Employers love employee wellness programs. More than three-quarters of all employers that offer health benefits (and 99% of large employers) include wellness initiatives as part of their benefits package, according to a 2013 survey by the Kaiser Family Foundation. Those wellness programs might involve screening employees for health risks, offering programs to help people quite smoking, hosting Weight Watchers meetings, or offering on-site vaccinations.
Your boss doesn’t want you to get healthy just because he’s a nice guy, of course. Rather, the desire to help employees get healthy is motivated by economics. Cost-conscious businesses are looking to reduce their health care costs by helping their employees shed pounds, give up cigarettes, and get more exercise.
Companies are willing to spend money now on employee wellness because they expect to see benefits later on. Spending on wellness programs has increased steadily over the past five years, according to surveys by Fidelity Investments and the National Business Group on Health. In 2010, companies were spending an average of $430 per employee on wellness programs. That number increased to $693 in 2015.
By and large, employers believe wellness programs work. When the RAND Corporation surveyed employers that offered such programs in 2013, they found that most were confident that such efforts were lowering their health care costs and improving employer productivity. But there’s actually little concrete evidence that wellness programs lower costs for employers.
In fact, when researchers looked more closely at different employer wellness programs, they found that most companies weren’t bothering to evaluate the effectiveness of their efforts. Also, while RAND’s analysis did find that people who participated in wellness programs had lower health care costs and utilization rates than those who didn’t participate, the difference was small – just $157 per year, not a statistically significant amount.
But even if they don’t dramatically reduce costs, wellness programs do make people healthier, right? The evidence isn’t straightforward here, either. First, it’s hard to get employees to participate in wellness programs. In RAND’s study, they found that among employees who were offered health screenings through work, less than half participated.
Even when an employee was screened and a potential health issue was identified (such as needing to lose weight, quit smoking, or exercise more), only one-fifth opted to participate in an intervention. Once employees did get on board with wellness programs, however, they did seem to get healthier, with lower rates of smoking, more weight loss, and more exercise. Further analysis revealed that companies saw a better return on investment, especially in the short term, for programs that helped employees manage existing conditions (like diabetes or heart disease) than for lifestyle programs, such as those that encouraged employees to walk more.
“Workplace wellness programs can help contain the current epidemic of lifestyle-related diseases,” the authors wrote, but whether they will dramatically lower health care costs is not clear, at least in the short term. Nonetheless, “there is reason to believe that reduction in direct medical costs would materialize if employees continued to participate in a wellness program.”
Other evidence suggests that the employees who do participate in wellness programs may be the least likely to need them. When the financial incentives for signing up for a wellness program were relatively small, employees who were young and healthy were more likely to participate, a study by the Employee Benefits Research Institute found. Bigger financial incentives were required to get older, less healthy workers to sign up.
“[T]he employees who had abstained from participating in the workplace wellness programs were likely the ones in need of them most,” the study’s authors noted. “Higher financial incentives — while more costly for the employer in the short-run — may bring in older, less healthy employees who are consuming more health services, and accounting for a large proportion of health care spending.”
Still, some companies do report significant savings from wellness programs. Johnson & Johnson estimates that its wellness programs saved it $250 million in health care costs over a decade, according to the Harvard Business Review. Promoting employee health can save money in other ways, such as by reducing turnover, the HBR reports.
Embracing employee wellness programs may also be a way to shift health care costs on to workers. The Affordable Care Act allows employers to charge up to 30% more in insurance premiums to workers who choose not to participate in wellness programs. A wellness program that offers financial incentives could take the sting out of increased premiums for some employees.
Despite employer enthusiasm for wellness programs, employees are lukewarm about initiatives that charge some people more for not meeting certain health goals. While the majority of people support employer-provided wellness programs, 70% said charging people more when they failed to meet targets like losing weight or lowering their cholesterol was inappropriate, a Kaiser Family Foundation survey found. But if current trends continue, employees may just have to get used to making an effort to get healthy, or pay the price.