Feature Article - November/December 2010

All Is Well(ness)

Incentives Help Promote a Healthy Lifestyle

By Rick Dandes

Using workplace-driven incentives to promote healthy lifestyles holds great promise for improving employee and dependent health, as well as stabilizing overall health care costs. It's a necessary goal—according to a PricewaterhouseCoopers' study—because employer health care spending has been rising at a rate of more than 9 percent annually. This threatens the global competitiveness of American corporations.

Given this economic challenge, most companies today cannot ignore the necessity of measures to control the costs of health care.

According to a recent Towers Watson survey, while employers are pausing to assess the effects of recently passed health care legislation, 59 percent of employers have plans to make significant or moderate health care plan design changes in 2011, and two-thirds (67 percent) will do so in 2012. Some of the measures taken to cope with increasing costs include raising employee contributions, and shifting from incentives for participation in programs to incentives for improvements in health metrics.

In fact, 86 percent of U.S. employers surveyed told Towers Watson they plan to increase efforts to encourage employees to engage in wellness and health promotion programs, including engaging in behavioral health programs, biometric screenings, health risk assessments and disease management programs. Incentives are a powerful tool to engage employees in these programs, and the ultimate benefit companies are aiming for is a reduction in health care spending.

If designed properly, wellness programs that monitor and improve employee health are one of the best ways to reduce health care costs. Rather than aiming to improve the medical system, these kinds of measures aim to decrease the need for treatment for common diseases brought on by lifestyle behaviors.

But just having a well-planned and science-based wellness program isn't enough, given human nature.

"I know this might sound simplistic, but wellness incentive programs exist only because people by themselves tend not to engage in wellness health programs. If they did, there would be no need for wellness incentive programs," explained Joshua C. Klapow, a clinical psychologist and Associate Professor in the Department of Health Care Organization and Policy, School of Public Health, University of Alabama, Birmingham, and the chief behavioral scientist and strategy officer for ChipRewards Inc., an incentive technology company based in Birmingham, Ala.

"Not every employer or entity needs a wellness incentive program," Klapow continued. "If the population that you are targeting is already engaging in wellness behaviors, you don't need incentives. But if they are not, then considering incentives is important because if you have a well-designed wellness program and you can increase participation in that, it will yield benefits in your outcomes and costs."

Klapow believes that wellness incentive programs do not necessarily improve health outcomes. However, wellness incentive programs, if done properly, do increase participation rates in wellness programs.

But there is a problem with that, he warned: There are good wellness programs and bad wellness programs, and you can increase participation in both through incentive rewards. If you increase participation in a poorly designed program, all you are doing is having more people engaging in a poor program. You will not reap the benefits in your outcomes and costs.