Wellness now, value later

Across the country, workplace wellness programs are making Americans healthier, paying quality-of-life dividends for millions of participating workers now and into the future. Employers are screening workers for diseases, paying for health club memberships and providing incentives to encourage healthier lifestyle choices.

This is a good thing. But it's just not good for the reason many employers and lots of other people think it is.

In recent years, employers have noticed that diabetes, heart disease and other conditions historically viewed as “curses of old age” were emerging more frequently in the working population and driving up the cost of health coverage.

But there was a solution, creative entrepreneurs asserted. As those diseases were partly caused by unhealthy lifestyles, wellness programs that offered weight management, smoking cessation, and fitness programs would reduce health risks, make employees healthier and control cost.

A win-win.

Clever marketing and countless success stories drove the development of a $4 billion industry that is supported by about half of all U.S. employers. Even the normally skeptical academic world joined the bandwagon: A 2009 review by Harvard economist Katherine Baicker stated that wellness programs returned $3 in healthcare savings and $3 in reduced absenteeism cost for every dollar invested.

Our research tells a different story. We recently completed the largest assessment of workplace wellness programs to date and found that wellness programs do in fact reduce health risks, like smoking and obesity.

But resulting cost savings could not be detected, especially when compared to the costs of the programs. The study, which included almost 600,000 employees and dependents at seven employers, found that programs are not likely having immediate effects on the amount employers spend on healthcare coverage for their employees, and it may take a number of years to detect any effect on costs.

Our results suggest that program participation led a quarter of the smokers to kick the habit. Programs also increased numbers of normal weight persons by 50%. However, the average annual savings over five years amounted to $157 per employee, while typical program costs are around $150 per employee each year.

That cost wipes out the anticipated savings for employers running wellness programs.

So why does better health not yield dividends? The problem is twofold. First, not every smoker will develop lung cancer; in other words, not everyone with a health risk will develop a disease.

Second, it takes a long time before a risk factor like obesity leads to the development of a costly disease like diabetes. But employers have to cover the cost for every program participant and have to cover it today. Thus, preventive interventions, like workplace wellness, can save money but only if the risk is high in relation to the cost of the intervention, and it seems that wellness proponents were overly optimistic about how quickly and strongly health benefits translated into savings.

But there is hope. As workplace wellness programs have sustainable and clinically meaningful effects on health risks over time, we should see lower rates of chronic diseases and thus reductions in healthcare costs. After all, the primary reason to invest in wellness programs is to improve health, and the evidence appears that wellness programs do this quite well.

In the near term, workplace wellness programs are reducing waist lines. In the long run, they might even help improve employers' bottom lines.

Soeren Mattke is a senior scientist at the not-for-profit RAND Corp. and managing director, RAND Health Advisory Services. Kristin Van Busum is a health project associate at RAND.