Most medium to large companies have some type of wellness program. That wellness program is part of the major medical group health insurance. It ranges from the annoying reminders to take the stairs and team weight loss events to significant disease and condition management. The more aggressive wellness programs will often tie money to participation. Some will charge smokers an extra $50 a month in premiums, others will offer a much lower deductible to individuals who have gone for a primacy care/obgyn well visit in the past year, and others will have a complex reward matrix.
The evidence as to whether they work in either saving costs or improving health has been mixed.
Aaron Carroll at JAMA Forum has a nice article on wellness programs that highlights an important policy point:
Many companies believe that these programs have the potential to improve health and by doing so, reduce spending in such a way as to make them cost effective.
Whether they actually accomplish these goals is not well understood. A review of randomized controlled trials found that they had no significant effect on blood pressure, blood sugar, or cholesterol. Another such review found that lifestyle programs that seek to improve weight and activity saved little, if any, money. But this has not slowed enthusiasm for wellness programs in the private sector: they account for about $6 billion a year in spending….
The overall result, which will please proponents of wellness programs, is that the program reduced health care spending by $30 per member per month, or $360 per year. For every dollar spent, $1.46 was returned in savings. This, of course, sounds great. Who wouldn’t want such a program? But a further analysis showed that things were not so simple. The disease management component accounted for almost all of the savings. Those who participated in that part of the program saw a reduction in health care costs of about $136 a month, or more than $1600 a year. This was driven largely by a 29% decrease in hospital admissions.
In fact, for each dollar spent on disease management, the company saw a return of $3.78. For each dollar spent on lifestyle management, they only saw a return of $0.48. In other words, lifestyle management cost more than they saw in return. [bold and italics mine]
This is not surprising, it is the Pareto Principle or the 80/20 rule in action. Most costs, and most benefits are attributed to a small portion of a population.
Now let’s ask the interesting questions, can a targeted disease management program for employer sponsored health insurance be created that is effective, efficient and perceived to be equitable?
We know that disease management is effective. Disease management wellness models are intended to reduce medical spending. They do this by reducing admissions. They pass the effectiveness test of doing what they say they want to do. This is a fairly easy hurdle to clear.
Now can they do what they want to do with resources that don’t have any higher or better uses. Right now, the risk free rate of return in the United States ranges from a few hundredths of a point for an overnight loan to 3.88% for a thirty year loan last week. The study in question showed a 378% return on investment for disease management. In most situations where the return on investment is that good, it is either from a Nigerian e-mail or requires committing major felonies. Disease management is neither a scam nor a felony. So it passes the low bar of being an efficient use of resources in almost all mature companies.
The big hurdle is equity and the perception that a disease management program is fair to both the people who would benefit from the disease management program and the people who do not. If everyone is required to enter a disease management program, the 55 year triathelete who is training for her 7th Ironman is laughing at being placed in the same healthcare pool as the 33 year old hypertensive diabetic guy. It is a waste of time, resources and credibility to include the 55 year old triathelete who does not need the additional intervention. The other extreme would be to make the program voluntary and see quite a few people who would benefit from disease management not enroll. It would be a medical ghetto.
This leads to the temptation of incentives to enroll the right population into the disease management program. Right now most wellness programs use a stick approach. If a person is a smoker and is not in a cessation program, or is overweight as measured by BMI (which has its own problems) and is not in a weight loss program or whatever, the person pays more. These are behavioral modification strategies which may or may not have direct health correlates (smoking does, weight not so much) and it provokes a big backlash if the lifestyle attributes incentives also apply to pre-exisiting disease management. Most people will consider a program that penalizes a diabetic for being a diabetic to be inherently unfair and inequitable as a person does not have control over whether or not they’ll be diabetic during the open enrollment period — they can control and minimize the impacts of the disease if they choose to do so and have the appropriate structure that enables control but they can’t just decide to quit diabetes.
A shared savings model is economically attractive, but also has equity concerns. A shared savings model would identify the people who have managable diseases and bring them into the program with the promise that the company would split some of the savings. The Pepsi data set discussed above had medical management savings of $136 per managed person per month, so a shared savings model might have the company pocket $86 and the managed people pocket $50 per month. This aligns incentives for the managed members to improve their health and to get the marginally medical managegement eligible person into the managed po0l. But the equity concern is that the healthy people are griping that they are paying higher net health insurance premiums than the fat slob in accounting who is getting a deal beacuse he is becoming a slightly healthier fat slob in accounting.
A targeted system that has a flat premium for everyone and then an incentive of $25 or $50 per month premium reduction per person who either does not have any of the diseases that can be effectively and efficiently managed or the same premium reduction for disease management enrollment would probably be seen by most if not all people as a reasonable and equitable system. This system is giving up significant efficiency gains if the original premium is close to actuarially fair for the entire group as most of the gains are being paid out as premium reductions but it will be perceived to be fair and voluntary.