Workplace Wellness Programs Are Prevalent, But May Not Save Employers Money In The Long Run

About four-fifths of the largest employers (those with more than 1,000 employees) offer worksite wellness programs, but while these programs did reduce cardiovascular events, the savings that resulted did not come close to offsetting the cumulative costs of participation. This is according to a recently released report from the RAND Corporation.

ACA-required. Patient Protection and Affordable Care Act (ACA) Sec. 1201 requires that the Departments of Labor and Health and Human Services compile information about worksite wellness programs. The Employee Benefits Security Administration’s Office of Policy and Research contracted with RAND to conduct an analysis of existing data on wellness programs. The report assesses the current status of wellness programs offered by employers in the United States; evaluates the impact of programs on utilization, employee health care costs, health behaviors, and outcomes; and identifies best practices in program implementation.

Employer survey. For the first part of the report, RAND used data from the 2012 RAND Employer Survey to answer questions about worksite wellness plans. The survey contained responses from 3,000 employers with 50 or more employees, and found the following:

• Most employers (69 percent) offered a wellness program, and of those, 75 percent offered incentives to encourage participation.

• Size was the most important indicator of whether the employer offered a program: one third of the smallest employers (those with 50 to 100 employees) had a wellness program, compared with four-fifths of the largest employers (those with more than 1,000 employees).

• Employers that did not use incentives reported lower participation rates, according to RAND. When a program did not incentivize participation, the median participation rate was only 20 percent. When incentives were employed, the median participation rate rose to 40 percent. Finally, if employers penalized employees for not participating, the median participation rate was 73 percent.

Wellness plan examination. For the second part of the report, RAND used data from one Fortune 100 employer to examine participation in worksite wellness programs. The data covered seven years of the employer’s wellness program for nearly 200,000 unique employees and dependents. RAND noted that:

• Only one-fifth to two-fifths of employees annually participated in the wellness program components for which they were eligible. Healthier employees and those with higher incomes were more likely to fill out a health risk assessment. Employees with multiple chronic conditions and older employees were more likely to participate in disease management programs, the study found.

• In the fifth program year, the employer introduced $600 surcharges for smokers and for employees who were eligible for disease management but declined participation. This surcharge was associated with an increase in smoking cessation program uptake of 8.5 percentage points; however, the overall participation rate remained below 30 percent. RAND also noted that the introduction of the surcharge actually decreased participation in the disease management program, by 18 percentage points.

• There was no evidence of health care cost savings for participants in the smoking cessation program or for employees who were in the so-called “predisease” program (which included higher risk employees who may be on the verge of developing a chronic condition).

• Finally, lower cardiovascular event rates due to wellness program participation reduced costs, but these savings did not come close to offsetting cumulative costs of participation, RAND found. The study used estimates from a previous report on lifestyle management program uptake and effect on health risks—such as smoking, weight, and cholesterol levels—to simulate the impact on a working-age population over a 20-year time period. The results simulated a modest reduction of 257 cardiovascular deaths and 1,796 nonfatal cardiovascular events in a population of 100,000 people, at an estimated cost of about $40,000 per avoided event. While improving employee health certainly has additional benefits, these numbers suggest that employers will find it difficult to achieve financial gains from saved health care costs alone from lifestyle management programs.

For more information, visit http://www.dol.gov/ebsa/pdf/WellnessStudyFinal.pdf.

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