Benefits January 24, 2018

A Different Goal for Employers to Offer Wellness Programs

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While wellness programs may benefit employees in poor health the most, a research study found it is those in the middle of the health care spending range that are most likely to participate in wellness programs, but this still could save employers money.

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According to a report of the research results, published by the National Bureau of Economic Research, the Illinois Workplace Wellness Study conducted at the University of Illinois at Urbana-Champaign used a comprehensive workplace wellness program that included an on-site biometric health screening, an online health risk assessment, and a wide variety of wellness activities (e.g., smoking cessation, stress management, and recreational classes). Those who successfully completed the entire program earned rewards ranging from $50 to $350, with the amounts randomly assigned and communicated at the start of the program. A control group was not permitted to participate. The analysis combines individual-level data from online surveys, university employment records, health insurance claims, campus gym visit records, and administrative records from a community running event.

The researchers found that 56% of employees in the treatment group completed the initial major component of the study, which included an on-campus health screening. Completion depended on the size of the monetary incentive assigned to an employee: increasing the screening completion reward from $0 to $100 boosted the completion rate by 12 percentage points, from 47% to 59%, but further increasing the reward to $200 only increased completion by 4 percentage points, to 63%.

The researchers conclude that the rapidly diminishing effect of wellness incentives implies that increasing a large financial incentive to even greater levels will transfer large sums of money to workplace wellness program participants, but will have little effect on their composition. They also found that incentives tied to completing downstream wellness activities are more cost-effective than up-front incentives tied to completing the initial health screening.

On the positive side, the research found annual medical spending among wellness program participants was $1,574 less than among non-participants, on average. But, a more detailed investigation revealed that this is concentrated in the middle of the spending distribution: employees in the upper and lower tails of the medical spending distribution were least likely to participate in the program.

The researchers found that wellness program participants were more likely to have visited campus recreational facilities prior to the study, and were more likely to have participated in prior community running events. They conclude that a primary benefit of wellness programs to employers may be their potential to attract and retain healthy workers with low medical spending, which could lower health benefit costs for employers.

Considering only health care costs, the researchers conclude that reducing the share of non-participating (high-medical-spending) employees by just 4.5 percentage points would suffice to cover the costs of the wellness program intervention. The patterns of participation researchers found are consistent with the concern that the benefits of workplace wellness programs are less likely to accrue to those with poor health or relatively low incomes, the paper says.

However, the researchers note that they only examined outcomes in the first year following the start of the study, and it is possible that meaningful effects may emerge in later years.
Benefits January 24, 2018

Consumer Directed Health Plans Aren’t Always Consumeristic

Rising health care costs and the advent of digital tools has made health care options more accessible and pushed the benefits industry toward a consumer-centric and retail-like model, to both the benefit and detriment of employees.

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Speaking during a recent webinar hosted by Alegeus, John Young, senior vice president, consumerism and strategy, warned in no uncertain terms of the potential “dark side of health care consumerism.”

As Young explained, over the past two decades, rising health care costs and the advent of the digital era have made a greater number of health care options more accessible and pushed the benefits industry toward a more consumer-centric and retail-like model. This has resulted in the possibility of employers creating more highly personalized and individualistic benefits options from which employees can select and discriminate based on their particular budget and needs—hence the happy image of  “consumerism.” 

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“However, all too often, these solutions are implemented under the mere guise of health care consumerism,” Young suggested. “In reality these solutions often are not actually set up to successfully deliver upon the goal of empowering Americans to get the best value for their health care dollars. In other words, not all consumer-directed health plans are truly consumeristic.”

On Young’s analysis, in order to empower consumers to take control of their health care finances, benefit plans must be designed to do more than shift costs. They must be designed to supply real support to participants, both financially and in terms of choice architecture.

“A plan design can be coined ‘consumer driven’ without giving the consumer any added value or chance for success,” he warned. “These plans are typically underfunded by the employer and result in an unaffordable cost shift to employees that can quite literally impede consumerism from taking hold in the market.”

Young further observed that “human nature causes employees to be sensitive and even resistant to change.” The result is that consumers, broadly speaking, tend to stick to the familiar, and this can result in employees continuing coverage with an existing plan that doesn’t necessarily deliver the best value for the individual’s current needs.

“Employers must be purposely disruptive in their benefit and employee engagement strategies,” Young suggested, “breaking down objections and barriers, with benefit options that deliver equitable value to their employees.”

An additional challenge is that employers may not have the know-how to increase employee engagement on their own.

“Consumer health and financial fluency is notably low, and according to Alegeus research, more than half of employers are asking for support to help better engage and educate their employees,” Young concluded. “It is imperative that all benefit solution providers, advisers, health plans and benefit administrators have strategic conversations with employers and provide access to decision support tools and materials they need to empower employees in their health care.”

Young pointed to his firm’s addition of “Emma” to its mobile application as an example of the type of tool that can promote consumerism. The voice-activated virtual assistant was designed to provide users with information about their benefit accounts and how to make the most of their health care money. “Emma” can be asked various questions about the full range of tax-advantaged benefit accounts including flexible savings accounts (FSAs), health savings accounts (HSAs), health reimbursement accounts (HRAs), limited purpose FSAs, dependent care FSAs, and commuter accounts. The virtual application can help users learn their account balances, previous transactions, annual contribution limits and more about the general makeup of their accounts.

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