Health or Consequences

A recent Aon Hewitt survey finds many companies offering or planning to offer rewards -- and consequences -- for employee involvement in company health programs. Critics say this approach unfairly punishes some workers, but HR can play a key role in shaping employees' perception of -- and participation in -- incentive-rich programs.

Thursday, April 18, 2013
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Rewarding participation in company health programs is an increasingly popular approach to encouraging employees to take a larger role in improving their health.

A growing number of companies, however, seem to feel that rewards won't be enough in the near future, according to recent Aon Hewitt research.

The Lincolnshire, Ill.-based consultancy polled nearly 800 large and mid-size employers, finding 83 percent of companies offering employees incentives for participating in programs that help them become more aware of their health status. These actions may include completing a health-risk questionnaire or participating in biometric screenings, according to the survey.

Among the 83 percent of employers that reported offering incentives for these types of programs, 79 percent offer incentives in the form of a reward; 5 percent offer incentives in the form of a consequence; and 16 percent offer a mix of both rewards and consequences.

Looking ahead, 58 percent of respondents said that, in the next three to five years, they plan to impose consequences on participants who do not take appropriate actions for improving their health.

Overall, these findings shouldn't exactly come as a revelation, given the rising healthcare costs employers are bracing for in the wake of the Affordable Care Act's passage, says Stephanie Pronk, senior vice president and leader of Aon Hewitt's clinical, health improvement and measurement team.

"Incentives have been around for a long time; even back in the 1980s," says Pronk. "So this [strategy] really isn't new."

What is new, she says, is the trend toward a more assertive approach to encourage involvement in health programs, and creating consequences for employees who don't participate in or comply with wellness policies. "There's shared accountability now," she says, "and some employers are being more aggressive and asking individuals to do more around maintaining or improving their health."

This strategy is not without its detractors, of course. CVS Caremark Corp., for instance, is the latest large employer to experience blowback from the addition of a new wrinkle to an employee-health program.

In hopes of encouraging better employee health, and in turn containing the company's healthcare costs, the Woonsocket, R.I.-based drug retailer announced last month it would start asking employees receiving CVS-sponsored healthcare coverage to disclose their heights, weights and body fat percentages, as well as blood pressure, glucose and fasting lipid levels to the company's insurance carrier as part of a wellness screening.

According to CVS, which employs more than 200,000 workers, employees can opt out of the requirement, but will be hit with a $600 annual charge - an extra $50 per month in health insurance premiums -- for doing so. The company will also reportedly pay for the health reviews, and claims health records and personal information will be for a third-party administrator's eyes only, with no one in the organization able to access data gleaned from these reviews.

Critics have called such measures an invasion of employee privacy and an attempt by employers to essentially penalize workers for engaging in unhealthy behaviors that may not directly affect job performance.

It's important to note, however, that these incentives should be viewed as "only one aspect of a comprehensive population health improvement program," says Pronk. "That said, all these programs are voluntary. The biggest consequence is employees will choose not to participate in the health activities, which is a loss for the employee and the organization."

Still, HR professionals must be careful to design employee health programs that motivate workers to get involved while ensuring the consequences for not complying or participating aren't perceived as punishment, says LuAnn Heinen, vice president of the Washington-based National Business Group on Health.

"Programs must clearly be in employees' best interests, and seen as a net positive," she says, suggesting HR leaders "consider a mix of rewards that are positively received and penalties that spur action but might leave a sting."

Most employers leave a sting in the form of higher insurance premiums, says Pronk.

"However," she adds, "we are seeing a small number of employers thinking about the concept of 'gated benefits.' In this model, completion of an HRQ or biometric screening enables the employee to select from a broad menu of plan choices in the following year. Those who do not complete the assessment would receive a base level of medical coverage."

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Financially-driven incentives -- bigger premiums for smokers or workers found to be at greater risk for diabetes, for example -- may ultimately be the most effective motivator for workers to adopt healthier behaviors, but employers and HR must also "make it easier for employees to be healthy at work than it is for them to be unhealthy" on the job, adds Pronk.

"For example," she says, "having 80 percent of your vending machines include healthy options for employees sends a message. Or, instead of allowing employees to take smoke breaks, you let people take 10-minute activity breaks."

Or, companies with large numbers of employees who sit for most of the day might offer options for "walking meetings," conference rooms with no chairs or sit-to-stand workstations, she says.

While many large companies are implementing these and other health program engagement and communication strategies -- wellness champions, mobile applications, gaming technologies, social networking, for example - financial incentives are "particularly straightforward and efficient" in fostering employee participation, says Heinen.

"Health messages alone do not attract employee attention, but money talks, at least for getting people to take specific actions," she says, adding that financial incentives' effectiveness in helping to sustain healthy behavior is largely "unproven."

Indeed, many large employers are "still in the early stages of trying to find programs that work well," says Paul Dennett, senior vice president of health policy with the Washington-based American Benefits Council.

"Programs that do work well," he adds, "tend to be the ones that are uniquely designed to [fit] the needs of the employer's own population."

With regard to imposing consequence on workers who don't engage in healthy behavior, "there's still a lot more talk than there is action," says Pronk, noting the number of companies that reported currently offering incentives in the form of a consequence - 5 percent -- is unchanged from a similar survey Aon Hewitt conducted in 2011.

"But I think it may come," she adds. "And if employees and unions start to step up in terms of making health an important part of work, it could be a win for everybody. We don't want [employees] to look at this as a negative. It's just a matter of finding what will work to motivate people."

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