Thursday, October 1, 2009

Wyden and Employee Wellness

In theory, Wyden’s Healthy Americans Act and Free Choice Act create an ideal blend of market-driven solutions from the right and mandates with subsidies from the left. There is inconsistency, however, in Wyden’s approach to wellness programs. Each of the major reform bills, including Wyden's, identifies wellness programs as a key cost containment strategy. Only the Healthy Americans Act and Free Choice Act, however, would allow employees to “cash out” of an employer-sponsored health plan in favor of a plan from a government run exchange. Allowing this kind of cash out may look like a great compromise, but it could undo much of the potential benefit from employer-sponsored wellness programs.

First, employee attrition to exchange plans decreases the population in the employer-sponsored plan. A smaller population in the employer-sponsored plan results in limiting the extent to which a wellness program can create productivity and premium savings for the employer. At a certain point, a paucity of participants in the program will make it difficult for the employer to justify the fixed costs of running the program. Moreover, if the government does a risk adjustment at the end of the year between those people who cashed out and those who stayed in the employer plan, it could wash out any savings from employer-run wellness programs.

Second, employee assistance program experts like Tom Bjornson and Asako Tsumagari believe that the social environment of the workplace is a deciding factor in the effectiveness of employer-sponsored wellness programs. If support for healthy behaviors does not coalesce from the “bottom up”, positive changes are likely to be short-lived. Employees cashing out of employer-sponsored health plans and wellness initiatives will no longer be contributing to the momentum of the employee social network, which would likely decrease the likelihood of the wellness initiatives’ success.

The other major reform bills currently under consideration do not contain these powerful disincentives to employer-sponsored wellness plans. The Healthy Americans Act had the foresight to mandate that wellness programs be included in any exchange listed medical policy, provide a tax deduction for employers offering wellness programs, and allow carriers to promote wellness programs through premium deductions. It is not clear, however, that these measures would preserve employer-sponsored wellness plans in the long term.

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