| NEW YORK
NEW YORK May 24 A long-awaited report on
workplace wellness programs, which has still not been publicly
released, delivers a blow to the increasingly popular efforts,
Reuters has learned, casting doubt on a pillar of the Affordable
Care Act and a favorite of the business community.
According to a report by researchers at the RAND Corp,
programs that try to get employees to become healthier and
reduce medical costs have only a modest effect. Those findings
run contrary to claims by the mostly small firms that sell
workplace wellness to companies ranging from corporate titans to
RAND delivered the congressionally mandated analysis to the
U.S. Department of Labor and the Department of Health and Human
Services last fall.
The report found, for instance, that people who participate
in such programs lose an average of only one pound a year for
In addition, participation "was not associated with
significant reductions in total cholesterol level." And while
there is some evidence that smoking-cessation programs work,
they do so only "in the short term."
Most large U.S. employers believe the programs improve
workers' health and reduce or at least keep the lid on medical
spending. "Companies from the CEO on down feel that these
programs are bringing value," said Maria Ghazal, a vice
president at the Business Roundtable, the association of chief
executives of big companies. "The criticism is surprising,
because companies are not hearing that internally."
Some experts not involved with the new report say even the
modest benefits RAND found need qualification.
"The strongest predictor of whether someone will lose weight
or stop smoking is how motivated they are," said Al Lewis,
founder and president of the Disease Management Purchasing
Consortium International, which helps self-insured employers and
state programs reduce healthcare costs. "Since the programs are
usually voluntary, the most motivated employees sign up. That
makes it impossible to credit the programs with success in
smoking cessation or weight loss rather than the employees'
For its report, RAND collected information about wellness
programs from about 600 businesses with at least 50 employees
and analyzed medical claims collected by the Care Continuum
Alliance, a trade association for the health and wellness
Industry experts noted that whenever researchers analyze
hundreds of programs, there are inevitably more effective and
less effective ones.
"Traditional workplace wellness barely scratches the
surface," said Keith Lemer, president of WellNet, which provides
programs to Cumulus Media, Viking Range Corp and the
Charlie Palmer Group of restaurants, among others. "Done right,
(the program) requires the integration of clinical data,
wellness, health coaching, and work flow." The initiatives
succeed if they have "senior level support and a high-degree of
employee engagement in healthy behaviors," he said.
SAVINGS OF $2.38 A MONTH
The report's conclusions about the financial benefits of
workplace wellness programs are also grim. In theory, the
programs should reduce medical spending as employees become
healthier and thereby avoid expensive conditions such as heart
disease, cancer and stroke.
In fact, workers who participated in a wellness program had
healthcare costs averaging $2.38 less per month than
non-participants in the first year of the program and $3.46 less
in the fifth year. Those modest savings were not statistically
significant, meaning they could have been due to chance and not
to the program.
More surprisingly, workplace wellness did not catch warning
signs of disease or improve health enough to prevent
emergencies. "We do not detect statistically significant
decreases in cost and use of emergency department and hospital
care" as a result of the programs, RAND found.
The RAND report was mandated by the Affordable Care Act, the
healthcare reform law known as Obamacare. Two sources close to
the report expected it to be released publicly this past winter.
Reuters read the report when it was briefly posted online by
RAND on Friday before being taken down because the federal
agencies were not ready to release it, said a third source with
knowledge of the analysis.
FROM SUBISIDY TO PENALTY
Starting next year, the healthcare reform law allows
employers to reward employees who participate in workplace
wellness programs with subsidies equal to 30 percent of the cost
of insurance premiums, or about $1,620 annually per worker.
If wellness programs do not reduce healthcare spending, some
employees could suffer financially. If an employer is
subsidizing employees who use its program but is not reaping
lower healthcare costs, it has three choices. It can absorb the
costs, perhaps figuring it helps recruit or retain valued
employees. It can raise healthcare premiums across the board. Or
it can raise costs only to workers who do not participate,
through higher deductibles or premiums, by at least that $1,620.
Cost-shifting seems especially unfair if wellness programs
don't deliver medically or financially, said senior counsel
Dania Palanker of the National Women's Law Center, which
generally supports the programs: "We've seen plans that appear
to cost-shift, with wellness programs rolled out at the same
time that premiums or deductibles are increased."
$6 BILLION INDUSTRY
Workplace wellness is a $6 billion industry in the United
States, with an estimated 500 vendors now selling the programs.
Fifty-one percent of employers with 50 or more workers offer
one, the RAND report found. Medium-to-large companies now spend
an average of $521 per employee per year on wellness incentives
(gift cards for losing weight, for instance), double the $260 in
2009, according to a survey by Fidelity Investments and the
National Business Group on Health released in February.
For many employers, wellness programs are a recruiting and
retention tool, attracting the health-conscious employees they
prefer. The programs also promise to control an employer's
healthcare spending. By getting workers to stop smoking they
should reduce expensive emphysema treatments, for instance, and
by nudging workers to get annual physicals they are expected to
help companies avoid such financial black holes as cancer
treatment and stroke rehabilitation.
Although the RAND report's conclusions seem counterintuitive
- how can wellness programs not improve health? - other recent
This year researchers at the University of California
conducted an analysis of dozens of existing studies of workplace
wellness programs at the behest of the California state senate.
Based on gold-standard studies, similar to those that evaluate a
new drug, participating in work-based wellness programs does not
lower blood pressure, blood sugar or cholesterol and rarely
leads to weight loss, said Janet Coffman, a health policy expert
at the University of California, San Francisco, Institute for
Health Policy Studies.
"Even in studies that found statistically significant weight
loss, it was not always sustained," she said.
Similarly, after years in which vendors and others claimed
that the programs return $3, $9 and more for every $1 invested,
rigorous studies have found the opposite, also providing support
for the RAND findings.
Earlier this year, economist Gautam Gowrisankaran of the
University of Arizona and colleagues found that employees who
participated in the wellness program at BJC Healthcare, a St.
Louis, Missouri-based hospital system, had fewer
hospitalizations for illnesses such as heart disease and
diabetes. But their overall spending did not decrease, the
researchers reported in the journal Health Affairs.
The main reasons, said Gowrisankaran, were that employees
who fill out company surveys assessing their health risks ("what
is your blood pressure?") or get health screenings at
company-sponsored health fairs ("you better see a doctor about
that") led to more office visits and medication use. In-patient
costs fell $22 per employee per month, on average, but other
costs rose $19. The program cost $500,000 per year.
"The wellness program just didn't save money," Gowrisankaran
To understand how that can be, experts offer the example of
what happens when a workplace wellness program identifies
hypertension (by requiring participants to get a physical) in
someone who never suspected she had it. That might keep her from
having a stroke in 20 years, but in the meantime it leads to
physician visits and drugs to manage a condition that had gone
untreated - and that therefore had previously cost the company
or its insurer nothing, explained Vik Khanna, a benefits
consultant in St. Louis.
Employers told RAND they were "overwhelmingly" confident
that workplace wellness reduces medical costs. Yet only 44
percent have actually evaluated their efforts, and only 2
percent had precise savings estimates. Most leave those
calculations to companies that sell them the programs, or to
consultants, opening the door to creative accounting, say
Tom Emerick, president of Emerick Consulting and former vice
president of global benefits at Walmart, is one of them:
"Many of the vendors reporting savings are making it up."
Ghazal of the Business Roundtable acknowledged that
calculating savings from wellness programs is tricky:
"Sometimes the benefits are way down the road, when the person
is not at that employer anymore."
On the bright side, the RAND report says healthcare costs
and use of expensive medical services rose more slowly for
program participants than nonparticipants. That offers hope
"that a reduction in direct medical costs would materialize if
employees continued to participate."