Workplace wellness programs, which provide incentives for employees who maintain healthy lifestyles, are becoming increasingly popular as companies try to stem rising health insurance costs. According to the Kaiser Family Foundation, the percentage of employers offering at least one wellness program increased from 58 percent in 2009 to 74 percent in 2010.
Wellness programs are carried out differently by different companies. Some, according to the Harvard Public Health Review, may offer discounted fitness classes, smoking cessation programs and nutrition counseling — and then lower premiums to employees who use them to keep their health on track.
Yet these employer wellness programs are not without controversy. Employee screenings and rigid health standards have led critics to label these programs discriminatory.
Incentives vs. disincentives
Employer wellness programs usually are based on a structure of incentives and disincentives. Those with health conditions or habits that lead to higher health care costs may be ineligible for certain incentives, be charged higher premiums or even be denied employment altogether.
Meanwhile, employees who take steps to improve or maintain their health — such as fitness classes, health education or stop-smoking programs — may be rewarded with cash bonuses, gift cards, merchandise, discounted gym memberships, reimbursement for health and fitness courses, or lower employee contributions for health benefits, according to the Harvard Public Health Review.
Many employer wellness programs take a proactive approach in identifying and diminishing high-risk health conditions. Employees may receive free wellness check-ups each year. If tests find high blood pressure, high cholesterol or another health risk, the employer may encourage follow-up appointments, employee education and other preventive steps.
Privacy, legality and implementation
In 2007, Cleveland Clinic in Ohio announced that it would no longer hire smokers (while offering stop-smoking cessation programs to existing employees). Now, potential employees who test positive result for cotinine — a chemical that the body makes from nicotine, one of the harmful byproducts of cigarette smoke — are denied employment.
Policies like this have led to debate about privacy rights and employment discrimination. And then there’s the question of how far workplace wellness programs can legally go — Michigan law, for example, prohibits workplace discrimination based on a person’s weight.
It’s also worth pointing out, however, that employers may have financial incentives to launch wellness programs. According to the federal Centers for Disease Control and Prevention, each smoker costs an employer an average of about $3,400 annually because of higher health care bills, reduced productivity and absenteeism. A study published in the Journal of Occupational and Environmental Medicine showed that overweight male and female employees with a body mass index of more than 40 cost employers an annual average of $6,087 and $6,694, respectively.
Do workplace wellness programs work?
The federal government is doing what it can to encourage workplace wellness programs. The Patient Protection and Affordable Care Act (the health care reform law passed in March 2010) allocates $200 million in grant money for small businesses that create comprehensive wellness programs.
But do they work?
According to a 2010 survey from the Kaiser Family Foundation, employers report that the programs are more effective at improving employee health than at reducing costs. Among employers with 25 to 199 workers, 70 percent of companies surveyed reported an improvement in employee health, while 57 percent reported a reduction in health care costs.
Overall, according to the Kaiser survey, wellness programs seem to be more cost-effective for larger employers. Sixty-nine percent of larger employers (compared with 42 percent of smaller employers) reported a drop in health insurance costs.