Employers Roll Out Aggressive Wellness Programs

Desperate to control healthcare costs, employers are rolling out wellness programs with teeth.

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Marsha Vorhis, 55, had no problem with her employer's proposal to set health goals.

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Weight Watchers, spinning, and classes in healthful nutrition and cooking led to a 90-pound loss for Betty Gravelle, 54—and a gain of $60 a week in her paycheck.

Discounted gym memberships. Free cholesterol screening. Movie passes for completing a personal health Q&A. Traditionally, most corporate wellness programs have relied on a variety of small perks like these to nudge employees to pay better attention to their health.

Despite such efforts, healthcare costs continue to rise, and most employees are getting no healthier. Straining to contain costs and looking ahead to worse as the workforce ages, employers are beginning to introduce wellness programs with teeth. Feel-good corporate self-interest is taking a back seat to employee accountability, with heftier rewards for those who toe the line—or painful bites taken from paychecks of workers who don't. And instead of simply urging workers to exercise and engage in other health-promoting activities, companies are focusing on specific benchmarks for weight, blood pressure, and cholesterol, for example, that they expect employees to meet to get the lowest-priced healthcare coverage.

This bottom-line focus on "workplace wellness" stands to benefit workers as well as employers, of course, and could go some distance toward brightening the nation's overall health picture, too. A study released by the Milken Institute in early October concluded that reorienting our health system toward preventing rather than treating disease could stave off 40 million cases of cancer, heart disease, and other chronic illnesses during the next 15 years. That would shrink the cost of medical care and lost productivity by $1.1 trillion, an amount equal to half of all healthcare spending in the United States in 2005.

Without some kind of sea change, the bill for treating the chronically ill will inflate even more rapidly. Spending on diabetes and other obesity-related maladies alone drove 34 percent of the increase in U.S. medical spending between 1987 and 2004, according to research by Kenneth Thorpe, professor of health policy at Emory University.

Healthy penalty. But incentive-based programs can be lightning rods. Clarian Health Partners, a large Indianapolis-based healthcare system, earlier this year found itself on the defensive after announcing that starting in 2009, 13,000 employees at five area hospitals would face a surcharge of up to $30 per pay period if they smoked, didn't fill out a health-risk questionnaire, or fell short of targets for weight, blood sugar, cholesterol, and blood pressure—a $5 penalty for each. Sheriee Ladd, vice president for human resources, says that as a healthcare provider, Clarian wanted to take a leadership role in encouraging healthful behaviors.

But employees rebelled, even though the company offered free lifestyle and nutrition coaching, stop-smoking programs, fitness centers, and other wellness activities. "We couldn't get people to hear the message because they were so stuck on the charges," says Ladd.

Clarian reversed course. Rather than being penalized for falling short of health targets, employees who meet them will receive up to $30 extra in every paycheck. "Now the package is more tolerable for employees to hear and digest," says Ladd.

Marsha Vorhis didn't object when Clarian announced the original wellness penalties. A patient visitor representative in the surgery waiting room at Clarian's Methodist Hospital, she has shed more than 40 pounds since the beginning of the year with the help of a Weight Watchers program offered at the hospital at a slightly discounted $144 for 12 sessions. She figured she was already on track to meet the proposed BMI target of 30 or below, and as she lost weight, her other health markers were dropping into the normal range as well. Coworkers, however, were less than enthused. "They thought it was very invasive," says Vorhis; some talked about quitting.

Those charged with overhauling employers' healthcare policies generally are sensitive to backlash; health policy experts say Clarian's experiment with "going negative" is an exception. Companies that offer financial inducements generally reward rather than punish, most often by offering a break on healthcare costs. At Johnson & Johnson, employees get $500 off their premium for completing a health risk assessment and working on health problems with a counselor. IBM employees can earn up to $300 in cash by exercising, eating right, not smoking, and filling out a health risk questionnaire.