The Wellness Wars

Last Thursday's Wall Street Journal includes a good account of the dispute, including PSU President Rodney Erickson's defense of this "stick" as part of a strategy to keep health costs from growing at a 13% clip in 2013-14, and because prior PSU "carrots" did not produce meaningful results.

Question: is the PSU backlash the start of a growing reaction against this new wave of wellness penalties aimed at workers, or is it just a bump in the road as employers get increasingly aggressive in compelling their workers to engage in wellness activities?

Answer: too soon to tell, and this is a fight worth watching.

Question: how did we reach this point?

Answer: it's complicated, but let's review.

Back in 1996, President Bill Clinton signed into law the bipartisan Health Insurance Portability and Accountability Act (HIPAA). HIPAA prohibited insurers and employers who provide employee health insurance from varying premiums based on an employee's health status ("guaranteed issue" -- just as the ACA will do on 1/1/2014 for all U.S. individual coverage). HIPAA provided an exception allowing premiums and cost sharing to vary "in return for adherence to programs of health promotion and disease prevention." Regulations defining this section were released in 2006 and limited the amount of incentives or penalties to no more than 20% of the employee's share of premium.

In the 2008-2010 period leading to passage of the ACA, some employers, especially the President of the Safeway grocery store chain Steve Burd, pushed for more flexibility and for a higher potential financial hit on employees. He won, and the ACA allows premiums and cost sharing to vary by up to 30%, and potentially as high as 50% (as opposed to HIPAA's 20%). Last May, the Obama Administration released draft regs to define this process, and you can read an excellent summary of them in this Health Affairs blog by Tim Jost.

A good number of organizations, especially disease groups such as the American Cancer Society, the American Heart Association, the American Diabetes Association, and others have pushed back hard against the ACA wellness provision. The Obama Administration's proposed regs try to walk a tightrope, giving employers more flexibility, and setting standards to prevent employer abuse of this authority.

A couple of weeks ago, I posted an introduction to behavioral economics in a review of a new book, Irrationality in Health Care.  The PSU approach surely offends the 'nudge' approach favored by behavioral economists. Though there is a more basic question -- do these approaches, whether incentives or penalties, work? On this point, the jury is not out -- the jury's verdict is in, and it's a hung verdict. The National Business Group on Health estimates that more than 80% of all employers who were providing worker health insurance were linking coverage to incentives or penalties. No disagreement that employers are increasingly in this game. What's unclear is whether these practices work -- and that is where the evidence is all over the map.

Earlier this year, RAND produced a comprehensive study of the value of workplace wellness programs.  Here are their key findings:

"We found statistically significant and clinically meaningful improvements among program participants in exercise frequency, smoking behavior, and weight control, but not cholesterol control. Participation in a wellness program over five years is associated with lower health care costs and decreasing health care use. The average annual difference is an estimated $157, but the change is not statistically significant."

For a curmudgeonly take on the Penn State initiative, please read this blog by Al Lewis of the Disease Management Purchasing Consortium.  Al has been a longtime critic of the junk science behind much of what we call disease management.  As we consider the merits of wellness initiatives, we would do well to take his perspective seriously.

At Pennsylvania and elsewhere, the wellness wars are just getting underway.