Health Begins at Work

Employers are urging workers to stop smoking and lose weight, but many argue workplace wellness programs are ineffective—and can even hurt less-healthy employees. What's the proper role of an employer in facilitating a healthy lifestyle?

Employees practice relaxation exercises during a break at the production facility of Swiss hearing aid maker Sonova at the company's headquarters east of Zurich. (Michael Buholzer/Reuters)

At Patagonia, the California-based clothing company, designers and publicists go for hour-long runs together at lunchtime. There are regular, company-wide surf sessions. When I visited, they said one man unfurls a yoga mat every afternoon and swan-dives into sun salutations by his desk. The company offered step aerobics three times a week, and its "board room" was literally full of surf boards.

For decades, the conventional wisdom has held that Patagonians’ fitness is good for the company’s bottom line, assuming they’re all wearing sunscreen during those outdoor activities. They are probably less likely to, say, prematurely develop diabetes and rack up medical bills on the company insurance plan.

The Affordable Care Act wants to encourage more Patagonias—that is, companies where workers stay active, don’t smoke, and eat healthfully. There are countless types of workplace wellness programs out there, but some of the most stringent tie the employee’s health outcomes—their body mass index, whether or not they smoke, etc...—to the amount they pay for their employee-sponsored health insurance. In June, the federal government released its rules for these types of outcome-based programs, saying that employees who meet their company’s health standards could be “rewarded” with up to a 30 percent cut in their health premium—10 percent more than what federal regulations previously allowed—or up to 50 percent for programs that aim to prevent tobacco use.

For example, employees who have used tobacco in the past year and aren’t enrolled in a cessation program may pay up to 50 percent more than their co-worker who doesn’t smoke, if their company participates in one of these wellness programs.

Business groups have supported the increases in penalties for “unhealthy” types in part because it offers a way to shift the cost of medical care to employees who, the thinking goes, aren’t as proactive about their health and are therefore more likely to ratchet up the cost of health insurance for everyone. Proponents of such programs point to estimates by economists at Harvard that show a $3.00 return for employers for every dollar invested in the programs.

“We applaud and support this expansion,” the Business Roundtable wrote in a letter referencing the higher penalties, quibbling only with the fact that it offers too many outs for employees who can’t seem to meet a wellness goal.

But recent research has poked holes in the theory that wellness programs reduce healthcare costs or encourage employees to change their behaviors. In fact, some consumer advocates have said that employers’ connecting insurance premiums to factors like weight loss might end up hurting the least-healthy employees by making health insurance pricy for those who need it most.

“The increased cost of a plan for someone who is unable to meet a specified wellness program outcome could make the plan unaffordable and potentially create a barrier to health coverage,” said Dick Woodruff, vice president of federal affairs for the American Cancer Society Cancer Action Network.

Just over half of employers with more than 50 employees offer a wellness program, and over the past few years, the percentage of companies offering health-insurance discounts to employees for participating in such programs has increased, according to a survey of 600 executives by the Society for Human Resource Management. In 2011, 12 percent of employers offered premium reductions for employees taking part in smoking cessation programs, and 7 percent did so for weight-loss programs.

But whether employees sign up for the programs is a different story. A study by the Rand research institute released in May found that fewer than half of employees at offices with wellness programs undergo clinical screenings and assessments, and less than than 20 percent take part in either weight loss or smoking cessation programs.

Employees who did head to the nearest gym or Prancercise track at their employer’s behest did lose weight—but only about a pound a year over the course of three years, Rand found. Those lackluster findings were bolstered by another study from the University of California, which showed that “participating in work-based wellness programs does not lower blood pressure, blood sugar, or cholesterol and rarely leads to weight loss,” Reuters reported. And just 2 percent of the employers Rand surveyed had reported measurable cost savings through the programs.

There’s also mixed evidence that people with unhealthy behaviors, such as smoking or overeating, actually spend more on healthcare. What’s more, it’s unclear that increasing their insurance premiums is an effective way to prod them to change their behavior.

In a March article for the journal Health Affairs, a team of economists and lawyers argued that charging smokers or the obese extra for health insurance makes little sense because a “majority of studies showed no significant spending differences between people who used tobacco, had high blood pressure or cholesterol levels, or got inadequate amounts of exercise, compared to other people.” They also found that it’s not clear that workplace wellness programs lead to a reduction in medical spending overall.

Some studies have found that low-income individuals are more likely to smoke and be overweight, so these outcome-based programs could lead to poor, less-healthy people being charged more for insurance—a tactic the Affordable Care Act was expressly designed to prevent.

“Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees—those from lower socioeconomic strata with the most health risks—probably bearing greater costs that in effect subsidize their healthier colleagues,” the Health Affairs article said.

Importantly, the ACA does give these unhealthy employees an out. It mandates that outcome-based programs “make a reasonable alternative standard” available to anyone who can’t meet their employers health-outcome requirements, even without a medical reason. That provision was a relief to some, like the American Cancer Society’s Woodruff.

“Requiring outcome-based programs to recognize and accommodate the recommendation of the individual’s personal doctor is a far better approach to promoting health and wellness than requiring individuals to meet non-personalized goals,” he said.

But Jill Horwitz, a law professor at the University of California in Los Angeles and one of the authors of the Health Affairs paper, is skeptical that getting such an exemption will be breeze for workers.

“Among other things, the employee needs to know about the possibility of an alternative and to feel that asking for an alternative will not harm her,” Horwitz and University of Michigan economist John DiNardo wrote in a recent follow-up. “And her employer must be willing to comply.”


All of this leaves companies in an awkward spot: On one hand, a desire to drive down costs and encourage healthy behaviors, but on the other hand, no clear confirmation that most wellness programs do that.

Ron Goetzel, director of the Emory University Institute for Health and Productivity Studies, has been sparring with Horwitz and her co-authors in Health Affairs through editorials for the past few months. He believes that wellness programs work, but only when companies take a holistic approach and target all employees—not just the smokers or the overweight.

“It is true that for incentive-based programs to work, they need to do more than encourage completion of a 15-minute health risk assessment,” he wrote. “Programs need to apply behavior change theory to engage people in the task of taking better care of their health. They need to convince them that a healthy lifestyle is not just about earning a financial reward—but rather a path to feeling better, experiencing a better quality of life, having more energy, and generally improving their well-being.”

Virgin Pulse, a workplace-wellness vendor, says they agree with the Rand study, but they contend that most programs’ failure is in their execution. While many programs offer biometric screenings and health assessments in an effort to get employees to “know their numbers,” Virgin says the trick is to build in activities, like walking contests or even sleep tracking. In Virgin’s view, employees can, say, use Fitbits to track their steps each day and use their progress to earn rewards, such as gift cards—or, yes, discounts on their health insurance.

“We’re not simply trying to get the sick to behave better,” Ron Hildebrandt, Virgin Pulse’s vice president of product, told me. “We assume that everyone can be a better version of themselves and give them the means to do so.”

But Hildebrandt also said he usually centers his pitch to CEOs on how Virgin Pulse can help make offices more fun and engaged, rather than on the program’s money-saving potential.


With healthcare costs climbing and large companies mandated to offer health coverage under Obamacare, it’s understandable that CEOs would like employees who go to the doctor as infrequently as possible. But the debate over wellness programs raises a deeper issue rooted in the fact that health benefits are still largely tied to one’s job: Just how involved should a company be in the private lives of each worker?

Henry Ford famously spied on his employees at home to ensure they were living virtuously and thus were eligible for a $2.66-a-day bonus. Today’s programs are far less creepy (thankfully), but they still come with hairy work/life division issues:

“If you're requiring an employee to get a sign-off from a doctor [to receive their health insurance discount], you're asking a doctor to sign off on how much to pay an employee for their job,” Horwitz told me. “Is that a breach of fiduciary duty to the patient? Are you encouraging the patient to lie to the doctor?”

Or, could the employer extrapolate the health impacts of various lifestyle choices even further? For example, as Horwitz speculated, somewhat sarcastically, in Health Affairs: People without children have more time to exercise, and “aren’t held hostage to the culinary tastes of toddlers so can eat kale, and aren’t exposed to all the illnesses of the schoolyard. Is the employer justified in telling its employees to not have children?”

Luckily, we don’t live in a post-apocalyptic hell, so that won’t happen. But the fact that something as seemingly innocuous as office-wide Fitbit tracking has grown so controversial is a word of warning for employers who seek Patagonia-level fitness among their own workers.