Wellness plans, or at least features of a wellness plan, are a popular benefit offered by employers. But a complete integrated buy-in of wellness plans does not really exist among employers. There are a few understandable reasons for that—return on investment is difficult to measure, if it is done at all. The duration of a wellness initiative is very long. So the distant horizon of possibly avoiding a high cost claimant isn’t too appealing when it is time to spend much sought after and high scarcity dollars. Also, most of these plans require a small investment where employers expect to see an impact in year one or two, claims might actually increase slightly. To exacerbate the long-term horizon problem, the average time an employee spends at a particular company is slightly more than four years. In my opinion, the success of wellness plans, and utlimately population health, is dependent on all companies offering wellness plans. Therefore, employers would be on a mostly level playing field investing in employees’ health.

A viable and accepted technique of justifying a wellness program is to demonstrate a value on investment.

Read my previous blog, Financial Wellness Effect on Human Capital, to learn more.

One way to measure the value on investment is the evaluation of population health though identifying and categorizing membership in the health plan by risk categories. This concept is exhibited in the chart below. The idea is moving participants from the right to the left.

A Becker’s Hospital Review article shares a specific example of the above methodology and the outcome achieved.

Preventive healthcare strategies include primary preventions, such as health education and vaccination programs; secondary preventions, such as biometric testing and early detection programs; and tertiary preventions, such as disease and disability management.

In a 2008 study published in Population Health Management, researchers documented the impact of preventive health strategies on an employee population of more than 2,600. Primary, secondary and tertiary strategies were implemented over a one-year period. At the conclusion of the year-long study, there were 5.8% fewer employees in the High Risk category and 3.6% fewer in the Medium Risk category. Overall, there was a 9.4% increase in employees added to the Low Risk category.

To provide an idea of the wellness plan offering landscape, I have cited some benefit survey information from the Kaiser Family Foundation.

Among large firms (> 200 EEs) offering health benefits in 2017, 62% offer workers the opportunity to complete a health risk assessment (a slight increase from the previous year). Of those, 42% of covered workers complete an assessment, similar to the percentage in 2016. Some firms offer incentives to encourage workers to complete a health risk assessment. Among large firms that offer a health risk assessment, 52% offer workers an incentive to complete the assessment.

Among large firms offering incentives for workers to complete a health risk assessment, 46% lower premium contributions or reduce cost sharing and 40% offer cash, HSA or HRA contributions, or allow the worker to avoid a payroll deduction.

Biometric screening is a health examination that measures a person’s risk factors (such as cholesterol, blood pressure, and body mass index (BMI)) for certain medical issues. A biometric outcome involves assessing whether an enrollee meets specified health targets related to certain risk factors, such as meeting a target BMI or cholesterol level.

Among firms offering health benefits, 21% of small firms and 52% of large firms provide workers the opportunity to complete a biometric screening. These percentages are similar to 2016. In firms providing workers the opportunity to complete a biometric screening, 41% of covered workers complete a screening. Among large firms with biometric screening programs, 53% offer workers an incentive to complete the screening

Among large firms with an incentive for workers to complete a biometric screening, 49% lower premium contributions or reduce cost sharing and 33% offer cash, HRA or HSA contributions, or allow the worker to avoid a payroll deduction.

In addition, some firms offer workers incentives to meet biometric outcomes. Among large firms with biometric screening programs, 14% reward or penalize workers based on achieving specified biometric outcomes (such as meeting a target BMI).

Many employers offer programs to help workers engage in healthy lifestyles and reduce health risks. Wellness and health promotion programs may include exercise programs, health education classes, and stress-management counseling. These programs may be offered directly by the firm, an insurer, or a third-party contractor.

Of the employers offering wellness programs, 32% offer an incentive to encourage workers to participate in or complete the programs. Among large firms offering incentives to workers to participate in or complete wellness or health promotion programs, 19% lower premium contributions or reduce cost sharing and 37% offer cash, HSA or HRA contributions, or allow the worker to avoid a payroll deduction.

Employers were asked how effective they believed incentives were for encouraging participation in wellness programs. The below figure exhibits the results.

The importance of wellness plan’s link to population health cannot be understated. With data analytics and the collection of robust data sets, the value of wellness can be shown.

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