Many companies have employee wellness programs with the goal of reducing the skyrocketing costs of health care for their workers. But there is little evidence that these programs are effective.
Wharton management professors Iwan Barankay and Peter Cappelli suggest that instead of free gym memberships or yoga classes, companies should try to meet the most vulnerable workers where they are by offering support tailored to their needs. Helping those employees find a primary care doctor or transportation to routine appointments, for example, would improve their health outcomes better than cash incentives.
“What we need to do is listen to our employees. We have to talk to them to understand what their barriers are to start engaging,” Barankay said. “It may look trivial for most of us, but for people who have a complicated life, just the thought of finding parking near the pharmacy to pick up drugs or knowing what to wear and how to sign up for classes at the gym are things that they would benefit from having support with. They’re just really burdened by their lives and comorbidities so they struggle to build this into their routines.”
Barankay spoke with Wharton Business Daily on SiriusXM about the problem with employee wellness programs. (Listen to the podcast above.) He and Cappelli wrote a recent article on the topic for The Wall Street Journal, explaining why wellness programs don’t work despite their surging popularity.
“What we need to do is listen to our employees. We have to talk to them to understand what their barriers are to start engaging.” –Iwan Barankay
Citing data from the Kaiser Family Foundation, the professors wrote that more than 80% of large employers have a wellness program, and about half offer free screenings for BMI, cholesterol, blood pressure, and other health markers. The incentives to stay healthy are wide-ranging, from subsidized health classes to insurance discounts to cash payouts for meeting certain goals, like not smoking. Companies spend about $16,000 per employee on health care, with the employee spending about $6,000.
“Companies look for savings here,” Barankay said. “We know from research that preventative measures [against] cardiovascular disease or other chronic diseases is the best way to save costs, and companies were thinking that with some of these programs maybe some of these gains can be fulfilled.”
Wellness programs have become a $50 billion industry, but companies aren’t getting much bang for the buck, he said. In the decades that such programs have been around, few firms have realized any savings from them. Yet Kaiser found two-thirds of companies want to expand their programs.
Barankay said the reasons why wellness programs don’t work are multifaceted, but the main reason ties back to behavioral economics. Research in that field has determined that when goals are abstract and distant, such as lowering cholesterol, people respond better when they get an immediate reward for staying the course. While incentives do work in some cases, randomized trials found no difference in health outcomes, cost savings, or absenteeism for workers in wellness programs.
“Although the idea sounds like it should work — if we give you a little nudge, then maybe you take care of your health — it just does not. The data does not support this,” Barankay said.
“The idea that these small vouchers would alter the calculations for these people is just missing the point completely.” –Iwan Barankay
Ironically, the employees who benefit the most from wellness programs are the ones who are already healthy. They exercise regularly and see a doctor, so getting a voucher for the gym just rewards them for what they are doing anyway, Barankay said. And there’s no evidence to support that healthy people increase their healthy behaviors by participating in a wellness program. They’re simply registering in the program to get the benefits.
“The people who are not engaged with their health, when we talk to them as part of our research, they see these incentives and they want to act on it. But their lives are just so complicated,” he said. “When you are poor in America, when you have comorbidities, this is such a big cognitive burden that the idea of adding more routines is really, really difficult.”
Most people want to be healthy, Barankay pointed out. There’s intrinsic value in living longer without pain or disease. Wellness programs are well intended, but they aren’t getting the job done.
“The idea that these small vouchers would alter the calculations for these people is just missing the point completely,” the professor said. “The essential issue here is that these programs are a redistribution [of incentives] from the unhealthy to the healthy, but behavior isn’t changed for either of these two groups.”
