how well wellness programs are doing

The issue: Employer wellness programs that provide incentives for employees to be healthier

The vocab: Incentives - how are they earned? The not-so-subtle difference between incentive-participation and incentive-attainment programs.

What's an easy solution to employers' rising healthcare costs? Make employees pay to have unhealthy habits. America's health

insurance system pretty much operates on the employer-provider model. People expect that the

ir employer provides a health benefits

package. Now some employers are holding

their employees accountable for the healthcare costs they generate by instituting incentives for employees to engage in healthy behaviors (such as exercise and eating right) and to disengage in unhealthy behaviors (such as smoking and having poor nutrition).

One example is Johnson & Johnson's wellness program, which is highly cited as one of the most successful large-scale employee intervention programs to date. If J&J employees participated in a yearly

health screening, they would be eligible for a $500 health insurance benefit. Those who had no "risky" health indicators were given the money; those who were "risky" (that is, they had indicators of risk for obesity, cardiovascular health, cancer, diabetes, or accidents/injuries) were required to participate in an intervention program in order to remain eligible for the money. The disease-specific intervention programs were fairly low-commitment - most entailed simply attending regular health education and preventive counseling sessions. In only 5 years, the percentage of J&J employees who were identified as "high-risk" decreased significantly pretty much across the board of health problems. But was this cost-effective? Probably. By some calculations, the $500 investment by J&J was more than compensated by its returns - less employee healthcare costs, fewer sick days from work, and a more productive workforce in general.

Great, right?

J&J's program is what I'll call an "incentive-participation" program. While J&J is obviously interested in the outcome of the interventions, employees received the bonus bucks just as long as they participated. That is, their incentive was not dependent on the actual health outcome - it was dependent on whether or not they tried.

Well, some employers have taken it one step further, utilizing "incentive-attainment" programs. In order for employees to receive some benefit, they need to be below a threshold risk (for example, they must be below a certain BMI or they they must not smoke cigarettes daily). Trying isn't enough - results are what matter here. It's the same principle as the "incentive-participation" model. The employer simply expects more.

Safeway has gotten a lot of media attention for using this type of incentive structure. Employees are regularly tested on BMI, blood pressure, cholesterol and tobacco usage. If they pass on all four measures, employees are given a sizable reduction in their health insurance premium (roughly 20% off). If they don't pass, they're given one year to show improvement in the health measure. If the employee improves, they're reimbursed for the past year and are given the reduction for the subsequent year; if the employee does not improve, they're back at square one. If you're wondering if this is all legal, it is. Well, within certain limitations. (The fine people at Harvard have a pretty good overview of what employers are legally allowed to do.)

It sounds a little harsh, right? But the logic is sound. Safeway is giving monetary incentives ABOVE what's normal. They're not exactly penalizing people for not being healthy, they're just rewarding those who are. And the outcomes-based incentive may actually be a creative way to address national health problems. Here's an excerpt from Safeway CEO Steven Burd's editorial in Wall Street Journal:

Safeway's plan capitalizes on two key insights gained in 2005. The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable.

Not a bad argument, really. And Burd has bigger plans for his program. There's some proposed legislation in the Senate (affectionately dubbed "The Safeway Amendment") that would raise the amount of reimbursement employers can offer from 20% of the employee's coverage to 30%. This would increase employee motivation to participate and strive to be healthier.

Well, theoretically. As you can imagine, this approach has gotten some legit criticism. The authors of a recent New England Journal of Medicine article argue (1) that it is unfair to not reward people who are earnestly trying to improve their health but are, for whatever reason, physically unable, and (2) that such a program worsens already existing inequities. Let me explain that second point a little further. The authors write:

There is a social gradient [in employees' ability to improve health]. A law school graduate from a wealthy family who has a gym on the top floor of his condominium block is more likely to succeed in losing weight if he tries than is a teenage mother who grew up and continues to live and work odd jobs in a poor neighborhood with limited access to healthy food and exercise opportunities.

On top of that, there's some doubt that the program is even effective in changing the health profile of the Safeway workforce. The problem with the incentive-attainment structure is that it assumes people can change because they want to and because they try. But there are serious barriers to success that the employer would need to keep in mind (like helping the aforementioned single mother get gym access and be able to locate and afford healthy food) - and overcoming those barriers is going to be much more costly than simply the 30% reimbursement. If Safeway is willing to foot the extra bill for the people who need extra help, then the incentive-attainment program makes perfect sense. But the program becomes much less cost-effective when you start adding in these equalizers, and it's unlikely that Safeway (or any company, for that matter) would be willing to finance a wellness program that comprehensively.

Employer wellness programs are ubiquitous - and in some peoples' eyes, they're expected. But you have to read the fine print about whether you'll receive incentives for participation or for attainment.