Tag Archive: large group health insurance

Doubts over wellness programs could unravel employer health coverage

Questions over the effectiveness of employer wellness programs intensified this month and could mark the beginning of the end of employer-sponsored health benefits that have already been eroding from the bottom up in the small group market segment. Wellness programs seek to improve the health status of large employer risk pools in order to reduce the utilization of high cost medical services and to hold down premiums for large insured employers. Now that their efficacy has been called into question, it also begs the larger question of the degree of control large employers have over health care costs. The experience with wellness programs suggests little if any. As Bill Leonard writes for the Society For Human Resource Management:

Even with the modest rise in health care costs over the past several years, sources familiar with the issue believe businesses have reached a tipping point and that the expense of providing medical benefits to workers has become unsustainable. Cost-containment efforts therefore are putting more pressure on wellness programs to deliver on the promise of reducing health care expenses. However, as the CHRO survey and other recent studies have shown, wellness plans may not be producing the return on investment (ROI) that employers expect and need.

The sense of no control over rising costs could prompt large employers to increasingly throw up their hands and cease offering health benefits. The money saved could then be redirected to higher earnings and compensation that couldn’t be done when the U.S. government established wage and price controls during World War II and employers first began offering employee health benefits in lieu of higher compensation. That in turn would create pressure to repeal the Patient Protection and Affordable Care Act’s mandate that employers with 50 or more employees offer health coverage.

There would also be a philosophical motive. Employers and employees alike could rightly declare health is an individual responsibility. Accordingly, the role of employing organizations would shift from a medicalized view of wellness – one that wellness program critics equate to nannying — to one that promotes a culture of wellness that supports healthy lifestyle choices and affords their members sufficient schedule control to engage in health promoting behaviors such as adequate sleep and exercise. Those behaviors require time and commitment in order to become healthy lifestyle habits. For office-based knowledge workers where the greatest occupational hazard is sedentary lifestyles that lead to preventable chronic health conditions, giving them greater control over when and where they work would provide a mutually beneficial tradeoff for taking responsibility for their health. That could pay bonuses in the form of increased engagement and staff attraction and retention.

Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

Schedule control necessary if contingent wellness programs are to achieve meaningful results

In November, the U.S. Department of Health and Human Services (HHS) issued a proposed rule governing wellness programs offered as part of employer-sponsored health plans for plan years beginning January 1, 2014.  The proposed rule is aimed at boosting incentive for large employers to increase the health status of their employees since large employers will be continue to be regarded as discrete risk pools under the Patient Protection and Affordable Care Act, whereas small employers will be collectively treated as a single risk pool.

In addition to the traditional participatory wellness programs such as discounts on fitness club memberships, health assessments and seminars, the proposed rules create an enhanced incentive for employers to offer health contingent wellness programs.  The contingency?  Employees must adopt a lifestyle changes and health improvement plans designed to help them reach target biometric goals such reducing weight, body mass index (BMI), blood pressure, or cholesterol levels.  If they hit the prescribed targets, the proposed rule would allow employers to reward the employee with a payout of up to 30 percent of the cost of the employee’s health coverage for the plan year, an increase over the current 20 percent permitted under rules adopted in 2006.

The rulemaking’s preamble suggests HHS believes the increase in the maximum reward is necessary to boost participation in contingent wellness programs. It cites a 2010 survey by NBGH and TowersWatson in which just four percent of responding employers reported offering financial incentives for maintaining a BMI within target levels.  Only three percent did so for maintaining targets for blood pressure and cholesterol levels.  Based on these numbers, increasing the maximum award level alone isn’t likely to produce a significant increase in the number of employers and employees participating in contingent wellness programs.

However, if such programs were joined with affording employees greater control over when and where they work, participation could increase substantially and employers would see a potentially large payoff in improved employee health status and reduced medical utilization.  Schedule control eliminates the “I don’t have time” excuse for not engaging in health promoting behaviors such as regular exercise and getting sufficient amounts of sleep.  If employers want employees to take responsibility for their health, they must give them the means to adopt healthy lifestyles and avoid the daily sedentary (and hardly health promoting) routine of commuting to and from and sitting in a centralized office.  Plus they would likely enjoy the added bonus of crisper and more creative thinking and better ideas from employees getting plenty of sleep and exercise thanks to having more control over their work schedules.


Need a speaker or webinar presenter on the Affordable Care Act and the outlook for health care reform? Contact Pilot Healthcare Strategies Principal Fred Pilot by email fpilot@pilothealthstrategies.com or call 530-295-1473. 

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