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Should Health Reform Legislation Allow Insurers to Incent Wellness Programs With Carrots and Sticks Made of Cash?

Posted Jan 10 2010 4:32pm
Should employers offer wellness and prevention programs like worksite-based health coaches, gyms, diet information, health fairs, blood tests, excercise classes, tobacco cessation courses and wellness screenings? If you think so, do you also believe that employers should incent or reward employees that participate in these programs? Should rewards also be made available for employees that become healthier as a result? Should the rewards be time off, a favored parking spot, entry in a raffle, a gift card, a discount or cash? Should the rewards be small, medium or large?

The longstanding AHRQ answer to all of this has been that 'it depends.' Yet, if you read this recent New England Journal piece titled 'Carrots, Sticks, and Health Care Reform — Problems with Wellness Incentives' by Harvard's Harald Schmidt, Kristin Voigt, and Daniel Wikler, the answer boils down a simple 'no.' Citing 'fairness' as a criterion, they note that employer-sponsored programs are only technically 'voluntary,' can poison the doctor-patient relationship, and fail to account for the pernicious influence of socioeconomic status on participation and success rates. If significant financial incentives are tossed in, they claim the well-off will not only become disproportionately healthier, they'll be unfairly wealthier and benefit from cost shifting.

This is not just an academic thought experiment. According to this 'FAQ' document from the American Cancer Society, Diabetes Assocation and Heart Association, pending health reform legislation will permit an increase in permissible financial incentives from the allowed level of 20% of the health insurance premium to 30% (and if the HHS Secretary allows it, 50%). That possibility that the has become a contentious flashpoint for progressives, who view such financially incented wellness programs as an underwriting Trojan Horse really designed to charge sicker people more for their health insurance.

The Disease Management Care Blog respectfully disagrees. Here's why:

First off, it's been known for a long time that worksite-based health promotion programs improve the health status of populations (here, here and here). Management's interest in promoting wellness is only partially based on retaining a talented and healthy workforce or lowering health care costs to the benefit of the shareholders: they also feel responsible for their workers' wellbeing, even when national health insurance is in place. Financial incentives care are not only welcomed by employees (for example, in weight loss programs), they positively influence health behaviors, especially when they are combined with other features like employee input into their design, linking them to a health risk assessment, changing the insurance benefit and providing free on-site services.

Unlike the theorists writing in the Journal, he DMCB has been in on the ground floor of several employer-sponsored and evidence-based health promotion initiatives. It never saw one of the problems cited by Schmidt et al. The DMCB doubts that would surprise to anyone with experience in the wellness business, expecially since the Journal article didn't cite any concrete examples of any of the possibilities it raised.

There is, however, an example raised here in the Health Care For America Now! (HCAN) blog. North Carolina apparently imposed a 10% out-of-pocket cost differential on State employees based on weight (BMI a hefty 40 or greater) or tobacco status. The local SEIU chapter has raised this as the poster child of employer-sponsored wellness run amok. However, closer inspection of the North Carolina State Health Plan web site reveals that tobacco cessation services and medications are also covered (they're cheaper than cigarettes by the way) and that enrollment, not just quitting, qualifies for the better insurance plan. Ditto obesity treatment coverage, including diet instruction, medications and (if the person qualifies) bariatric surgery. What's more, the obesity requirement doesn't kick in until 2011. Last but not least, it wasn't the 'employer' that technically imposed this, but the democratically elected State Legislature.

What's there to conclude?

1. Worksite wellness programs are rarely imposed 'top down,' without the input of the employees themselves (or in the case of North Carolina, the voters' representatives). Smart employers listen to their workforce and use their insights to develop programs the reflect local needs and preferences. They should have the ability to create locally meaningful financial incentives, including a 30% premium differential. While the wary DMCB distrusts Federal instrusion into health care, it notes the raising of the ceiling to 30% expands the amount of employer (and their employees') flexibility. That's good.

2. Do higher cost incentives translate into higher participation outcomes? The DMCB isn't sure, but it suspects the employers and their employees will sort that out if Congress gets out of the way and raises the ceiling. Instead of taking the New England Journal's word for it, employers typically study their program results very carefully. If they find higher out of pocket expenses translate into less use of needed medical services or an unhappy work force, they'll adjust. What's more, keep in mind that higher participation rates leading to increased incomes means lower insurance costs which also benefits all the employees.

3. While obesity and tobacco abuse disproportionately affect persons who are socioeconomically disadvantaged, the upside financial incentives (less out of pocket costs/lower premiums) that are built into wellness programs have far greater marginal utility - meaning lower income families benefit proportionately greater compared to their more affluent coworkers.

4. Health promotion services are not cheap. The DMCB suspects that any increased out of pocket costs are more than made up by the increased value of the health insurance benefit package. Note that in the case outlined above, smoking and weight loss drugs were covered along with bariatric surgery. Perhaps a more correct way of looking at this is to ask if the out of pocket costs borne by the non-participants is really making up for the increased cost of the services. If that were the case, they'd be foolish to not take advantage of them.

5. The son-of-a-union-man DMCB also wonders if anti-incentive view may not only on the wrong side of the rank and file union members, but of the American electorate. Since there is increasing wariness over merits of health reform, a bill that emphasizes a requisite amount of personal responsibility may be more likely to make it to the President's desk.

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