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Wellness Incentives on the Rise

Employees are more receptive to being rewarded -- either with cash or by lower premiums -- for participating in wellness initiatives, according to research. But overall culture change is necessary if HR leaders want healthy behaviors to continue long-term.

Monday, February 28, 2011
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Employers' use of incentives to drive wellness participation is on the rise, suggesting momentum and hope for the wellness movement overall.

In two recent studies, both employer use -- and employee acceptance -- of incentives and punishments to effect healthier behavior are increasing, in some cases, rather significantly.

Incentives provided by employers averaged a total of $430 per employee in 2010 -- a 65-percent increase from $260 in 2009 -- according to a study by Boston-based Fidelity Investments and the Washington-based National Business Group on Health of 147 organizations, conducted between Sept. 20 and Oct. 29.

"Wellness programs in the past have typically had modest impact because of low participation rates," says Sunit Patel, senior vice president of Fidelity's benefits consulting business, "but our study indicated that incentives are starting to make a real difference in employee interest and engagement."

Another study finds that most employees (67 percent in 2010, compared to 64 percent in 2008) are comfortable with their health plan or employer reducing premiums for healthy workers and those willing to take steps to manage their illness or lower their risks.

That's according to a New York-based Towers Watson two-year-comparison study of 9,080 full-time U.S. employees.

It's also significant to note that the same study found nearly half of all employees (47 percent) would be comfortable if their health plan or employer raised premium costs for workers unwilling to take such steps, up from 39 percent in 2008.

Such negative measures may be self-defeating, however. A December 2010 report in the Harvard Business Review, "What's the Hard Return on Employee Wellness Programs?" -- based on a study of about 300 people at 10 organizations -- cautions against using negative or punitive incentives because "employees lose trust when they feel they're being forced to act against their wishes" and such a tactic "just sends the [unhealthy] behavior underground ... ."

The good news here, says Shelly Wolff, senior healthcare consultant at Towers Watson, is that "with healthcare reform calling for an increase in incentives, employers have the tools to put together a powerful program that can help engage employees."

Even though employees appear to be receptive, many wellness experts are quick to point out that incentives are only one part of a much larger set of initiatives needed to ensure wellness efforts can really make a difference -- in corporate America and in society, in general.

"Granted, there is an increasing interest in wellness and an increasing willingness to invest more dollars," says Dr. Ronald Loeppke, vice chairman of Jacksonville, Fla.-based health-management company U.S. Preventive Medicine, "but having said that, I think it's more important to have a discussion beyond just incentives themselves and the costs related to them.

"We're at a point now," says Loeppke, "where we should be talking about intrinsic incentives more than extrinsic ones, i.e., money.

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"What will really push the needle beyond mere cash incentives will be the cultural model," he says. "The most compelling thing that I have seen over time is that the more you can get people not only participating, but really engaged in this [healthy behavior] being part of their lives, then it's not just a diet-of-the-month club or a New Year's resolution, but people actually building it into their life routines."

Dee W. Edington, director of the University of Michigan Health Management Research Center in Ann Arbor, Mich., agrees wellness success is all about culture.

"There is no doubt employers of all sizes are realizing the relationship between a healthier workforce and increased performance, and lower healthcare costs," he says, "but I believe the simplistic assumption that providing incentives for participation will result in healthier employees is somewhat naïve.

"Even if the incentive does motivate an employee to change and then he or she goes back to the same work environment [where healthy diets and activities aren't encouraged], the chances of that change being sustained is minimal," says Edington.

Factors that need to accompany an overall culture change, says Catherine Fillmore, project manager at the university's HMRC, include effective marketing to generate broad-based awareness, easy-to-use programs, top-down support (from CEO to vice president to director to manager to team leaders), and policies and support efforts consistent with the messages being pushed out.

"The ideal program may start with an incentive," she says, "but companies need to encourage individuals to become self-leaders and take responsibility for their health status."

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