Shifting costs helps workplace wellness programs whip savings into shape

While many companies across the country are seeing positive results and cost savings through their workplace wellness programs, a new study from Health Affairs suggests that the savings employers may strive for with these programs may more likely come from cost shifting to the most vulnerable employees rather than employees’ improved health.

Study author Jill Horwitz, a professor of law at the University of California in Los Angeles, said that while the Affordable Care Act (ACA) encourages workplace wellness programs, mostly by promoting programs that reward employees for changing health-related behavior or improving measureable health outcomes, those same programs are prohibited by the law from using workplace wellness as a way to discriminate against employees based on their health status.

Horwitz said her analysis of randomized controlled trials and the challenges of workplace wellness programs suggest that health-contingent programs cannot readily save costs through health improvement without being discriminatory.

While there may be other valid reasons for employers to institute workplace wellness programs, such as better employee health, Horwitz said that employers looking to save money in healthcare costs would be more successful with using cost shifting among their employees. This means that those employees that are most vulnerable with many health risks would bear the greatest costs and would, in effect, subsidize their healthier colleagues.

“Employers are increasingly using wellness plans and an important reason is for controlling healthcare spending. While the programs may control healthcare spending, it’s unlikely that it’s saving money through better health among employees. It’s more likely that employers are increasingly raising the prices for those employees with various health conditions through higher premiums or financial penalties,” said Horwitz. “That isn’t the intention of the ACA rule though. The general understanding is that wellness programs are a win-win for everyone. The employer saves money and the employee gets healthier.”

Horwitz said that ultimately more research is needed to know whether savings accrue from cost shifting, selection into the programs, or both. She added that participation rates in wellness programs hover around 50 percent and it needs to be more understood about who participates and why. “In the meantime, it may be overly optimistic to assume that workplace wellness programs can lower costs through health improvement,” Horwtiz wrote in the study.