Ten Questions Publicly Traded Company Boards Should Ask about Employee Wellness

The Board reviews a company

health promotion program

As follow-up to this post about the peer-reviewed evidence linking company-sponsored employee wellness programs and total shareholder return (TSR), the Population Health Blog offers ten questions that these companies' boards of directors should consider when reviewing the topic with their management team:

1. Does the company have a wellness, health promotion, disease prevention or condition management program in place?  If not, why not?  If it does, what is the vision and strategy?

2. In addition to internal measures of "return on investment," are the costs of the program(s) worth the impact on total shareholder return (TSR) and will this pass muster with the due diligence of activist investors?

3. Do other companies competing in the same industry have wellness, health promotion, disease prevention or condition management programs? How have they fared?

4. Have the program(s) been subject to external review, such as Mercer, C. Everett Koop or CHAA? 

5. If the company is self-insured, what are the expectations about the impact of the program(s) on health insurance claims expense?

6. Is the programs' impact on recruitment, morale or productivity being assessed?  How, and can the results be subject to an internal audit or to third-party outside review?

7. How are regulators' and employees' concerns about discrimination or privacy being addressed?

8. Does a "Chief Health Officer" exist?  If not, why not?  If yes, does the job description include any oversight responsibility of employee health?

9. Who on the board can act as a lead in providing the necessary oversight of any of these programs?

10. Is low-cost, scalable digital technology "mHealth" being leveraged? How?

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The Link Between Corporate Wellness Programs and Total Shareholder Return

While employer-sponsored wellness, health promotion and disease prevention programs have been linked to "human capital," talent recruitment and retention, improvements in employee morale, reductions in absenteeism, reductions in presenteeism and bending the curve of claims expense, should shareholders care?

After all, according to President Obama's latest State of the Union Address, corporate America's pursuit of profits have resulted in greater automation, less competition, loss of worker leverage and "less loyalty to their communities." According to that narrative, employees are just another commodity on the road to total shareholder return.

Well, according to an expanding body of peer-reviewed scientific literature, shareholders should care.

The latest example of why is this publication by Ray Fabius and colleagues that appeared in the January issue of the Journal of Occupational and Environmental Medicine.

First, some background.  The Corporate Health Achievement Award (CHAA) was created by the American College of Occupational and Environmental Medicine (ACOEM) to recognize companies' workplace health and safety programs.  It relies on a thousand point-based assessment system of multiple standards in four categories of 1) Leadership, 2) Healthy Workforce, 3) Healthy Environment (including Safety) and 4) Organization.  Many of the companies that have participated in CHAA are household names.

In this study, the authors tracked the stock market performance of companies that applied for the CHAA from 1997 through 2014.  As the Population Health Blog understands it, all the privately held companies as well as those that scored 175 or lower in Organization and lower than 350 combined in the Workforce and Environment categories were excluded from the analysis. Of the remaining publicly companies, those scoring at or above the 37.5 median percentile in the four categories described above (defined as high CHAA achievers) were placed in six hypothetical stock portfolios of 5 to 22 companies.  The authors then mapped out what would have happened with a January 2001 investment of $10,000. As each year passed, new high scorers were added to "rebalance" the portfolios, while the stock of repeat high scorers were added.

The results? While the benchmark Standard and Poor's (S&P) return over the study period was 105%, the portfolios easily exceeded that with returns that ranged from just from over 200% to 333%. 

This study builds on other studies that used the CHAA as well as other wellness award programs including Mercer's HERO Employee Health Management Best Practices Scorecard and the C. Everett Koop National Health Award.

Now that's total shareholder return.

In another demonstration of why peer-review is so important, Dr. Fabius and his colleagues correctly point out that correlation is not the same as causation. As a result, there is no evidence that importing wellness programs into other companies will translate into better stock performance. In addition, elementary statistics tells us that corporate wellness and TSR won't necessarily correlate over shorter periods of time for individual companies.

Bottom line? The PHB doesn't think investors in public companies are necessarily interested in "causation" as they are in market signals. It stands to reason that a commitment to company wellness is an important signal about where to put their money. 

Which raises three questions....

1) This was raised by Fabius et al: should investors or regulators demand that companies publicly report whether they have employee wellness programs?

2) Should companies invest in a "Chief Health Officer?"

3) Why isn't corporate wellness part of the national conversation about capitalism in America?

Coda: For additional reading, see this link on the ten questions about employee wellness that should be asked by boards of directors.

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Everything You Need to Know About Health Care Reform, Thanks to a 25 Minute Video, Courtesy of Managed Care Magazine

Thanks to Managed Care Magazine, the Disease Management Care Blog can post this interesting 25 minute interview with Princeton healthcare economist Uwe Reindardt.  Suitable for desk-bound meal-break viewing by overachieving DMCB readers, the modest and insightful Dr. Reindardt gets it mostly right:

No, the slowdown in the U.S. rate of health care costs cannot be ascribed to passage of the Affordable Care Act.  It started wayyyy before Obamacare was passed and is more likely due to the economic slowdown and increased consumer cost-sharing.

Accountable Care Organizations remain an "iffy" experimental proposition because they "don't go all the way like Kaiser."

Republican proposals to let health insurers sell their products across state lines are hardly a health reform panacea, because prices (and therefore premiums) are not a function of where the insurer is domiciled, but where the care is rendered.  Texas insurers would still have to pay New York prices.

Americans use fewer pills, occupy less bed-days and see fewer doctors, but we pay more because providers can charge more.  Despite being relatively small vs. the behemoths like Aetna and Cigna, regional hospitals have considerable market power that translates into take-it-or-leave it local single seller monopsonies.   Europeans, in contrast, have lower prices because their system is dominated by single purchaser monopolies.

We're headed toward a three-tier system comprised of 1) the indigent safety-net public programs, 2) the middle class "reference pricing" "networks" where consumers pay the difference if they want to buy up and 3) "boutique" health care for the 5%.

There's reason to be optimistic about the next five years thanks to a sluggish labor market (making it easier to impose networks and even more cost sharing) and innovation (computational capacity is putting meaningful quality measurement within reach, while techy gizmos are making self-care simultaneously cheap and fun). 

Plus, there's reason to be of good cheer.  Compared to the U.S. education and the legal systems, health care is far more efficient and consumer-friendly.  Stop beating up on yourselves.

(The DMCB didn't quite agree with Dr. Reinhardt's views on worksite wellness.  He finds the notion counterintuitive and intrusive, preferring that insurers own wellness.  He neglects to mention that the employers who invest heavily in wellness are typically self-insured and that employers have an arguable stake in improving the quality of their human capital.)

More on Penn State's Wellness Woes and The Evolving Science of Evaluating Health Promotion Program Outcomes: There Is No Gold Standard

Aside from keeping up to date with work buddies, the Disease Management Care Blog doesn't really use LinkedIn all that much. But when "Support our Penn State Colleagues in their Fight to Prevent Coercive Junk-Science Wellness Programs" postings began to appear in a Discussions board, the DMCB couldn't resist. It rose in support of its alma mater (College of Medicine, '77) faster than a med-mal attorney can calculate a contingency fee.

 As noted in this prior DMCB posting, Penn State University launched a rather routine health promotion program that prompted some nasty and very public teaching faculty resentment. Calls for "civil disobedience" and sinister references to "eugenics" made the DMCB wonder how much of the reported push-back was mainstream employee opinion vs. mainstream media's biased reporting. That distinction didn't stop the LinkedIn board from running a mostly one-sided dialogue on the matter.

So, undeterred by the unfairness of so many vs. just one, the contrarian DMCB naturally jumped right in.  Among the issues raised:

The RAND Study on wellness casts doubts on the merits of employer sponsored wellness programs:

Actually, RAND found employer-sponsored programs lead to statistically significant increases in exercise levels as well as reductions in tobacco abuse and body weight.  To the disappointment of wellness vendors everywhere, however, these programs did not lead to statistically significant reductions in health insurance claims expense.  The ever-optimistic DMCB points out that that means that these health improvements occurred without an increase in health care costs.

While cost neutrality alone is good news, the DMCB also believes that an emerging generation of wellness programs will do a far better job of identifying persons with 1) actionable risk and 2) who are willing to take action.  By husbanding wellness resources for subpopulations where it will have the greatest "bang," program costs will go down and claims savings will achieve statistical significance.

The author of the widely quoted Health Affairs paper on the merits of employer sponsored wellness programs has back-pedaled away ("too early to tell") from her study's original conclusions.

Actually, the original Health Affairs paper said that the finding of a $3.27 return on every dollar spent is subject to:

 "(f)urther study.... to elucidate the time path of return on investment.... The assumption of a linear trend in savings from the beginning to the end of program evaluation may not reflect the reality of behavior change within organizations."

The point is that nuanced and calibrated conservatism is typical of excellent peer-reviewed research and, taken in context, the authors are being quite consistent in-print and on-air.  Academics will always say more research is needed.  Skeptics will over read that.

There are powerful arguments against the common wisdom that "wellness saves money," suggesting that the health promotion industry has been intentionally ripping employers off.

Actually, when it comes to wellness outcomes, there is no agreement on "the" measurement "gold standard." Without any consensus on which assessment approach (for e.g., this vs. this) is truly "better," only one thing is certain: much like the Betamax vs. VHS wars, the future owner of "the" standard stands to reap a consultant's bonanza. Until we declare a winner, assessing the truth will be a messy mix of triangulating on means, medians, confidence intervals, imperfect reference controls, suspect generalizability, human judgment, moving targets and evolving interventions.

What about [insert name of wellness program here] that is an obvious sham?

There have been women who have had mammograms with missed cancer, victims of car crashes who have died despite seat belts and times when the DMCB did something really dumb despite the advice of the DMCB spouse.  That doesn't mean mammogram, seat belts or advice are worthless.  The plural of anecdotes is not data.

Coda: By the way, the statistically significant "value of  0.05" is more of a consensus than a gold standard.  Why is a 5% chance that an observed result is not the result of randomness wiser than a 6% chance or a 4% chance?

Penn State's Wellness Woes: Seven Lessons Learned About Launching a Worksite Employer-Based Health Promotion Program

Penn State's mascot goes on the
prowl for a good wellness program

Listen to this NPR report and it's easy to conclude that another employer-based health promotion program has gone amok. Reporter Jeff Brady implies rising health care costs have led Penn State University to force its employees into an intrusive wellness initiative, pitting David-like faculty members against the Goliath-Administration.

What can wellness architects and service providers learn from this imbroglio?

Here's the facts:

Penn State provides health benefits to over 45,000 employees and dependents. It's self-insured (administered by Highmark), which means the University, not some remote insurer, is on the hook for any unanticipated health care costs. 

Those costs have led to a whopping $217 million health care budget for 2013-2014 and a long term $3 billion pension liability. In response to the threat of budgetary "crowd out," the University made some important changes to the insurance benefit that included a high deductible option and value-based benefits.

It also hatched a health promotion initiative. It checked in with the Faculty Benefits Committee in the early spring of 2013 and then used the summer to unveil a "comprehensive wellness-focused strategy."  This included the "Take Care of Your Health" program that packaged biometric screening (some labs, weight blood pressure), an on-line WebMD wellness survey and preventive health exam. Failure to complete that screening, survey and exam will result in a $100 per month payroll deduction in 2014.

The plan didn't sit well with everyone. Faculty members Matthew Woessner fretted about privacy and penned a "call for action and civil resistance," Barry Ickes doubted the economics and Larry Backer invoked eugenics, human dignity and sinister profit-motives.  Brian Curran used the Change.Org website to post an anti-wellness petition for "employees, alumni and friends" that has reached 2000 signatories.  Naturally, wellness gadflies Vik Khanna and Al Lewis were unable to resist and used The Health Care Blog to pile on any wellness program with the temerity to not use their consulting services.

The Disease Management Care Blog speculates on lessons learned......

While worksite wellness programs have a reputation for increasing employee morale, it stands to reason for that any stressed organization (and here's why that may be true here), it runs both ways: low employee morale can hinder acceptance of a wellness program. The faculty backlash may be as much of a symptom as a problem.

Lesson: Health promotion programs should tread lightly in times of organization turmoil.  This is no time for "big bang" multidimensional interventions, especially if they involve a $100 per month penalty.

There is good evidence that employer-sponsored wellness programs save money, but it's unlikely that any health promotion will be enough to tame a $217 million budget.  To Penn State's credit, they simultaneously made some health insurance benefit changes, but that's been lost in this controversy.

Lesson: If you're fighting high health care cost trends, don't let the positive return on investment (ROI) from health promotion take the lead. It won't work that well, and employees will think this about reducing your costs, not about increasing their well-being.

Similar on-line WebMD wellness assessments for Pittsburgh city employees and the Mennonite Church have gone without any substantial privacy concerns.

Lesson: If there are two employee groups with a special talent for indignant paranoiac outrage over any employer-sponsored health initiative, it's medical providers and university faculty. There are plenty of reasons, but the DMCB suspects both are victims of the decades-long twin cultures of 1) autonomy and 2) abundance in health care and higher education.  Stopping by a Faculty Benefits Committee is not enough to secure buy-in.

Interestingly, Penn State's College of Medicine has a long standing agreement with Highmark that includes the joint development of evidence-based health, wellness and prevention programs.  Unless that's been cancelled, the medical science faculty's silence is deafening.

Lesson: Search for and engage employee subgroups that can be your allies in launching a health promotion initiative. Their advocacy may really help.

There are wellness service providers like this and this with established records of performance that can successfully reconcile employee and employer needs.

Lesson: There's nothing wrong with preferring to "build" over "buy," but only if both options are carefully considered at the outset.  External wellness providers are often subject to financial performance and recruitment standards. If the petition gains traction, the latter would sure come in handy here.

Critics of wellness programs in general and this one in particular say that they lead to unnecessary testing.

Lesson: The science is still evolving, but here is one answer to that criticism: it's not wellness per se but our society's love of technology.  Wellness programs can use initiatives like Choosing Wisely to develop even better programs.

As a self-insured entity, Penn State technically already has access to all the employees' insurance and claims information.  The WebMD privacy concern is silly.

Lesson: Now would not be a good time for Penn State's administration to point that out.

 

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The Link Between Personalized Medicine and Worksite Wellness

Critics look at employee wellness

Only the Disease Management Care Blog can link population health, a JAMA "Viewpoint" article on personalized medicine and a Wall Street Journal editorial on the alleged futility of worksite wellness.

The DMCB explains.

The JAMA article, written by Drs. Goldberger and Buxton, illuminates the cognitive dissonance over guideline-based vs. personalized medicine. 

The former represents the best care advice for a condition based on a published body of evidence.  Makes sense, but that evidence is typically based on multiple research studies involving populations that are both broad (able to generate statistically significant data) and representative (similar to other patients with the same disease). 

The latter describes tailored medical treatment that is suited to the individual characteristics (and personal preferences) of each patient.  This suggests that within the flow of "populations" that form the basis of a generalized guideline, there are circumstances for some persons that might make a particular treatment of greater or lesser benefit.

While Goldberger and Buxton use a complicated example involving implantable cardioverter defibrillator therapy to illustrate the conundrum, the DMCB has a simpler example.  Current guidelines support yearly mammography in every woman over the age of 50 years. Does that apply for the terminally ill woman in hospice or for a woman who, despite the advice from her physician, decides to forgo the test?

Intellectually reconciling competing policies of guidelines, such as "best practice," "reducing variation," "benchmarks" and "pay-for performance" on one side vs. personalized "informed consent," "patient empowerment" and "clinical judgment" involves subpopulations.  In other words, within any population-based study that shows an intervention is of benefit (mammograms save lives) there are subpopulations where the intervention is of little to no benefit (exceptions to every rule).

Which brings the DMCB to this provocative Wall Street Journal editorial condemning the entire worksite wellness industry. It recycles a number of tiresome criticisms, including outcomes tainted by regression to the mean, over-reliance on process-based outcomes, selection bias, employee discrimination, savings vs. program costs and overdiagnosis.  

Another criticism of the industry is the need for workforce-level (total) savings vs. per-participant savings. Since wellness programs typically focus on subpopulations of employees at greatest risk who are most likely to benefit and willing to participate, the observed savings can be limited to a few patients.  Unless those savings are culled from the large pool of total health insurance claims, they are otherwise invisible and critics will unfairly pounce.

Worksite wellness offers personalized care for limited numbers of patients.  That is its essential value proposition and its curse.  Until we can reconcile the total care via standardized guidelines vs. a more nuanced approach using personal care, it will continue to be criticized.

Do Employer-Based Wellness Programs Work?

Reuters tackles worksite wellness outcomes

Mrs. Smith (name changed) was overweight.  She knew it and her physician, the Disease Management Care Blog, knew that she knew it.  Since the DMCB was one of the two persons on the planet who knew her true weight, she could talk to it behind closed doors about diet, exercise, fads, over the counter meds, prescription appetite suppressants and even bariatric surgery. 

What the DMCB quickly discovered was that Mrs. Smith's weight-loss goals were not only unrealistic but, like many women struggling with weight, driven more by the prospect of how she'd look in a bathing suit than any real health benefit.

Mrs. Smith wasn't alone. This seminal study demonstrated just how unrealistic women's weight loss goals (in the range of 50 lbs.) can be.  Think of the popularity of The Biggest Loser and it's easy to see why persons think thinness is just a matter of a few months of dieting and exercise, and that being skinny leads to health and happiness, 

Easy, right?

DMCB readers know otherwise. That's why they're not going to be impressed by the tone of this May 24 Reuters article on worksite wellness.  RAND, in a not-quite released report to Congress, examined the impact of several employee based programs and found, in the words of the Reuters reporter, only a "modest effect."  Average weight loss was "only" three lbs., tobacco cessation rates were significant but "short term," average cholesterol levels were unchanged and reductions in health insurance claims expense failed to achieve statistical significance.

Researchers have known for years that conservative dietary and lifestyle therapy typically results in weight loss in the range described above. In addition, cholesterol reduction as a primary prevention intervention is low yield when it comes to health. On the other hand, even short term tobacco cessation is a good thing. When it comes to the ability of wellness to reduce health care costs, weight reduction is unlikely to drive claims expense for a health insurer within two to three years, the impact of obesity on overall mortality rates is not as large as you'd think and "prevention" rarely saves money.

What's more, these programs were able to achieve their "modest" outcomes without increasing claims expense.  Participants lost weight and stopped smoking at no additional cost to the system.  Now that is something.

Mrs. Smith and Reuters are very similar.  Both are struggling with nrealistic expectations thanks to dubious fashion trends, media misinformation and scientific ignorance.  Fortunately, Mrs. Smith had access to a resource that could help her better manage her weight.  The DMCB can only hope that Reuters has access to a resource that can help it manage its lack of background knowledge.

Does Worksite Wellness Work? A Critical Look at the "Wellness Incentives In the Workplace" Article

A waste of money and
a basis for discrimination?

The answer to the "Does Worksite Wellness Work?" question depends on your frame of reference.

If you read this 2010 review by Baicker, Cutler and Song, you'll see that there are 32 peer-reviewed published studies from work settings that a) transparently described the intervention and b) used a valid parallel control group - persons who did not receive the intervention - as a comparison. When interventions like these were deployed, impressive reductions in medical costs and absenteeism like these were achieved in the intervention groups, compared to the groups that did not receive the wellness programs.

If you read this just-published 2013 review by Jill Horwitz, Brenna Kelly and John DiNardo, you'll see that it's possible to use a "conceptual framework" to completely trash the notion that worksite wellness programs offer any benefit.  Oh, and by the way, they also result in discrimination.

How is that you ask?

This framework asks:

1) Do employees with chronic conditions or health risks spend more?  The authors' answer is that most studies for most conditions indicate the answer is yes.

2) Do financial incentives change behavior? The authors' answer, based on a review of the literature, is that obese persons tend to gain weight and many persons who quit tobacco relapse.  The impact on high blood pressure and lipids is less certain.

3) Do health improvements lead to employer savings? The authors' brief three paragraph answer, based on two references (here and here), is "uncertain," "depends" and "erroneously assuming."

The authors also

a) point to the abundant literature that questions the relationship between "process" and "intermediate" outcomes (blood glucose testing or control in persons with diabetes mellitus) versus long-term outcomes (like mortality - an example is here),

b) note that aggressive treatment can lead to unintended consequences (an example is here), and

c) suggest that wellness programs disproportionately benefit persons from higher socioeconomic classes who suffer from less disease. It's frankly difficult for the Disease Management Care Blog to follow the authors' logic, but as it understands it, anything that benefits one segment of a population is a zero-sum loss for the remaining segment.

The DMCB's two-fold take:

1) The 2010 review examines state-of-the-art clinical trial data, while the 2013 "conceptual framework" interprets the underlying published literature and finds it wanting.  According to the framework authors, the value of any counseling is ultimately unproven.

Big deal. The DMCB would like to point out that a similarly conducted review of primary care (where there are no randomized control clinical trials), Medicare (a social experiment if there ever was one) and parachutes (to combat "gravitational challenges") could also conclude that there's no proof.

Bottom line: Lack of proof for a benefit is not the same as proof that there is a lack of any benefit.  What's more, the business persons that run worksite wellness programs know that evidence based medicine is necessary, but not sufficient.  They don't demand proof, they use reasonable assurance.  The 58% of large employers that are offering worksite wellness are using seasoned logic in a world of conflicting data.  Good for them.

2) The Homer Simpson-inspired DMCB doesn't quite "get" the framework's socioeconomic argument.  If persons from lower socioeconomic classes have a higher burden of obesity, diabetes, high cholesterol levels and poor fitness, anything that offers increased access to a higher level of care is not only good policy but a proportionately noble thing.

What's more, if worksite wellness results in no economic benefit and doesn't shift costs in any direction, how does that result in any discrimination?

While economic incentives in a zero sum game can be problematic, the DMCB believes that Horwitz, Kelly and DiNardo's logic is overlawyered worksite nihilism run amok. Their ultimate unspoken conclusion is that when it comes to employees, all should be treated to the same level of neglect.

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

The Disease Management Care Blog announces that there's an important update to this original January 10 posting on financial incentives and worksite health promotion programs. The authors of the New England Journal article that was referenced have some important comments that should not be missed.

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

1/12/10: While this was originally uploaded to the Disease Management Care Blog on January 10, readers should note that there is an important update at the end of this posting.

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 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 that 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 for this population - meaning that 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 high value 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 a blanket 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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The DMCB is pleased to post this reply from the authors of the New England Journal of Medicine article reviewed above, Harald Schmidt, Kristin Voigt, and Daniel Wikler:

As authors of the NEJM Perspective to which Jaan Sidorov refers we would like offer three comments.

First, it is incorrect and a misrepresentation to say that we argued against all forms of incentive programs. We take up the two categories set out in the relevant regulations, and hence differentiate between programs that offer reimbursements for meeting targets and those that offer them for simply participating in a wellness program. We raise substantial concerns regarding the former, but we note the value of the latter and emphasise that the focus of efforts should shift to devising equitable participation incentive programs.

Secondly, it is incorrect to say that we do not cite any examples supporting our claims, see reference 4 in the paper, also found here.

Thirdly, the principal policy conclusion we draw is that there is no need to increase incentive levels from 20 to 30 or 50%. According to Jaan Sidorov, these increases should be introduced. We are not aware of any evidence that would demonstrate that the current levels are exhausted, or that health can only be improved further or more effectively, if reimbursement levels are increased. If the author is aware of such evidence, perhaps he would like to share it with the readership of this blog.

Harald Schmidt, Kristin Voigt, Dan Wikler, Boston, 12 January 2010

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and in reply......

First off, Jaan Sidorov would like to thank the NEJM authors for offering up their additional insights for posting in this blog. As mentioned in separate correspondence, the ultimate desire of the DMCB is to help readers discern the truth. Taking the time to provide the clarifications above importantly serves that purpose in an important area of health reform.

The authors are correct that the DMCB didn't point out the important difference between 'participation' incentives and 'attainment' incentives. This is a subtle and important point that is the victim of blogging brevity. Hopefully that lapse is partially made up for by the link to the original article in the posting above. The DMCB reads the literature, but knows there is virtue when all readers 'trust but verify.'

To clarify, the DMCB agrees there are business entities that are offering up 'attainment' progams. What it continues to look for are examples, or better yet, science, i.e, reports that show that these attainment programs systematically hurt employees in some measurable way.

Like the authors, I'm also unaware of any peer reported science that argues against increasing incentive levels from 20 to 30 or 50%. Ultimately, the lack of any research that conclusively shows that there is patient harm could argue in favor of high differentials. Alternatively, the lack of any research that demonstrates patients have NOT been disadvantaged argues in favor of prudence. The blogger in me says it will be up to the readers and the policy makers to decide. The researcher in me says 'more research is needed.' In the meantime, there are employers and insurers who want to try it. Given the understandable urgency with which they want to do something, who can blame them?