Column: A new study says ‘wellness’ programs don’t save money for employers

By Michael HiltzikBusiness Columnist

May 13, 2019 2:20 PM PT

As workplace wellness programs have gained popularity among employers, questions about their effectiveness and drawbacks have proliferated.

A new study published in the Journal of the American Medical Assn. explodes the most common expectation of employers offering these programs — that they’ll enjoy at least a short-term reduction in healthcare costs as their workforces get the healthy lifestyle bug.

The study followed some 33,000 employees of BJ’s Wholesale Club, a big East Coast warehouse retailer, for 18 months. Although participants in the company’s wellness program did report getting more exercise and managing their weight better than nonparticipants, there were “no significant differences in...clinical markers of health; health care spending or utilization; or absenteeism, tenure, or job performance,” the study found.

“If they are looking to achieve a large financial return on their investment in the short term,” Zirui Song of Harvard Medical School, the study’s lead author, told me, “that may be overly optimistic.”

That doesn’t mean there aren’t benefits to wellness programs, Song observes. Weight loss and exercise are clinically related to better cardiovascular health; given the hours that full-time employees spend in the workplace, that’s as good a venue as any for delivering that message and the opportunity to follow it.

If [employers] are looking to achieve a large financial return on their investment in the short term, that might be overly optimistic.

— Zirui Song, Harvard Medical School

But the study’s cautions about financial returns are important in terms of the incentives—and punishments—that employers apply to goad their workers into joining these programs. Some of these have crossed the line, and arguably the law, in employer-employee relations, often because they’re fixated on reaping a big benefit from lower healthcare costs or extracting fees from nonparticipating workers.

Some have used the programs to delve into their workers’ personal medical histories, and using their findings against the workers.

Labor regulators have tried to put limits on some of these practices, but their actions have been controversial. In 2016, the federal Equal Employment Opportunity Commission tried to block Honeywell from charging employees a steep penalty for failing to sign up for a wellness program that involved screening for cholesterol, blood pressure, height, weight, waist size, and tobacco use. Those who opt out lose their company contributions to health savings accounts, which could reach $1,500, and face a surcharge of $500 on their insurance premiums. Another $1,000 is charged for workers or spouses who smoke.

The total penalties of as much as $4,000 violated rules requiring that the programs be “voluntary,” the EEOC said. But a federal judge blocked the EEOC from acting. The judge’s ruling nullified the EEOC’s rule entirely as of last Jan. 1, so it’s unclear where the line between voluntary programs and coercion exists.

The siren call of lower costs from wellness programs originated with Safeway, a California supermarket chain later acquired by Albertson’s. Safeway claimed in 2010 that its wellness program had saved $3.27 for every dollar it spent on the program. This led to the so-called Safeway Amendment in the Affordable Care Act, which encouraged companies to institute the programs with liberal incentive and penalty rules.

But Safeway’s story eventually was debunked. Later studies determined that the real gains in wellness programs came from disease management for employees with chronic conditions such as diabetes. Lifestyle programs aimed at weight loss and exercise actually lost money. The most optimistic studies, as it happens, were produced by the firms pitching their wellness programs to employers. Nevertheless, workplace wellness remains among the employee amenities most favored by employers, offered by about half of big companies.

The program studied at BJ’s by Song and his co-author Katherine Baicker of the University of Chicago is fairly conventional, as workplace wellness goes. The program is divided into eight “modules” of one to two months each, covering topics such as how to choose a health plan; how to manage stress, sleep better and manage weight; and how to maintain an exercise regime. Participants received a gift card worth $25 to $50 for completing each module.

Song says that it’s difficult to gauge the effectiveness of wellness programs for several reasons. One is that the employees most likely to join up may be those who already follow a healthy lifestyle, so the programs may get too much credit for the participants’ more healthful behavior.

Another is that short-term transitions to healthy lifestyles such as weight loss can disappear over time. “Behavior change is not only difficult, but difficult to sustain,” Song told me. “It’s possible that the program may have had effects within the 18 months we studied that we did not detect when we collected the data at 18 months.”

It’s also possible that the gains in healthcare costs need more time to show up. Song is extending his study out to three years. “That will teach us more” about whether there are any changes in healthcare spending or utilization, or clinical measures of health, he says.

Song tried to address some of these limitations via his study design. He chose the subjects randomly, rather than merely assessing participants versus nonparticipants. The 18-month term aimed to capture longer-term outcomes than the year or less examined by earlier studies.

“This study is not the final verdict on workplace wellness programs,” he says. If employers want to offer workers incentives to get more exercise, eat more healthfully and quit smoking, that’s a positive amenity, on the whole.

But their positive outcomes depend on how the programs are designed. “Wellness programs generally are focused on the right areas of wellness,” he says. “But whether they’re approaching them in the right way, with the right intensity, and whether they effectively motivate and sustain behavior change, are separate questions from whether diet and exercise are the right things to do.”

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