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Corporate wellness has been getting a bad rap in recent months, from an employee protest over a new wellness program at Penn State University to a number of books and studies suggesting that these efforts do little to control health care costs. Yet the number of companies beefing up their wellness initiatives is on the rise, according to a recent survey.
About 93 percent of midsize to large employers are planning to expand or maintain their wellness efforts during the next three to five years, according to the fifth annual survey by Fidelity Investments and the National Business Group on Health on the growth of corporate wellness programs.
Despite the soaring popularity of these programs — nearly 60 percent of all employers offer them, up from 36 percent in 2009 — this strong projection was a surprise to Karen Marlo, vice president of the NBGH and a co-author of the study.
“I thought more people would say in five years we’re going to pull back because of all the criticism we’ve been hearing in the last six months, especially around cost savings,” she said referring to a study released in January by the nonprofit think tank RAND Corp. The study, which examined seven years of data from PepsiCo’s wellness program, questioned the belief that these efforts can lower health care costs.
“The RAND study created a lot of press and caused employers to step back and think about the reasoning behind our decisions,” Marlo said. “I thought more employers would be saying, ‘We’re moving on to a new area of engagement,’ but this says that they’re in the game for the long-haul.”
Indeed, employer spending on financial incentives, like reductions in insurance premiums, gift cards and other rewards, is expected to climb 15 percent from 2013, according to the Fidelity survey. Employers plan to boost incentive spending to an average of $594 per employee this year, up from $521 in 2013 and more than double what it was five years ago. And the number of employers offering incentives has increased from 57 percent in 2009 to 74 percent in 2014. Also, a growing number of companies are offering incentives to spouses as well.
Even dropping employer-sponsored health coverage would do little to deter the commitment to wellness, according to the survey, which shows that 44 percent of companies said that they plan to “maintain or increase their investment in wellness programs,” even if they moved their employees to a private exchange.
Employers have been able to look beyond the focus on ROI when it comes to wellness because many see cost management as just one piece of their wellness strategy, according to Robert Kennedy, a benefits consultant with Fidelity Investments and a co-author of the study.
“Employers see wellness more broadly,” he said. “They realize that medical costs are just part of wellness, and they are interested in the overall well-being of their employees and the positive impact on their culture and their brand.”
If the Penn State controversy caused some employers to rethink the carrot-and-stick approach, it did little to discourage them from using health-risk assessments and biometric screenings — nearly 95 percent of survey respondents will offer them — or from using penalties to drive behavior. Penalties are most commonly used to drive participation in smoking cessation programs, with 19 percent using them, according to the study.
Last August, employees at Penn State raised privacy concerns over filling out a health-risk questionnaire and protested a $100 a month penalty for not doing so. A public outcry ensued and the university dropped the requirement. The lesson there is about the importance of employee communication when it comes to wellness programs, Marlo said.
“Employers have struggled with disincentives,” she said. “In watching Penn State play out, those who’ve done it successfully would argue that they [Penn State officials] didn’t handle employee communications appropriately. I talked to a lot of employers who have said that communication is the most critical piece of this. If you don’t do it right, it will blow up on you.”