Does Corporate Wellness Work?
October 5, 2020

Table of Contents
Brief History of Corporate Wellness
Two Recent Studies
What Does This Mean for Employers
Best Practices (to lower spend)

As average premium and out of pocket healthcare costs continue to rise, employers have searched for strategies to help the company and employees manage and reduce their spend. This effort seems to have accelerated with the rise of 2 key trends: (1) health savings accounts, (2) level or self-funded employers. According to Kaiser Family Foundation 2019 Employer Health Benefits Survey, 30% (up from 4% in 2006) of employees have high deductible health plans (HDHP) and 61% (up from 44% in 2014) are enrolled in a self-funded employer plan.HDHP enrolled 2019

These plan design and finance platforms can carry increased exposure (potential costs) to the employee and/or employer if uncontrolled. By assuming more potential responsibility, employers desire to financially protect themselves and employees. HDHPs have even been re-branded as Consumer Driven Health Plans (CDHP).

Enter wellness as a potential tool to manage spend. Sounds like a reasonable theory, healthier employees would incur fewer healthcare expenses, right? (hint: it's not that simple to implement)

Full disclosure: I am a health enthusiast. Health and wellness are of long-standing importance to me, my experience and professional perspective. I have formally and informally studied body mechanics, nutrition, exercise, and sport almost my entire life. My first "career" was as a minor league professional athlete. I later competed in triathlons. So I am pro-personal health and wellness. 

Evidence of corporate or workplace wellness exists back to pre-1900. It seems to have accelerate post-WWII, as unions and other social systems focused on worker health. In the '70s and '80s as effects of cigarette smoking and OSHA come to be, a new level of attention focused on lifestyle and safety. In the late '90s and early 2000s, a shift to helping general physical health began to take shape in larger companies. 

Corporate wellness has evolved to include several domains of wellness, 5-10 depending on sources. The idea being wellness extends beyond the physical activity. Today, the traditional corporate wellness plan looks something like this: (1) Biometric Screening, (2) Health Risk Assessment, (3) Wellness Activities (team challenges, yoga classes, pot lucks), (4) Wearable Technology, (5) Incentives to Participate, and (6) Behavior Change Coaching/Programs (eg smoking, weight loss).

Two studies were released earlier this year (2020) from Kaiser Family Foundation (KFF) and Journal of the American Medical Association (JAMA) addressing the question: Do traditional corporate wellness programs improve health status and/or lower healthcare costs?

There is no question that preventive health and medical care is important. These are individually good things, right?

The results of these studies are clear. Wellness programs, like the one described above, do not show improved health or lower healthcare costs (utilization of healthcare services). They are not moving the needle on spend. And only 11% of employers felt they were effective at reducing healthcare costs.

Wellness has some inherent limitations, reflected in the studies:

  • Limited duration of the study - 1 to 2 years
  • Limitation of domains targeted - wellness has gone down a 'fitness' rabbit hole, rather than general well-being and health.
  • Participation vs engagement - incentives might encourage participation, but engagement or actual behavior change is limited.
  • Fully-Insured - 83% of small employers are fully insured. A program's influence on premium is limited.
  • Transient workforce - behavior change and declining health happens over time. Employees may change employers before savings are realized.
  • Who participates - quite often those who engage in wellness programs are already low risk to incur significant expenses. 

Given these results, should employers abandon activities to support the personal care of their employees? Of course not! Personal well-being is good. With increases in lifestyle-related illness on the rise, costs increasing, utilization increasing, we need to care for ourselves.

But how do employers translate good behavior into company and/or personal ROI?

Use these questions to craft your intent:
Why create and implement a wellness program?
- If the intent is to add a perk to attract and retain employees or build culture, then the above style program might be okay. However, if the intent is to optimize health and lower healthcare spending other actions may address that goal.

What you are trying to accomplish?
- Set short and long term goals consistent with the why.

What tactics accomplish those goals? 
- Measure the right things (participation vs engagement).

BEST PRACTICES (to lower spend)

1. Design education/training on health literacy. Educate employees on topics around health, healthcare and insurance so they can be confident, savvy consumers.

2.  Include healthcare navigation resources to support employees as they engage the healthcare system. Healthcare is complicated. If employees have access to support systems and transparency tools, they can make well-informed decisions.

3. Consider insurance options that allow access to claims data. Most level and self-funded plans provide aggregate or member-level claims data. Employer plans will not need screening tools when claims provide the lens to high risk issues. Claims can inform items 2 and 3 below so information is always relevant.


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Topics: Health Employee Benefits Health Finance Small Business Health Insurance Health Literacy Healthcare Navigation Healthcare Finance Wellness Employee Health
Eric Hannah

Written by Eric Hannah

Eric is an employee benefits advisor at Olivier VanDyk Insurance and a catalyst for change. Through a multi-faceted, two-decade healthcare career, he developed a unique perspective on personal well-being, healthcare navigation and insurance systems. This experience inspired Eric to introduce an innovative approach to employee benefits – putting employers and employees in charge of their own care and spend. Eric believes that employee benefits should be a tool to achieve the optimal employee experience. Today, he helps forward-thinking business leaders develop strategies that create value.