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November 06, 2019 | ROI, Health Improvement, Corporate Wellness & Benefits

The Real Reason Employee Wellness Initiatives Fail (Or Succeed)

By Jim Pshock, Founder and CEO of Bravo

If you’ve read the headlines regarding wellness programs that failed to show meaningful results (e.g. BJ’s Wholesale Club1 and the University of Illinois2), I hope it caused you to take a hard look at your program, as well as your targeted results.

I’m always amazed when researchers and reporters will laser in on a single program element like incentives, biometric screenings or a mobile app, and use their findings to evaluate the validity of an entire industry. Doing so is like comparing the impact of an app you download on your phone for $3.99 to the impact of paying a personal trainer $300 per month. Could you look at the $3.99 solution and conclude that personal training is a waste of money? Of course not.

The devil is always in the details.

If you want to know about widely accepted best practices for a comprehensive well-being program, there are many resources to help you do so. These include:

While it’s easy to poke holes in someone’s attempt to support their employees, the truth is any organization investing in employee well-being should be commended. Helping individuals overcome decades of bad habits is not a small endeavor. Getting the program to be the right fit for your culture will take trial and error. And results will take time, especially when there is a very limited budget.

I’ve yet to see any research that suggests a workplace health recipe consisting of the following elements failed to produce quantifiable risk reduction and a return on investment:

  • A supportive culture and environment.
  • Leadership that walks the talk.
  • High-quality communications.
  • Incentives that are large enough to motivate meaningful actions.
  • Personalized assessments and action plans.
  • Achievable improvement or health maintenance goals (targets and timeline).
  • Evidence-based clinical support and resources.
  • Personal physician involvement.

While few who have dedicated their education and career to population health would argue with the recipe, many employers think they lack the dollars necessary to support a comprehensive design so instead they settle for a minimal solution that fails to achieve results.

The reality is, as health plan sponsors, employers are already paying a lot more than what this type of comprehensive plan would cost­. Instead of paying for prevention, they are paying for the chronic conditions that resulted from poor lifestyles.

According to the US Census Bureau, 56% of Americans are covered by an employer-sponsored health plan.3 Most employers don't exist to improve health in America­—they are companies that create products, goods and services. They create jobs. They pay taxes. They are accountable to investors and must carefully steward every dollar responsibly. Employers want their employees to be happy, healthy and as productive as possible, but they are also juggling numerous priorities and investments to grow their business, serve their customers and support their employees. There is never a blank check for employee benefits and well-being investments.

The Rising Cost of Benefits

The Kaiser Health Foundation annual report states that the average annual premiums for employer-sponsored health insurance in 2018 were $6,896 for single coverage and $19,616 for family coverage.4 The same report indicates that on average, covered workers contribute 18% toward single premiums and 29% toward family coverage. That means that employers are contributing an average of $5,654 and $13,927 per employee respectively. This is real money and it poses a threat to jobs, profitability, wage increases and ultimately company survival.

The traditional levers used to control the rising cost of healthcare include provider network discounts, higher deductibles, co-pays to reduce emergency room utilization and brand-name prescriptions, as well as provisions like making it mandatory for spouses to enroll in their employer’s plan if one is offered. While all of these are effective ways of curbing utilization and reducing cost, it hasn’t been enough. Even though employers are subsidizing most costs, more costs shifted to workers. In fact, the Kaiser report states the average dollar contribution for family coverage has increased 21% since 2013 and 65% since 2008. Workers deserve better.

The CDC reports that 90% of annual health care expenditures are for people with chronic and mental health conditions.5 Six in 10 adults in the U.S. have a chronic condition and four in 10 adults have two or more.6 Yet many chronic diseases are caused by risk behaviors such as tobacco use, poor nutrition, lack of physical activity and excessive alcohol use. Heart disease, stroke, cancer, diabetes and obesity top the list of conditions that are largely preventable. Combating these conditions and helping to prevent them from happening is what wellness programs should be focused on.

Where to Begin:

Wellness Part One

Obviously, creating a culture of health, providing health education, inspiring better choices, addressing root causes like stress, mental health and financial well-being are all important ways that employers can help employees change. But are these programs a moral obligation to be provided by an employer - like a safe working environment - or are they discretionary benefits that an employer has an opportunity to offer like a retirement plan, dental plan and vision coverage? Many feel it’s the latter and as such, they work the cost of wellness programs into the overall employee benefits budget.

Example:

XYZ Inc. Cost of Employee Benefits:

Option 1 – Employer pays the cost of wellness program

Benefit

Company Contribution

Employee Contribution

Health Insurance

$5,740 (82%)

$1,260 (18%)

Dental Insurance

$740

$160

Short-Term Disability

$250

$0

Basic Life Insurance

$320

$0

401k

$1,100

$0

Wellness Program

$145

$0

Option 2 – Wellness program cost combined with health insurance and follows same cost-share

Benefit

Company Contribution

Employee Contribution

Health Insurance and Wellness

$5,859 (82% of medical + wellness)

$1,286 (18%)

Dental Insurance

$740

$160

Short-Term Disability

$250

$0

Basic Life Insurance

$320

$0

401k

$1,100

$0

That covers the program access, but what about the cost of incentives? Experts agree that small incentives pay people for things they were already doing. Therefore, incentives need to be large enough to motivate new actions and progress towards realistic goals to not create a barrier. The more effort to complete the new action(s), the higher the incentive should be.

This is where the incentive can serve a dual purpose. By converting a portion of the employer’s premium subsidy into something like a “good driver discount” the employer bakes the incentive into the existing cost-share structure while simultaneously creating benefit equity and rewarding those employees who are actively addressing their health risks.

Wellness Part Two

This is where the health equity conversation comes in. While there can and should be a lot of emphasis on helping those at-risk, what about the fairness to those who are already living a healthy lifestyle?

Much like how some employers have adopted a philosophy that says it is unfair for the non-smoker to subsidize the cost incurred by individuals who choose to use tobacco products and refuse to attempt a cessation program, many employees expect and deserve to be shielded from cost increases driven by those who make no attempt to address their poor health or bad habits.

This “good driver discount” concept is widely understood and accepted by employees and it allows the incentives to be funded by the subsidy that an employer is already making toward employee health insurance.

Example:

Before:

Enrolled Employee Profile

Number Impacted

Total Premium

Company Contribution

Health Profile Not Applicable

1,000 lives

$7,000 each

$7,000,000 total

$5,740 (82%) each

$5,740,000 total

After:

Enrolled Employee Profile

Number Impacted

Total Premium

Company Contribution

Healthy Lifestyle or Making Progress (e.g. tobacco users trying to quit, obese individuals who are improving and/or engaged in coaching)

510 lives (51%)

$7,000 each

90% or $6,300 each

($3,213,000 total)

Non-Obese Tobacco User (not trying to quit)

140 lives (14%)

$7,000 each

80% or $5,600 each

($784,000 total)

Obese Non-Tobacco User (not trying to improve)

160 lives (16%)

$7,000 each

75% or $5,250 each

($840,000 total)

Obese Tobacco User (not trying to quit or improve)

 90 lives (9%)

$7,000 each

70% or $4,900 each

($441,000 total)

Non-Participant (no attempt to assess their health)

100 lives (10%)

$7,000 each

60% or $4,200 each

($420,000 total)

Total

1,000 lives

 

$5,698,000

(81.5% or $5,705 avg.)

In summary, this employer covered the same portion (or slightly less in this example) of total health insurance premium that they had been paying. By introducing the “good driver discount” approach, they allowed each employee the opportunity to earn nearly $600 more than what they would’ve received by taking proactive actions to maintain or improve their health.

The ROI is less of an urgent concern in this new scenario because the cost is baked into the benefit plan much like when any new benefit is added. Of course, the greater, long-term purpose of this strategy is to embed meaningful incentives into the design, which can empower every plan participant to achieve meaningful rewards and control their healthcare costs. As they take a proactive role in their health and reduce risks, costs decrease for everyone.

Complicated? Perhaps, but Bravo and our satisfied customers have found that it’s worth it. The benefits of a comprehensive strategy are enormous, and the dollars needed are already available in your budget. We’d love a chance to bring our experience and expertise to the table and help you evaluate the best ways to achieve your population health objectives using these and other best practice strategies.

For more information on how to turn your wellness program into a solution for sustainable benefits, watch our recorded webinar: Design Wellness as a 2020 Benefits Solution.

Resources:

1 https://jamanetwork.com/journals/jama/fullarticle/2730614?guestAccessKey=f67976b4-63b8-4369-983f-196774f9404e&utm_source=For_The_Media&utm_medium=referral&utm_campaign=ftm_links&utm_content=tfl&utm_term=041619

2 https://www.nber.org/workplacewellness/s/IL_Wellness_Study_1.pdf

3 https://www.census.gov/library/publications/2018/demo/p60-264.html

4 https://www.kff.org/report-section/2018-employer-health-benefits-survey-summary-of-findings/

5 https://www.cdc.gov/chronicdisease/about/costs/index.htm

6 https://www.cdc.gov/chronicdisease/about/index.htm

Topics: ROI, Health Improvement, Corporate Wellness & Benefits

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