Wellness programs in the workplace, such as free exercise classes, have been used for some time and offer employees the benefit of maintaining or improving their health. Some employers also offer reductions in health insurance premiums or deductibles to employees who participate in specific wellness schemes. Such programs sound like a win-win situation: employees are healthier and pay less for health care, and employers can reap the benefits of a more productive workforce.
However, these programs also raise some problems, and provisions proposed in Section 2705 of the Senate bill threaten to exacerbate them.
HIPAA legislation and subsequent regulations of 2006 allow employer-based health plans to vary premiums, copayments, or deductibles among employees as part of wellness programs. The regulations distinguish between two kinds of wellness programs: those that reward workers for participation in a health promotion or disease prevention program (such as a weight loss class or a smoking cessation program) and those that make rewards conditional on employees meeting a specific health target (such as normal BMI, cholesterol levels or smoking status).
Outcome-based wellness programs are permissible only if a number of conditions are met. One such condition is that the size of the reward must not exceed 20% of the cost of the employee’s coverage or, if the employee’s dependents are included, the cost of family coverage. The Senate bill proposes to increase this limit to 30% and possibly even 50%.
Current regulations and the Senate bill’s proposals leave open exactly how wellness schemes are to be implemented. Some employers may choose to absorb the cost of incentive payments in the short term and not increase premiums or copays, perhaps hoping to recoup the expenditure in the medium to long term through savings gained from a healthier workforce and reduced sick leave and absenteeism.
However, as explicitly recognized by the 2006 legislation, wellness programs that tie rewards to the achievement of a health status target can also be used to shift costs, both from “healthy” to “unhealthy” workers and from employers to those employees who fail to meet the stated targets (or refuse to participate in the wellness scheme).
What does this mean in practice? Based on the 2009 average of the cost of health care coverage, the 20% cap required by current legislation allows for a variation of as much as $965 per year for a single employee and $2675 for an employee with family coverage.
Despite the fact that there is no conclusive evidence of the efficacy of these schemes, or anything to suggest that the 20% threshold is often exhausted (and that further improvements could only be made with higher reimbursements levels), the Senate bill proposes quite significant increases. With regard to the current average cost of coverage for a single employee, a 30% threshold would amount to a difference of $1,447, and 50% would equal $2,412. (For family policies the sums would be $4,013 or $6,688, respectively).
These increases would disproportionately hurt lower-paid workers, who, generally, are less healthy than higher-paid workers and thus in greater need of health care, less likely to meet the targets, and less likely to afford higher premiums and deductibles.
As these numbers suggest, wellness programs can make health coverage significantly more expensive for those who cannot meet the targets stipulated by employers. This is illustrated by the wellness consultant Benicomp. The company’s Advantage plan implements wellness programs not by raising premiums, but by increasing deductibles for all employees covered under the health plan. Reductions are then offered to those workers who meet specific health targets. As the company explains, one way that such a scheme leads to savings for the employer is that individuals who cannot gain reimbursements under the scheme might be “motivated to seek other coverage options.”
People with multiple health problems and low incomes are among those who are most likely to feel the financial burden of the legislative loophole in the Senate bill, and may even lose health care coverage as a result. As such, wellness programs may seriously undermine one of the crucial goals of health care reform: to extend affordable health care coverage to all Americans, regardless of pre-existing conditions.
Making improvements to the workplace that could help workers adopt and maintain healthier behaviors is a crucially important and laudable goal. However, current provisions on wellness programs allow for highly inequitable cost-shifting to occur. Wellness programs of this kind run counter to the spirit of health care reform.
As we suggested recently in the New England Journal of Medicine, and as is urged in a letter to members of Congress by the American Heart Association and more than a hundred other patient advocacy groups, Congress should reject the Senate proposal to increase incentive levels for wellness programs.
Financial incentives have a role to play, but under fairness considerations the key point is that they must be equally achievable for all and, in particular, not penalize those who are already among the most disadvantaged. The focus should therefore shift to prevention and health promotion programs that are sensitive to the abilities and needs of lower-paid workers.
Kristin Voigt is a post-doctoral fellow in the Harvard University Program in Ethics & Health; Kristin_voigt@hms.harvard.edu. Harald Schmidt is a research associate at LSE Health of the London School of Economics, and a Commonwealth Fund Harkness Fellow in Health Care Policy and Practice at the Harvard School of Public Health; firstname.lastname@example.org. The views expressed here are those of the authors and should not be attributed to the Commonwealth Fund, its directors or officers, or LSE Health.