We want Americans to live healthy lives and take good care of themselves. So does John Berry, the director of the U.S. Office of Personnel Management (OPM). As matter of fact, recently, Berry told health insurance companies that participate in the Federal Employees Health Benefits Program (FEHBP) to encourage healthy lifestyles by offering employees “concrete incentives to participate in wellness and prevention activities.” The next day, the OPM published its annual call letter, which outlines the benefits that participating insurance companies are expected to cover. In the letter, the OPM clearly states it expects the insurers wanting to participate in FEHBP to offer programs that promote health and wellness, which improve employee productivity, enhance healthy lifestyles, and lower long-term healthcare costs.”
Wellness programs are not new. For the past two decades, large employers have been experimenting with wellness pilot programs for their employees. Gym discounts and smoking cessation classes are classic wellness incentives. Now, a growing number of employers are offering wellness or health promotion programs. The Affordable Care Act (ACA) allows employers to “reward” employees with lower premiums, up to 30 percent of the cost of employee-only coverage under the plan, with room to up this to 50 percent with the approval of the Secretaries of Health and Human Services, Labor and the Treasury.
Wellness programs work as employee benefits, but also as a cost saving mechanism for employers. How? The theory behind wellness programs is that by maintaining a healthy workforce, the employer enjoys higher productivity and, down the long-run, reduced health care spending.
The cost-savings theory is well-intentioned, and there has been some limited evidence among large employers, such as Pitney Bowes and Johnson & Johnson, that wellness programs do promote some improved health outcomes and lower health care spending.
But most wellness programs are run by large employers with hundreds of employees and low employee turnover rates. In these organizations, employers have the resources to be innovative and can afford to undertake a wellness program, where they may reap benefits in the long run.
Moreover, wellness programs vary widely between employers, and as more are implemented, potential risks are being identified that need to be addressed before programs are expanded.
The most pressing issue is the potential employee discrimination based on data collected through a health risk assessment (HRA). Such data include an individual’s health information, which may be sensitive and which the employee most likely doesn’t want to share with the employer. Recognizing this problem, various federal laws, including the Health Insurance Portability and Accountability Act (HIPAA), the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), ban employers from discriminating against employees based on health factors, which would include information gathered through HRAs.
But how far can an employer go without triggering any of the discrimination laws? Can an employer discriminate against an employee because he has high cholesterol level? Because she smokes? Because he is overweight? The smaller the employer, the more serious the issue. At a smaller business, everyone knows each other, which may cause the employee to worry about revealing one’s health status to the employer.
The second issue is penalties. There are two types of incentives in a wellness program: One that provides rewards, and one that allows avoiding penalties. The latter only works if those who don’t receive the incentives receive penalties. If a program allows premium discounts for those who lose weight or reduce their cholesterol levels to a certain point but increases premiums for those who were unable to do so, that cost-shifting acts as a penalty. Sure, it can be seen that it is the individual’s responsibility to become healthier. However, a person’s health is highly complex and simply judging someone based on a single factor, such as weight or personal habits, is insufficient to impose mechanisms such as cost-shifting and penalties.
Such penalties can also lead to adverse selection, where less healthy employees are forced out of employment due to unaffordable premiums. Also of concern is wellness program participants getting penalized due to inadequate support to ensure their success in getting healthier.
What we do know: ingredients for wellness success There are a few ingredients that are necessary for a wellness program to succeed. Programs must:
- — collect baseline health information from the participating employees through completing an HRA.
- — provide some incentive for the employees to continuously participate in the program. The incentive can be anything from gym discounts and free smoking cessation classes to actual premium discounts. Discounts can be based on simple participation in wellness programs, or on actual health changes, such as losing weight or reducing the cholesterol level compared to the HRA record.
- — receive strong buy-in and commitment from the employer to sustain programs, because it takes time for positive results to surface while the employer invests money into implementing and maintaining wellness programs.
Promoting the wellbeing of individuals is a wonderful idea, but it must be done correctly so that employees are not discriminated against or penalized for health factors that are sometimes beyond their control. Wellness programs must also be continuously measured both quantitatively and qualitatively so that the participants can learn about the true benefits of the programs, not only for the employers, but for the individual employees.
— Jekkie Kim, Guest Blogger Legal and Policy Analyst, Health Care for All Massachusetts