• Sound Medicine: Why are employers offering health care incentives?

    Sound Medicine is a radio show produced by the Indiana University School of Medicine and WFYI Public Radio. In the last few years, I’ve become their go-to guy on health policy. So, for those of you who would find your day brightened by the sound of my voice, enjoy the following:

    Sound Medicine” health care policy analyst Aaron Carroll, M.D., M.S., weighs in on the actions employers are considering to reduce health care costs. Some companies have begun offering incentives like gym memberships to employees who lose weight; others have raised the cost of insurance for those who smoke. Some, like Honeywell, fine employees up to $1,000 for an elective procedure if they don’t seek a second opinion. According to Dr. Carroll, the companies are offering incentives in hopes of avoiding future costs caused by heart attacks from obesity, for instance, or smoking-related illnesses. But while losing weight or quitting smoking may reward the individual, the company may not save if the employee leaves in a few years, with the insurance savings lost to another employer.

    Full audio after the jump

    @aaronecarroll

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    • I’m not yet convinced that workplace incentives and wellness programs aren’t cost effective or health improving, even in the short term. There are too many anecdotal instances of success. As an example, I recently spoke with an EVP of a regional bank whose went 5 straight years without a premium increase; she attributed it to their wellness programs.

      I recognize that this, in itself, does little to further the evidence base. But it does mean we need to do a better job trying to identify the specific strategies that have the most potential to work. We need to look at the strategy level, not at the generic “workplace program” level.

    • I’m still unsure about it. Health policies can be life savers or just cut up your wallet.

    • Is there any indication that insurance companies pay attention to wellness programs in setting rates?

    • I was part of the leadership team that introduced a nationally-recognized, award winning, HIPAA-compliant wellness program at a Fortune 100 employer about eight years ago. We had had a program in place, but this dramatically altered the breadth, reach and depth of the program. It was and remains one of participation-based financial incentives (that is, the financial incentives are based on completion of wellness assessments and participation in wellness activities, not in achieving specific health factor standards). While many believed the goal was to reduce the rate of medical cost trend, the Benefits/HR department fought hard to ensure the program was never sold with that goal in mind – that while the program would incorporate a number of metrics focused on changing population health, any change in claims experience would likely be very difficult to attribute to the program.

      Nonetheless, when health experience moderated in 2008-2009, after our third year, some tried to draw a direct causal link to the wellness program – to use the moderation in claims as justification and to expand the effort. The claims about wellness program success can be quite outrageous. I’m reminded of one national benefits consulting firm who in a 2007/2008 report noted that companies they deemed to have the most effective wellness programs:
      – Achieve 20% more revenue per employee
      – Have 16.1% higher market value
      – Delivered 57% higher shareholder returns”

      Causality, anyone?

      It took everything I had to fight off multiple efforts by internal business units to suggest to the senior leadership team that there was a causal relationship between the wellness program and the moderation in medical claims experience – conveniently ignoring other dramatic changes in health coverage, the introduction of a consumer driven health plan, a significant reduction in the number of high cost HMO options offered in certain locations, and, not surprisingly, significant changes (over 15%/year) in the covered population.

      For me, it was, is and continues to be sufficient to point to the clinical outcomes as the only indication of success (or lack thereof). The goal is to improve the workers’ standard of living, including improved health, which at some point may equate to reduced expense, and perhaps reduced absenteeism and presenteeism. The wellness assessments (with biometric data) showed significant reductions in the number of workers with multiple health risks, significant weight loss, an increase in individuals remaining compliant with their treatment regimens, and yes, a reduction in the number of workers and adult family members who use tobacco. The wellness activities highlighted an increase in physical activity as well as changes in nutrition and diets.

      There, those clinical outcomes, clearly linked the change in health behaviors and health status to the wellness program.