• On wellness programs: Part 2

    Yesterday, I began answering questions on wellness programs posed by a reader, by summarizing a recent RAND study. Of course, there is other work beyond the RAND study on wellness programs. Trudy Lieberman reported that,

    A review of the literature by the California Health Benefits Review Program, which advises the California legislature about health insurance mandates, found, for example, that the preponderance of evidence from randomized controlled trials suggests wellness programs do not lower blood pressure, blood sugar, or cholesterol (risk factors for disease). The California review also found that randomized controlled trials have shown that participating in smoking cessation programs increases the chances people will quit.

    Another systematic review found that, according to randomized controlled trial (RCT) results, programs to promote nutrition and weight loss are not money savers. Observational studies find the opposite, suggesting their results are driven by selection bias.

    Karen Osilla et al. conducted a systematic review of workplace wellness programs, covering 33 studies and 63 outcomes, with mixed findings based largely on studies with low rigor.

    The studies yielded mixed results regarding impact of wellness programs on health related behaviors, substance use, physiologic markers, and cost, while the evidence for effects on absenteeism and mental health is insufficient. The validity of those findings is reduced by the lack of rigorous evaluation designs. Further, the body of publications is in stark contrast to the widespread use of such programs, and research on the effect of incentives is lacking.

    Katherine Baicker, David Cutler, and Zirui Song also note the preponderance of weak study design in this area of investigation. Nevertheless, in their meta-analysis of 32 prior studies, they found “that medical costs fall by about $3.27 for every dollar spent on wellness programs and that absenteeism costs fall by about $2.73 for every dollar spent.” They tick off the limitations:

    First, the firms implementing these programs are likely those with the highest expected returns. Second, it is difficult to gauge the extent of publication bias, with programs seeing high return on investment most likely to be written about and studies with significant findings of positive returns most likely to be published.

    Third, almost all of the studies were implemented by large employers, which are more likely than others to have the resources and economies of scale necessary both to implement and to achieve broad savings through employee wellness programs. Whether smaller employers can achieve positive return on investment through wellness programs is an important policy question.

    There are other ways wellness programs can fail to improve health or reduce spending. Through overuse and the over-treatment to which they can lead, screenings can increase spending without large health gains if they are not narrowly targeted. And, penalties for poor screening results could discourage use of valuable care. It should also be noted that, for better or worse, penalizing less healthy individuals undoes some of the risk-spreading function of insurance.

    Given all of this, why are wellness programs so pervasive? My hypothesis is, it’s supplier induced demand. People don’t understand that observational studies don’t support causal inferences. It’s easy for a wellness program marketing rep to cite seemingly glorious-sounding results. This is big business; the wellness industry is a $6B one. This would not be the first time Americans bought something that hasn’t rigorously been proven to work as well as advertised.

    I do think the foregoing is relevant to the question whether wellness program incentives are acceptable. If we aren’t confident they work, using them as justification for charging less healthy policyholders more isn’t reasonable. However, there is heterogeneity in programs. Some probably do some good, particularly smoking cessation programs. So, I would not make a blanket statement that financial incentives should never be used.

    Lisa Klautzer, Soeren Mattke, Michael Greenberg consider whether wellness programs will face legal challenges. Mostly, they think they’re legally safe.

    However, should wellness program incentives be legally challenged in the future we expect obesity—which is one of the key drivers for rapidly increasingly prevalence of chronic diseases, and therefore health care cost []—to be the primary battleground. As obesity is strongly influenced by individual choices about nutrition and exercise, [] policymakers and employers are very interested in effective weight loss interventions. At the same time, obesity is known to have genetic and social determinants, [] implying that obese individuals should not face draconian financial penalties. This ambiguity and the magnitude of the societal challenge obesity poses make it the most prominent case for discussions on wellness program incentives. Theoretically, the abundance of legal rules and theories affecting insurance, together with divided authority at state and federal levels,create room for lawsuits over what kinds of incentives for weight loss might or might not be allowed, and lots of different technical grounds for courts to overrule wellness programs and incentives targeting obesity.

    Of course, what’s legal and what’s ethical or moral are different questions. No doubt some will care to debate this matter in the comments.


    Comments closed
    • Great post, Austin. I agree with your conclusions, though I may not agree with some of the conclusions your readers may draw. That’s too much ground to cover here, so I hope you don’t mind if I do it in a separate blog post.

      I do a questions for you about the very premise employers and their vendors use to justify wellness programs. One of the many assumptions of employee wellness programs is that increased wellness is associated with fewer/lower health care expenses. You point out that wellness programs have not been consistently shown to lead to substantial health improvement. If employers *were* able to implement truly effective programs, would it indeed help lower their trend? Considerations include: 1) In a time when we hear about health care costs being driven up by pharma marketing, litigation, inefficiency, and greed, to what extent are costs correlated with the demand for health care services? 2) If an employer’s cost escalation is largely affected by disproportional increases in the cost of specialty Rx and catastrophic care, how realistic is it to believe that wellness has the potential to have measurable impact?


    • Thanks for the information. As a patient who is already at a high level of activation, no wellness program will have a significant effect on my decisions but $1200 is better spent keeping the house warm this Winter and the inconvenience of getting my height, weight, and navel circumference measured and having my finger stuck to get a few drops for a rapid analysis is less than the inconvenience of having to take annual training on how to report child abuse or read hazardous material labels.

    • I’d just add a couple of obervations to your excellent post. There are two reasons it is supplier-induced demand. First is moral hazard: the “advisors” to HR departments are usually paid directly or indirectly by the brokers or consultants. By law they don’t need to disclose these fees.

      Second, for a market to work you need “perfect information” or something close to it. HR directors generally don’t know how to analyze ROIs that the vendors and consultants give them, so they usually just accept them, even though as my website points out, every vendor that has claimed savings has demonstrably lied. (I name names.)

      One other point: Baicker walked back her precise 3.27-to-1 ROI in late July on Marketplace. Now, 4 years later, she says “It’s too early to tell” if these programs save money. So there is no academic on the side of savings

    • The larger question is whether those taking advantage of wellness programs are those who are already living a healthier, more active lifestyle. In other words, are the programs driving change to healthier behavior, or simply quantifying what were already healthy behaviors.

      I suspect it is the latter.