Wellness: Truth and Consequences

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We are seeing people move more toward ‘sticks' rather than ‘carrots,'" says Cathy Tripp, National Leader for Consumerism at consultant Watson Wyatt Worldwide, about how the economy has affected employers’ thinking on wellness programs.

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Before, an employer might have offered workers a gift card as an incentive to do a health screening. "Now, the employer may say that, if the health-risk assessment indicates you need to participate in a disease-management program and you do not, your deductible is going to be $500 higher. We even have seen some employers say employees have to do a health-risk assessment if they want coverage. In this economy, there is the latitude to push these things a little further."

As employers with wellness programs plan for 2010, “they are being much more aggressive” about their expectations, says Jay Savan, a St. Louis-based Principal at consultant Towers Perrin. …

A lot of the discussions Savan currently has with clients explore the idea of requiring or strongly encouraging participation in programs like biometric screening. “An employer might say, ‘I am going to offer you two medical plans. One is much higher in value than the other—however, to participate in that plan, we require you to complete a health-risk assessment, and if the risk assessment determines that you are eligible for case management or should be in a wellness program, you have to participate,” he says.

Or an employer may make its health savings account (HSA) contribution to an employee contingent on participation in a wellness program, says Jerry Ripperger, National Practice Leader of Consumer Health for the Principal Financial Group. …

Some employers also are looking at low-cost or no-cost wellness options, Tripp says … . "Some creative things can be done in a tight economy," she says. "It just takes energy, and you need champions within the company."…

Wellness programs' ROI is getting a closer look. Employers increasingly want not only to know what ROI their providers claim to have achieved, but also the methodology used to determine it, Tripp says. …

No industry standard currently exists for how to figure out wellness programs’ ROI, Tripp says, and methodologies differ. Some approaches measure only direct savings on medical claims, for instance, while others may take into account indirect benefits such as lower absenteeism and increased productivity.

“The biggest challenge to a wellness and prevention program is to identify the return on investment,” Savan says. “You are trying to gauge the impact of things that never happened.”

Even employers still offering “carrot” incentives are scrutinizing their effectiveness more closely. “… [An] employer may find that offering workers $100 off on their premiums is less effective than offering them $100 in cash to participate or that, instead of offering a gift card from one particular retailer, participation rises when employees get a choice of gift cards from 10 retailers.”

Companies trying to cut back on wellness­-program expenses may reduce the frequency of health-risk assessments from every year to every 18 months or two years, for instance, or they may increase employees’ contributions or deductibles slightly to help pay for a wellness program, Ripperger says.

In any case, the payoff does not come immediately. “Generally, you are looking at the second half of the second year before you start to see returns,” he says. “It takes time to change behaviors, and to see the impact of that on participants’ health status.”

Judy Ward editors@plansponsor.com