Recipe for a Successful Wellness Program

Studies are mixed on the effectiveness of incentivizing employees to get healthier. But one county is chalking up some big savings.
by | October 2015
(AP)

Last year, the RAND Corp. published a study that rocked the “wellness” world. Common sense suggests that encouraging a workforce to develop better health habits -- more exercise, good food, no smoking -- would translate into healthier employees and lower health-care costs. A trio of Harvard economists even put a number on it in 2010: For every dollar invested, wellness programs returned just over $3 in health-care savings and just under $3 in reduced costs of absenteeism.

But RAND begged to differ. In its study, the think tank found that wellness programs that focused only on lifestyle incentives saved just 50 cents for every dollar invested. The message, though, wasn’t entirely negative. Employers that also offered disease management -- in-depth services for those who already had chronic illnesses such as diabetes -- did much better. They saved $3.80 for every dollar invested.

Wellness programs are widespread both in the private sector and in government, and indeed some have earned little by way of return on investment. But one government has gotten a lot of bang for its bucks. King County, Wash., provides a lifestyle program, Healthy Incentives, for its employees that offers sizable financial incentives and follow-up coaching for those who sign on. The plan also rewards employees who get their care through providers that were found to consistently provide the highest-quality care at the lowest prices.

In 2007, when the county changed its approach to health insurance, employee health-care costs were rising at a rate of three times the Consumer Price Index. In the first five years of the new program, the county invested $15 million and saved $46 million in health-care spending. Apart from the fiscal savings, the county can point to improved employee health habits. Smoking rates have dropped from 12 percent to less than 5 percent of employees. Meanwhile, some 2,000 employees who were classified as overweight or obese at the start of the program lost at least 5 percent of their weight, more than halving their risk of developing diabetes.

Employee participation in the program has also been impressive: 90 percent, compared to the general take-up rate for wellness programs of less than 50 percent. That’s not too surprising considering the incentives the county offers. Participants can shave $200 off their deductibles by simply filling out a health assessment form and another $200 for completing an “individual action plan,” such as attending a given number of Weight Watchers meetings at work. All totaled, a family can earn as much as $1,500 in incentives.

One key takeaway from King County’s experience is that wellness programs are successful if there are sizable incentives along with consistent coaching or follow-up. In encouraging employers to expand their wellness programs, the Affordable Care Act loosened federal regulations that limit the financial rewards employers can offer workers for reaching certain health goals, such as quitting smoking.

Still, it’s important to note that it may be too early to judge the lifestyle component of government wellness programs. By intervening early to reduce a risk factor such as obesity or smoking, a program may not yet see the savings it might gain 10 or 20 years from now in not having to pay for treatment of diabetes or emphysema. But a long-term view is what common sense suggests, and it ultimately may be the best judge of these programs.