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Employee Health Incentives: Myth or Miracle?

The Affordable Care Act will encourage employers to expand incentive programs like cash and games. Some studies back their efficacy. Yet some experts claim incentives undermine personal responsibility rather than encourage it.

May 8, 2013
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Related Topics: Health Care Costs, Benefit Design and Communication, Health and Wellness, Health Care Benefits, Benefits
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The debate over workplace wellness incentives is becoming more pronounced, as some are saying that they don’t motivate workers to improve their health while others contend they can be crucial to boost program participation and outcomes.

The Affordable Care Act expands the parameters for employers to reward workers who achieve wellness goals. Starting in 2014, employers will be able to enhance financial incentives in the form of lower premiums, deductibles and copayments to workers who achieve healthy biometric levels or are nonsmokers, for instance. Employers can apply up to 30 percent of the cost of coverage to rewards or penalties under the law.

Writing in the journal Health Affairs in March, three legal experts concluded, after review of recent studies, that it “may be overly optimistic to assume that workplace wellness programs can lower costs through health improvement.” They found little evidence that wellness incentives drive behavior change, lower company health care costs or improve health outcomes.

Still, many employers offer wellness incentives. Human resources consultancy Mercer’s 2012 survey of 2,809 employers found that nearly half of all large companies have added incentives and penalties to boost participation in wellness programs, and 18 percent link incentives with health outcomes.

Large employers offering incentives see higher participation rates in biometric screenings, health risk assessment completion and lifestyle management programs, the Mercer survey found.

The trend toward incentives is accelerating, says Steven Noeldner, a senior consultant at Mercer’s total health management practice. But employers should be clear about their goals when establishing wellness programs, he adds.

“We ask our clients what they are trying to accomplish with incentives,” Noeldner says. “Are you trying to get employees to take action or support long-term behavior change?”

Many organizations look to incentives to drive higher participation rates in health risk assessments and biometric screenings, and several studies show that financial rewards motivate workers in these areas. A 2009 study of 36 employers with a total of 560,000 workers indicated that financial incentives tied to a communications strategy and workplace culture boosted employee participation in health risk assessments.

Benefits-integrated incentives such as lowered health premiums worked better than cash incentives, according to the study. The study was published in the American Journal of Health Promotion.

The amount of cash incentives necessary to get half of all employees to complete health risk assessments dropped by $80 per employee with better communications and operational strategies, according to a 2008 study in the Journal of Occupational and Environmental Medicine. A March 2013 study by the Mayo Clinic indicated that financial incentives boosted weight-loss goal achievement among employees more than no incentive.

 “Incentives work to get the ball rolling,” Noeldner says. “The qualifier is you have to apply best practices.”

However, Glenn Riseley, founder and president of Global Corporate Challenge, a 10-year-old workplace health program found in more than 100 countries, says incentives and penalties don’t work.

Riseley likens workplace incentives to paying your children to brush their teeth. In other words, incentives don’t encourage personal responsibility; they undermine it.

“This is about changing people’s behavior long term,” Riseley says. “That can’t be driven by waving cash around.”

The Global Corporate Challenge uses friendly competition and a round-the-world game to get participants to take 10,000 steps throughout the day. The challenge runs for 16 weeks each May with a six- to eight-week follow-up challenge in December to reinforce good habits.

“By the time they are one or two months into the challenge, they realize the benefits of walking,” Riseley says of participants. “For us, that’s what it’s all about.”

Some 3,400 organizations totaling more than 1 million people have participated in the Global Corporate Challenge program, he says. 

Creating long-term behavior change that improves workers health is, for many employers, the ultimate goal for wellness programs. Better health improves productivity and lowers heath costs.

But Riseley contends that many employers paying workers to take health risk assessments and do biometric screenings are “spending a huge amount of money to measure something that’s already been measured.” Namely, that a good portion of their workforce is in poor health and does not exercise.

Noeldner agrees that incentives aren’t enough to motivate workers. Instead, workplace wellness programs should be well-designed and supported internally.

“We need to move from an external motivator to a more intrinsic motivator,” he says, adding that games and competition may not be the answer. “This concept hasn’t been around long enough to say this will create long-term behavior change. I’m cautious about claims that this is the holy grail.”

Rebecca Vesely is a writer based in San Francisco. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

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