Creating a Self-Funded Wellness Program
Dec 9, 2009
“I like the idea of a wellness program, but there simply isn’t a budget for one.”
How many times have you uttered or heard this phrase? If you’re like most organizations, probably more than you’d like, but this is one objection that should never stand in the way of offering a comprehensive wellness solution.
Health promotion and disease prevention (wellness) programs should be designed to engage participants to make lifestyle behavior changes that reduce the risks associated with preventable chronic diseases (such as hypertension, high cholesterol, stress, tobacco use, lack of exercise or poor diet). The evidence supporting wellness programs is easy to state: as participants’ health improves, the medical claims go down. Unfortunately, as compelling as the evidence is many companies face the “catch 22” of knowing that a comprehensive wellness program can reduce costs, but often times don’t have the budget to pay for it.
This is where the concept of self-funding comes into play. Wellness programs which are funded by the program itself eliminate this “catch 22” and open up the path to comprehensive wellness for all companies, no matter what their budget restraints might be.
What’s wrong with group health plans today?
Many experts speak freely about the “problems” with group healthcare plans, but perhaps the most basic problem is frequently overlooked. As a general matter, group health plans have not set employee plan contributions based on an individual’s health profile. As a consequence, group plans have systematically shielded those employees who engage in certain “costly” lifestyle choices, (e.g. … lack of exercise, over eating, failing to control hypertension, managing stress, controlling cholesterol levels or smoking), from paying a more accurate share of their usage of the health plan resources. Since certain plan members are shielded from the cost of their behavior, “costly” behaviors are in fact subsidized and costs for the entire group plan increase. Individuals who do make good lifestyle choices are required to pay more in order to remain members of the medical plan. Often times, those are the same people who end up dropping plan membership in favor of other forms of health insurance or no insurance at all, leading to a further deterioration of basic medical plan economics.
As we all know, the foundation of any group health plan is that a pool of individuals join a plan in which there is a balance of “healthy” and “not so healthy” making contributions to access services, but what if the balance becomes skewed? That’s when an incentive to participate in healthy lifestyle programs becomes an important part of the health plan. The incentive creates a legally authorized means to differentiate the members on the health plan who do not participate in the wellness program from the ones who do. Those who do not participate forgo the incentive and pay more for health coverage.
Incentives are the key to success – but only the right ones!
Not all wellness incentives are the same. Wellness programs should be focused on participation – not the achievement of a “one size fits all” health outcome. The critical difference between a good wellness program and a poor one is the focus on members’ participation. Incenting, encouraging and reinforcing sustained health engagement must be the singular goal and with a solid wellness program all employees and spouses are incented to participate in individualized programs. A properly designed program is founded on the fact that we all (no matter what our current health status) need to be continuously engaged in our health. The “one size fits all” health outcome approach, (e.g. you get the incentive if you have a BMI of Y, or a total cholesterol of X, or a systolic blood pressure reading of Z), has been widely criticized by the medical community as being fundamentally unfair and unsustainable. The “one size fits all” approach fails to recognize that employees and spouses come to a wellness program with diverse and varying levels of health. Setting a narrow definition of a health outcome and tying a financial incentive to its achievement does not lead to the goal of total population health management.
How the incentives are applied is important as well - deductible discounts don’t work for the plan members who are healthy because they typically don’t use the services enough to even reach or dip into deductibles, and prizes and cash must be taxed and typically don’t create enough of an incentive to drive long-term behavioral changes. What works the best, and incents not only initial participation but continued adherence, are employee plan contribution differentials. Individuals who choose not to participate in a wellness program and adopt lifestyle choices that are favorable to plan economic interests pay more for their overall benefits package than those who choose to participate.
The power of ENGAGEMENT
While it’s important to attain high levels of participation, it’s also important for participants to be fully engaged in the health promotion programs in order to achieve the biometric improvements essential to reducing claims costs. Total population health management is crucial to program success because without it, the “unhealthy” members will eventually be replaced with the currently “healthy” ones. Offering programs that are only focused on high risk individuals isn’t enough. They shower only the high risk people with resources and interventions, but then ignore the “up and comers” - the people who might be headed into the high risk category later on, but are otherwise “healthy” right now. To make an impact, the people who are in the high risk category must move into the mid-risk range, the mid-risk to the low and the low risk people should stay exactly where they are.
And it’s not enough to just tell people what’s wrong with them – through HRAs, screenings and maybe a follow-up call with a health coach – participants must be encouraged and incented to do something about their health now. Without an activity-based program design, biometric improvements are hard to come by. Health must become a habit and participants must have regularly scheduled activities in which they are incented to participate. Whether those activities are focused on weighing themselves or taking their blood pressure each week or simply logging steps taken or reporting the calories they consume, the focus must be on understanding how behaviors affect health and how those behaviors can be modified to achieve even better health. When participants make the changes necessary and improve their health, that’s when a company has the best possible chance at achieving a significant reduction to their health plan claims.
Trumping the ROI model
Wellness plans should not rely on some future year’s health measurement or health plan savings to justify their positive economic effect. A well constructed wellness program should fund itself based off the first year results as measured by contribution differentials, as well as trended healthcare expense savings. It only makes sense that a program should be internally funded and in these economic times – where every dollar counts – a plan that pays for itself seems the only right way to go.
BIOGRAPHY:
Michelle Clark is a large group Account Executive for EngagementHealth®, a privately held healthcare company based out of Lombard, IL. With a personal commitment to leading a healthy lifestyle and over 15 years of experience in working with group health plan providers in offering medical, dental, life and ancillary programs to employees and their dependents, she has an unwavering interest in helping plan participants achieve better health and employers reduce health plan costs through comprehensive wellness initiatives.
EngagementHealth® is an innovator in corporate wellness programs and offers comprehensive health promotion and disease prevention programs to companies throughout the United States. The hallmark of EngagementHealth’s service offering is its proprietary self funding model, Participatory Underwriting®, that allows companies and plan providers to implement EngagementHealth® programs without creating any negative budget risk. Offering programs to all employees and spouses, EngagementHealth® specializes in a high-tech solution coupled with a high-touch network of health counselors that work with all participating employees and spouses to address specific health risks. EngagementHealth® and Participatory Underwriting® are registered trademarks of EngagementHealth LLC. An application for patent protection of EngagementHealth’s proprietary program design process is pending in the United States Patent and Trademark Office.
For more information about EngagementHealth® contact Michelle Clark at (866) 692-1979 ext 1023 or michelle.clark@engagementhealth.com.
