role in her decision, Gravelle says, but they've been a nice sweetener. She gets a "healthy behavior credit" of $20 a week against her health insurance premium for completing a health risk assessment, not smoking, and working on weight-loss goals that she set with the company nurse, even if she doesn't achieve them. Her husband is covered under her health policy, and while he is not a Hannaford employee, he must participate for his wife to receive the $20 credit.
As Gravelle works toward trimming that last 20 pounds, she is further motivated by thoughts that companies might someday put more muscle into their wellness programs. "Being overweight causes just as many problems as smoking," she says, "and I keep thinking the day is going to come when they'll start penalizing me for my BMI."
O'Donnell thinks the real impact of wellness incentives could come more from their influence on workplace culture than from individual employee decisions. He observes that until the 1990s, when smoking was banned in hospitals, people insisted that allowing patients to smoke during this difficult time was crucial to their recovery. Now the idea of smoking in a healthcare facility is unfathomable. If that kind of disapproval is extended to other forms of unhealthful behavior, some day there may be little need for wellness programs at all.