Editor’s Note: The post below responds to an earlier post by Jaan Sidorov, “Why Wellness Incentives Belong In The Workplace.”

No one should doubt the importance of wellness and prevention in addressing the growing burden of chronic disease, especially in the workplace setting.  That is why the American Cancer Society, the American Diabetes Association, and the American Heart Association work with a multitude of employers across the country to adopt and implement effective worksite wellness programs.  In fact, we each have wellness programs for our own employees and we sometimes offer incentives to promote participation.

The issue at hand is NOT whether evidence-based workplace wellness programs can help improve employee health, or if certain incentives should be used to help promote adherence to those programs.  And because incentives can take many different forms, support/concern for one type of incentive should not be construed as support/concern for all types. With that in mind, the issue is about two interrelated questions:

1)      Under the Health Insurance Portability and Accountability Act (HIPAA), should financial rewards and penalties for an employee’s adherence to wellness programs be tied to their premiums, deductibles, or other coinsurance and what should be the cap on the incentives?

2)      To what extent should those incentives be based on the employee’s ability to meet health status standards set by the company (e.g., limits on weight or blood pressure) versus participation in wellness programs?

What The Literature Tells Us

Published studies that specifically assess the efficacy of insurance-based incentives tied to health status standards are virtually nonexistent.  What little empirical evidence is available to help answer these questions indicates that participation-based incentives can sometimes increase short-term participation in wellness programs, and that the reward or penalty neither needs to be excessive nor tied to health care costs. 

In a comprehensive analysis of financial incentives in general to encourage healthy behaviors commissioned by the Agency for Healthcare Research and Quality (AHRQ), Dudley and colleagues concluded that although incentives can boost participation in smoking cessation or weight loss programs, “they generally have little lasting effect on actual smoking cessation rates or weight loss.” A 2007 review and meta-analysis by Paul-Ebhohimhen and Avenell published in Obesity Reviews found no effect of financial rewards on weight loss. 

A 2005 Cochrane Collaboration review of financial incentive programs concluded that they have “not been shown to enhance long-term smoking cessation rates,” although a more recent study by Volpp et al. published in the New England Journal of Medicine found that financial incentives of up to $750 not tied to health insurance did increase the rate of smoking cessation over a 9 to 18 month period. Volpp et al. suggested that targeted incentives “unbundled from health-insurance premiums” may have a greater influence on behavior than adjusting health-insurance premiums on the basis of smoking status.

An Opening For Discrimination In The Senate Health Reform Bill

Moreover, the risk that attainment-based or health status incentives tied to health insurance costs could be used to discriminate against persons who are less healthy than their counterparts is real.  We need only look to the individual health insurance market to know what happens when the price of coverage is tied to health status.  Section 2705 of the current Senate health reform legislation, however well-intentioned it may be, creates a clear and simple mechanism for a similar approach in the group health plan market (i.e., no “Trojan horse” needed). 

Under current federal regulations, employers can reward or penalize an employee based on the employee’s ability to meet a health status standard, but that amount is capped at 20% of the total premium cost (i.e., employee and employer contribution).   In the words of the Departments of Labor, Treasury and HHS when they set the cap in 2006: “The 20 percent limit on the size of the reward…allows plans and issuers to maintain flexibility in their ability to design wellness programs, while avoiding rewards or penalties so large as to deny coverage or create too heavy a financial penalty on individuals who do not satisfy an initial wellness program standard…”   

However, the current Senate bill would raise the amount to 30%, and potentially 50%, despite a lack of evidence that such an increase would be more effective at promoting healthy behaviors among employees.  In fact, we don’t even know if 20% is effective.  

A recent study conducted by Seaverson et al. published in the American Journal of Health Promotion found that the impact of financial incentives on participation in Health Risk Assessments seemed to level off at about $450, “suggesting an effect of diminishing returns for incentive values above that level.”  Based on the average cost of health insurance, the Senate bill would allow incentives in the range of $1,500 to nearly $7,000 potentially.  Seaverson et al. warned that significant financial incentives may actually decrease the likelihood of achieving long-term behavior change.  Instead, they noted that incentives should be used “judiciously,” and they encouraged the use of alternative strategies that avoid the “potential pitfalls of relying primarily on financial incentives.”

Under the proposed Senate language, which largely codifies current regulations, it would be perfectly legal under HIPAA for an employer to operate a “wellness program” that consists of nothing more than conducting an annual cholesterol test and then charging employees whose count is greater than 200 mg/dL, thousands of dollars more for health insurance costs unless they provide a doctor’s note saying they have a medical condition that makes it difficult or inadvisable to meet the standard.  If the employer doesn’t want to impose a direct penalty, they can provide rewards and discounts for those who meet the standard and pay for those by raising everyone’s deductibles by thousands of dollars.  See the BeniComp Advantage program for a real-world example.

For reasons so clearly articulated in the recent Washington Post article by David Hilzenrath, policy makers should be skeptical of anecdotes about the power of insurance-based incentives tied to health status standards, and of the need to raise the caps on this type of approach to levels that federal regulators felt would deny coverage or create too heavy a financial penalty. 

As was pointed out by Pearson and Lieber in a recent Health Affairs article on the topic: “People do not voluntarily choose their health outcomes…Biological, environmental, and socioeconomic factors greatly affect health, regardless of how a person behaves.”  They conclude that the “goal of penalties should not be to recoup costs attributed to unhealthy behavior…penalties should serve only as incentives to encourage changes in behavior, not as tools to drive at-risk employees out of their health insurance.”