The PPACA (The Obama Healthcare Law) includes a provision that employers may use up to 30% of the employee’s health insurance premium for wellness incentives. An article in the NEJM discussed some of the difficulties of this seemingly straightforward effort to prevent the onset of chronic diseases and lower healthcare costs.
I won’t repeat the whole article here, but will focus on a few key points. One point was that there are very few studies that tell us if reward or penalty programs are more effective. Incentive programs are very dependent on the amount, style, and timing of the incentive. Small but immediate rewards are thought to be more effective than larger delayed incentives such as a year-end rebate for gym attendance. Also, the manner in which rewards are packaged is important. A $100 dollar check is more noticeable than a $100 dollar discount on an insurance premium.
Some believe rewards may be more effective than penalties, but they may not feel right to employees. The authors write about their experience working with a company that showed that rewarding smokers with $750 to quit increased the quit rate. However, the other employees felt that the smoking employees shouldn’t be rewarded for something — not smoking — the other employees did on their own. When the next year’s benefits package was announced, it included a $650 penalty for smokers, which had no evidence to support its effectiveness.
All of these efforts are somewhat misguided. The cost-effectiveness of these efforts may be reasonable, but they are unlikely to reduce overall healthcare costs much. If everyone magically quit smoking today, short term costs would go down, but several models predict long term costs would go up. Basically we would just trade lung cancer deaths for Alzheimer’s disease deaths, which are much more expensive. The cost-effectiveness literature finds that smoking cessation treatments are very cheap compared to other common treatments, but there are still no magical savings at the end of the health insurance rainbow.
In contrast, a recent study in Health Affairs estimated that if prediabetic Americans age 60-64 were enrolled in community-based weight loss programs, Medicare could save a few billion (though I don’t think they assumed enough up front expenses to find and counsel these people). So it’s possible that a few very targeted prevention programs could actually save money in the long run, it’s just rare.
I believe employers continue to get bad advice from insurance companies and insurance brokers. To a degree, the employers are telling these insurance advisers what they want, and the consultants are just regurgitating these statements back to the employers (“You want a wellness incentive program, here are 3 to choose from.”). To reduce health insurance costs by approximately 20%, the proven answer is well-supported family medicine. To reduce costs further requires a deeper discussion of the very role of healthcare in our society few are willing to undertake. Let’s hope this reticence doesn’t last much longer.