An Unhealthy Debate Around Wellness

SidorovThere’s an adage that, except for their tax revenue, American business is something the left loves to hate. And who can blame them, what with executive compensation, minimum wage and overseas job outsourcing powering the left wing’s ascent faster than corporate gunships in a greedy search of Avatar movie unobtainium? Being the principal source of health insurance for their employees hasn’t helped the liberals’ view of American business either, not only because it gets in the way of their cherished public option, but because their constituents’ benefits have been squeezed by the specter of an unholy alliance with managed care over caps, deductibles, co-insurance and co-pays.

So when it came out that the Senate’s proposed health reform legislation would increase employers’ and insurers’ ability to incentivize employees’ participation in worksite-based health promotion activities, progressives zeroed on it  like Air Force One on a Massachusetts political rescue mission. Believing that any use of any financial rewards is just plain wrong, opponents have cast incentives as penalties on those who don’t participate in workplace wellness programs – a sneaky, indirect and backdoor way of making the sicker pay more for their health insurance.

Egads. Follow this line of logic far enough and you’ll ultimately conclude employers have no involvement in health care.  But wait a minute…maybe that’s the intent of my liberal colleagues. But I don’t think their reasoning holds up under the light of real world experience or what’s been published in the peer-reviewed scientific literature.

First off, federal law already allows employers and insurers to provide incentives up to 20 percent of the premium. Current legislation proposes to increase that to 30 percent. The point here is that argument over the use of premium differentials was settled years ago; what is different is the amount, which in the Senate bill, is intended to give employers greater flexibility in the design of their incentives.

Second, worksite wellness programs are almost always designed with the employees’ input. Early attempts to concoct programs ”from the top down” quickly established that they always fail, and fail miserably, no matter how much money is on the table. Premium incentives alone can be a necessary ingredient. But by themselves, they are not sufficient. Employers always have and always will seek their employees’ counsel over the many components of a successful program, including incentive levels.

Third, monetary incentives, like all employee incentives, are not the purpose but are really part of the solution to achieving outcomes in the fight against tobacco abuse, obesity, poor nutrition, lack of exercise and stress in the workplace. Communications campaigns, health risk assessments, building facility redesign, cafeteria menu selection, other aspects of the insurance benefit package, visible leadership support/participation and providing employee-free time are only some of the other ingredients that need to be assembled for this to work. The idea that this is only about the employees’ money is a myth. It’s about tackling issues that are driving up local health care costs and crippling our economy.

Fourth: There is considerable research that has shown that line employees welcome financial incentives. Unsaddled by an oppositional union leadership disorder to all things having to do with business, the rank and file support in favor of this is probably based on a perspective lost on their union leadership: money talks, especially when it’s walking into your pockets.

Fifth: Are there any reports, outside of some anecdotes framed by an extremist bias, of measurable harm to patients subjected to a premium differential? Other than conjecture or theory, there are none. What is true is that SOP in business is to study the outcomes of worksite wellness initiatives and PLEXEVAD (plan, execute, evaluate and adjust) the components of the program against the outcomes achieved. There is no scientific literature that has shown that patients’ access to care is hurt by these employer programs.

Sixth: Worksite wellness programs are designed by the same minds and energy that has propelled the United States to unparalleled economic achievements. While this record has not been free of any serious mishaps, the fact is that the genius of private enterprise is far more likely to develop successful health promotion initiatives than anything in the public sector. Case in point: who has been better at getting H1N1 vaccinations to persons at risk: Goldman Sachs or the New York City Health Department?

Last, I’m not hearing any suggestions about alternative approaches to health promotion from my colleagues, other than “no.” It is obvious that to succeed in battling the scourge of chronic illness, we’re going to need the unions and health care advocacy groups, as well as constructive participation of government, public health, academia, the health care system and the insurer community. The reason why benefits are being squeezed is because health care costs are exploding thanks to the very health care problems that worksite wellness programs address. Hobbling the employers is consistent with ultra-liberal disdain, but fails to capitalize on the fact that we’re all in this together. Business bashing is fine, but it’s time to harness this energy more effectively. As Benjamin Franklin famously observed, on this health care issue, we hang together or we’ll hang alone.

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36 replies »

  1. Nate, the “straw man” comes from the unfortunate association of health care and employment.
    If insurers had nothing to do with employment and insurers had to accept all comers and couldn’t adjust premiums based on risk and they augmented their services to include clinically competent folks to run wellness programs, I wouldn’t have a problem with some form of voluntary risk assessment.
    The reason for the last caveat is that some folks would object to being forced to accept medical care.
    Of course you can always entice insureds with gifts and freebies. However premiums should have nothing to do with it.

  2. “Second for an insurance plan to manage people’s health,…
    Isn’t that between a doctor and their patient? Ask people if they want insurance companies managing their health and you’ll get a resounding NO. Only insurance companies want to micromanage the risks and split people into smaller and smaller risk groups to maximize their premiums. Fat people on the right, less fat people in the middle and slim people on the left. Sorry Nate, but the solution is not more onerous insurance. I’d rather tax risky behavior and use the funds to pay for healthcare.

  3. No one advocated for HRAs as condition of being hired, that was never suggested. As a condition of joining the insurance plan makes perfect sense. For starters everyone should know their health. Second for an insurance plan to manage people’s health, something they are expected to do for some reason, don’t they first need to know what they are working with. Waiting till someone has a stroke to manage blood pressure seems counter productive.
    How can you argue for forcing insurance companies to insure risk without knowing what that risk is or allowing them to manage it?
    Where did this straw man come from your beating? How do you take a discussion on mandatory HRAs to have insurance and turn it into a slavery relapse?
    Vikram I would like the premium differential to reflect the risk differential of lifestyle choices. If you’re medical claims are expected to be 50% higher if you smoke then your premium should be 50% higher. I don’t think people should be penalized above the issuant risk or we should be telling people how to live. If you want to smoke by all rights that is your choice, but you should be responsible for the consequences, in this case 50% higher medical cost.
    Size of rewards depends on what we are asking them to do. For $10-$20 I can get someone to change pharmacies. To change hospitals is in the thousands. To use UC over ER for some reason takes $100+. It is all perception and what the person feels they are giving up. I can get someone to change doctors for a fraction of the cost to get them to change dentist. It is near impossible to get wholesale dental change.
    Meaningful HRA participation is rough because you need to give them enough to fill it out accurately and meaningful then reward them again to follow through. You can’t back load one reward, no immediate gratification, or front load it, no follow through. You need a series of sustained rewards or accumulation to greater prize.

  4. I’ve read Pollan’s book as have most at our company, watched the movies, understand the cultural issues, tax stuff , government support etc. Prevention is a comprehensive program that looks at the person, their environment, and other factors in order to change behavior.
    As for the 75% number its from the Partnership to Fight Chronic Disease, Ken Thorpes group and I beieve they reference a CDC report.

  5. There are two things which are getting mixed up here.
    1. Providing basic incentive to promote healthy behavior
    2. Investing in wellness program over and above the basic incentives in assumption it will make strong dent into claims volume an dollars in medium timeframe, say 1 to 3 years.
    When I say Insurance companies offering wellness program, by that I mean providing ‘substantial’ incentives to employeed in form of lower premiums. This is referring to my second point of expecting strong reduction in claims. I would like to question how much you want to invest in it in form of premium discount- 10%, 20%, 30%?
    I note with interest Nate’s comment on higher offtake when copays are waived or there is reward participation. I would be interested to know how substantial the rewards were. Notice the Medencentive’s
    study presented on THB a few weeks back. One of the finding was that reward does have to be $50+ in order to generate sufficient interest and for program to be sustainable.

  6. First of all, is there any data behind the assertion that “75% of health care cost growth can be attributed to an increase in the incidence of chronic diseases”?
    I understand that chronic disease is prevalent and expensive, but is there a 75% increase? Increase from what baseline?
    Second, what is the economic reasoning for subsidizing corn? Is there a national benefit to such subsidy? In the day and age of “what’s in it for me”, may I ask the same thing about corn and the other agricultural subsidies? If we have to manage our budget and cut wherever possible, why not cut some of the corn fest expenses?
    Nate, aside from your job and your business, how can you advocate for “risk assessment” as part of hiring?
    Is this the modern way of checking one’s teeth and muscle tone prior to closing a transaction? Since you seem to be very sensitive to government intruding into your freedom and liberty, do you see no problem with employers doing the same? Doesn’t it look to you like a huge step back?

  7. “When 75% of health care cost growth can be attributed to an increase in the incidence of chronic diseases, many of which are preventable, the solution is pretty clear.”
    Apparently not clear to you Fred. History, culture and politics subsidizes high fat, high carb, high sugar diets and marketing junk food to children through a rigged corporate food system that’s about cheap quantity not quality. Get the video, “Food Inc.” and “King Corn” and you’ll see how “clear” it is. If you’re into reading I’d also suggest Micheal Pollan’s book, “The Omnivore’s Dilemma”
    Nate, employers already discriminate because “they are fat, old, women, black, etc etc.”, what would stop them from discriminating and screening for health as well. This is just another reason to disconnect health coverage from employment.

  8. “And Nate, man, you overstep the bounds of what you know. People do not need small financial incentives in the form of health insurance contributions or cash rewards to stay healthy.”
    Interesting jd, speaking of bounds, how exactly do you know what I know? Like Vikram’s statement you really have no basis at all to make that comment. As to your conclusion how many patients did you speak to today trying to get them to change their habits? Being a monday it was slower then most days but I spoke to three. In an average week I usually speak to 10-15. I oversee the bribing of thousands of people.
    If I send an EOB insert, or post a flyer, or do other passive “education” the uptake is low single percent. When I start waiving Rx co-pays all of a sudden I am getting 50%+ responce.
    Voluntary HRA low double digits, rewards for participation high 80s.
    What experience do you have to back up anything your saying? Your just as bad as Vikram and his insurance companies don’t offer wellness comment.
    No financial reward no responce ask anyone that actually does it for a living.
    I wish I was wrong, we would all be much better off if people took responsbility for their health but that aint reality. So far nothing has worked any where as close to as well as paying people to do what you want, works even better then fear of death.

  9. Vikram C: “By the way, do insurance companies implement wellness program for their employees? I think not.”
    Vikram, a couple minutes’ Googling would have answered this question for you. They do. Not all of them, but plenty do and I think all the big ones. Note that not all wellness programs are created alike. They don’t all have financial incentives built into the premium contribution.
    I may have missed it in the discussion, but we really need to stop thinking about being healthy as primarily about reducing medical costs. More than 50% of the savings to companies comes from improvements in productivity (and way more than 50% of the savings for fully insured companies). And from a public health perspective, being healthy is of course about living with less pain and impairment for a longer period of time.
    As for ROI and the ability to actually get people healthier, it depends enormously on how you execute the program. It’s a “people” and “culture” driven process, not something you can phone in, or just throw some bucks at and expect results. So take any average ROI numbers with a grain of salt, but the best health care policy and research publication out there, Health Affairs, just published a meta-study showing an average ROI of over 3:1.
    And Nate, man, you overstep the bounds of what you know. People do not need small financial incentives in the form of health insurance contributions or cash rewards to stay healthy. Failure to stay healthy is a cultural phenomenon. Without ever coming to grips with the negative consequences, we created the conditions for an over-indulging, under-active society.
    I won’t get into all the issues, but I could go on and on. There are the big subsidies for things like corn syrup that make high calorie, low-nutrient foods even cheaper. There is the fact that we live in suburbs where we drive everywhere rather than walk, and instead of working physically, most of us sit in chairs all day at work, then come home and sit on a couch watching TV, playing video games or typing on a laptop…as I’m doing right now.
    Never forget that Europeans pay less out of pocket than the kinds of health insurance you hype, and they tend to be thinner and in better shape than the people your plans insure. It’s primarily cultural in a broad sense, and only secondarily do those immediate financial incentives impact health and wellness. The incentives matter and I’m in favor of them, but really, and this is to everyone, not just you: it’s the culture, stupid!

  10. When 75% of health care cost growth can be attributed to an increase in the incidence of chronic diseases, many of which are preventable, the solution is pretty clear.
    And while there are a large humber of groups against premium differentials, to get a sense for how strong public support is for prevention/wellness programs go to and watch the video of Fox and Friends featuring Frank Luntz and his “dial” results.
    There are clear reasons why employers are interested in these programs, and the means to get engagement such as premium differentials; other proposed solutions have not worked. Additionally, studies now show that for every $1 in medical costs incurred by those with chronic conditions, a company incurs $2-$3 in lost productivity. If we expect to compete in a global economy we need a healthy workforce, not a 21 year old newly hired individual who has had Type II Diabetes for 10 years.
    Premium differentials are a great tool if implemented correctly. and contrary to a statement made previously there are companies that look beyond the one year window and “measure costs and returns” in year 3 or so. How do I know, we contract with them.

  11. I am in agreement with Peter. We don’t want company’s benefit administrators in charge of well care. They are too squeezed to implement the program where you have a nanny overseeing employees. Cost reduction will be only target of Benefit Administrators and as wellness takes so many years to fructify it is likely that program will degenerate into meaningless experiment.
    Gift cards and example set up by executives will be more than sufficient.
    By the way, do insurance companies implement wellness program for their employees? I think not.
    Human body is strange machine. The output is just not discernible corresponding to the input. My grandpa, attributed his late age energy to rich food consumption in childhood. There ain’t a company that would measure costs and returns for more than a year, let alone through lifetime.

  12. “Because the “engagement” would soon turn into exclusion,”
    By this logic employers should not be allowed to interview people in person. Or over the phone. If they see or hear the person then they could discriminate becuase they are fat, old, women, black, etc etc.
    There is no proof or reason, except your cinicism, to expect that would happen. If you do regulate by that standard then employers shouldn’t even be allowed to hire people the government should assign employees to employers so they have the utopian liberal diverseification.
    inchoate but earnest, you have no idea how hard it is to respond to people like you while staying in the guidelines.
    “positively cartoonishly misconstrued notions of the thinking behind their pursuit of those strategies”
    I’ll just leave it to the readers if they wish to beleive you, who has no experience with any of this, or myself who sat in the room with the person who crafted the Pitney Bowes plan going over detail by detail how they accomplished it, why they did it, and how we can do it. And the emails I traded back and forth with him after. That was 2nd or 3rd week of October 2009, Sand Pearl resort in FL. What’s your resume?

  13. Nate, your ability to grasp the nub of the health strategies devised and implemented by Pitney Bowes, Caterpillar, and others you’ve named, coupled with your positively cartoonishly misconstrued notions of the thinking behind their pursuit of those strategies, is — well, as my dear old ma used to say, “will wonders never cease?”
    Trust me, Nate, if you were acquainted with the politics of those who crafted and applied those strategies, you’d – well, frankly, it’s really hard for me to imagine just what you’d do.
    FWIW, Nate, EEOC’s GINA opinion has been attacked from all points of the political compass. Ill-advised is ill-advised – regardless the advisor’s politics.

  14. I personally am deeply skeptical about giving employers discretion to financially incentivize in order to promote wellness, simply because their interest is in maximizing profits/cutting cost, not their employee’s health, especially not when employee fluctuation is large (leading to little financial incentive since returns from wellness are longterm returns) and when medicare ends picking up the tab anyway (paying for the lion share of cv disease complications, joint replacement, DMII costs) …
    … but …
    …as long as we are stuck with the nonsensical employer based health care system for the young and middle aged (that, according to Jaan, apparently should be reason for eternal gratitude towards employers), that (probably with some regulatory oversight) is the best we can do to prevent the upcoming catastrophe of diabetes, obesity, stroke in middle aged and old. A national campaign for a healthy life style, subsidizing healthy food, desubsidizing fructose corn syrup, a 5% percent bonus for nonsmokers, a 10 % bonus for people close to normal weight (and a 5% bonus for obese people loosing weight), a 3% bonus for people succesfully managing eac h HbA1c and/or hypertensive BP values by being compliant with meds, that has a realistic chance to work.

  15. ” Some employers have considered requiring employees to participate in risk assessments in order to be eligible for employer-sponsored health insurance.”
    “They weren’t trying to penalize them for results they just wanted everyone engaged.”
    “What argument can you make”
    Because the “engagement” would soon turn into exclusion, either from company insurance (or parts of it) or from the job as costs continue to rise. Would you support a pre-hire health risk asessment? Wouldn’t that be the prerogative of the employer?

  16. “In order to control health care costs, employers continue to introduce various wellness programs, including health risk assessments. Some employers have considered requiring employees to participate in risk assessments in order to be eligible for employer-sponsored health insurance. In the past, it has been unclear whether such an eligibility requirement was permissible, particularly under the Americans with Disabilities Act (ADA). Recently, the Equal Employment Opportunity Commission (EEOC), the agency responsible for enforcing the employment provisions of the ADA and the Genetic Information Nondiscrimination Act (GINA), issued an informal opinion letter to an employer stating that requiring employees to participate in a health risk assessment in order to be eligible for health insurance would violate the ADA.”
    This is how liberals screw things up. They weren’t trying to penalize them for results they just wanted everyone engaged. If people aren’t aware of a problem how can they inteligently decide to treat it or not?
    What argument can you make for not allowing employers to atleast require employees to know their health?

  17. “Mid size to small companies — the bulk of US employers — are not well equipped to manage medical plan benefits let alone wellness programs. ”
    Why is this? Many small business may choose to not manage such programs but there is nothing that prevents them from doing so. I’ve built my business on allowing 20 life groups to do all the same things 1000 life groups do. WHen small employers weren’t bothered by the cost it was not worth the time investment. Now that cost has increased they are willing to put in the effort. Short of an onsite medical clinic there really isn’t tool they don’t have access to. Heck I even got Wal Mart to give my clients the same deal they gave Catipilar and other large national employers.
    “Why should anyone have to be provided incentive to maintain their own good health? Isn’t that individual responsibility?”
    Because Vikram liberals passed laws making the employer liable for the claims of people that lack personal responsibility. Almost any group with more then 10 employees is community rated where employees pay the same despite age or health. Employers use to sit back and passivly let employees take personal responsiibility for their health, and 5-10% of the population chose not to. When they failed to exercise that responsibility it wasn’t them that suffered, it was everyone that paid the price.
    This is getting even more dire as liberals now try to buy votes by eliminating co-pay and deductibles after a low OOP is meet. With out such tools to make people responsible for their decisions there are no tools to control cost. Someone could see the doctor every day for no reason and there is nothing plans could do.
    Well designed and implemented wellness programs have ROI of $3+ easily. Pitney Bowes has great data on theirs and the cost savings. Whoel Foods has had great success. Boiler plate wellness bought off the shelf and thrown in just to say they did has failed but that was to be expected.
    The 20% cap is only the tip of the iceberg, of much bigger concern is what ADA and EEOC have done. They hamper wellness far worse then GINA did.
    Margalit what is the difference between giving someone $50 gift card and taking $50 off their premium desides politics? Wasn’t the point to get the politics out of it?

  18. The partisan issue arises from the definition of these “wellness” programs. Nobody can object to a wellness program where people are rewarded for participation.
    However, there is plenty to object to “wellness” programs where people are penalized for not meeting “goals”.
    These are just another way to charge higher premiums from sick people. It is just like those department store sales, where the store doubles the “original” price and then announces a 1/2 off sale. You only get the “sale” price if you meet the “goals”, and meeting the “goals” is not just about trying hard. There are genetic, environmental and economic factors involved that may very well be beyond one’s control.
    So if (big if) benevolent employers only want to help their employees be healthy, then by all means, have wellness programs and give folks a gift card for joining and a bigger gift card for losing weight, or quitting smoking, or controlling BP. Leave premiums and insurers out of it.

  19. Interesting that “the left” is flamed for not supporting wellness programs when “the left” supports tobacco taxes, pollution control, workplace safety, food safety, drug safety, chemical free food production, etc. etc. Where are “the same minds and energy that has propelled the United States to unparalleled economic achievements” on these issues – usually sending lobbyists to DC to bribe/scare congressmen into blocking all that “wellness” legislation.
    I support lower insurance premiums for non-smoking and intelligent weight control, but I also support a fast food calorie tax to at least pay for overeating/obesity – where is business on that issue – fighting it as usual. Tell me how many soda taxes have been defeated by and how many junk food ads to children are produced by “the same minds and energy that has propelled the United States to unparalleled economic achievements”?

  20. I agree with the first poster. Wellness and health should not be a partisan issue, and I’m not sure why our two big political giants feel the need to politicize everything that happens in this world. Good, affordable health care is a right for every hard-working American–whether they’re Republican, Democrat or otherwise. At least in my opinion.

  21. Even in countries with socialized medicine, employers offer additional insurance as a benefit to employees and in such programs, the use of incentives is common place. By providing employees with incentives for healthier living, employers help to reduce the costs of health care both to employees and to the health system while being able to offer a number of benefits over the standard health coverage provided by the state.
    It is really hard to see any legitimate argument against providing incentives for healthier living.

  22. It’s been long suggested that for quaint reasons wellness programs do not show great results. Its counter-intuitive but true. And combine that with cost of running the program, the return is barely positive. From a study that I went through it seems that executives have to set health example to get the program to be effective. Still I think all would support it as it should generate long term benefits.
    I haven’t seen any partisan bickering about welness programs. But if there is any, I don’t understand reason behind it. At least on conservatives side. Why should anyone have to be provided incentive to maintain their own good health? Isn’t that individual responsibility?
    By the way, please define wellness program and all its benefits. There is too much being made out of it.

  23. anon#2, while your caution is probably well-intentioned, even a cursory look at a census of US enterprises tells us that “the bulk of US employers” do not employ the bulk of US employees. of the 6 million US firms, only about 17,000, or about 0.4% of the total, employ 500 or more – but they employ close to half of all nonpublic employees (throwing in public sector employers would boost the employee count more than the employer count).
    this is not to suggest ignoring small to midsize employers, but to advise that concern over what most EMPLOYERS are capable of may be looking at the issue through a distorting lens.

  24. I agree with Alan – framing the issue with such inflammatory, snarky rhetoric is extremely unhelpful. And the absence of citations is a concern. I’ve designed and studied incented wellness programs for nearly 10 years and, while I continue advocate for them, it is clear that there are limits to their effectiveness… even in the best designed and funded environments. Mid size to small companies — the bulk of US employers — are not well equipped to manage medical plan benefits let alone wellness programs.

  25. I agree Alan: folks on all sides of the political spectra support worksite wellness. Margalit, I also state in the post that “this record has not been free of any serious mishaps.” Make that VERY serious, but the point is a good one: American enterprise is very ‘good’ at what it does (like immunizations), even if the same efficiencies can also lead to other outcomes we’d rather not see. And to all with comments to make about managed care folks, perhaps I should have also quoted Shakespeare: “If you prick us, do we not bleed?”;)

  26. arrghhh – meant 21st century of course (see what we mean about inchoate?)

  27. Anonymous,
    would that ALL “managed care executives” (halloo, 1980s – it’s me, the 20th century)were as ‘true’ to effective health care as Geisinger executives.

  28. “Worksite wellness programs are designed by the same minds and energy that has propelled the United States to unparalleled economic achievements.”
    “Case in point: who has been better at getting H1N1 vaccinations to persons at risk: Goldman Sachs or the New York City Health Department?”
    Am I supposed to deduct from this that Goldman Sachs is an example of those who propelled the United States to unparalleled economic achievements, and therefore they should be appointed guardians of our health?
    As far as I know Benjamin Franklin was opposed on principle to indentured servitude….

  29. Intriguing article. I wish it was more politically neutral. I didn’t think wellness was a partisan issue. I think there are folks in both parties in support of wellness initiatives.
    Does the fact Hooter’s only has one uniform size count as a wellness program or health incentive? (Joke)