In Part 1, we discussed how to bend the employee medical cost trend, the effectiveness of outcomes-based wellness programs, and the importance of impact and reach within a wellness program.
Outcomes- Based Strategy is Only Part of a Wellness Program
Too many outcomes-based strategies simply raise standards that must be met by employees to qualify for preferred rates without providing behavioral tools and skills to help employees adopt and maintain healthy behaviors. This is a little like requiring an employee to produce a business report without providing a desk or computer.
Also, experts suggest that lower-income employees likely have access to fewer resources and environmental support to achieve outcomes-based standards. As a result, they may wind up paying higher premiums. This underscores the importance of creating a supportive workforce culture so that all employees have the support they need to meet outcomes-based standards.
Point #3: Create a healthy culture by providing tools and skills to help employees change.
Using Outcomes-based Incentives To Drive Behavior Change
According to scientists, people place more weight on present versus future rewards or penalties. So more motivation will be generated if employees get something good or avoid something bad NOW versus LATER.
By contrast, according to managers of HR, payroll and benefits, the best way to provide incentives to employees is the way that does not complicate their job! What is the best way to apply this information? There are essentially two ways to provide incentives and both have one primary advantage and disadvantage.
Strategy number one is to reduce the employee portion of the premium every month, which is a good thing NOW but it creates management complexity for HR, payroll, and/or benefits. Strategy number two is to reduce employee portions of co-pays and deductibles along the way (good thing LATER). This strategy comes with the advantage of administrative simplicity that HR, payroll and benefits managers will love. So what should you do? Choose strategy number two but add immediate, positive incentives along the way to keep employees moving in the right direction!
Point #4: Choose administrative simplicity but remember to reward employees for being healthy
If the goal is to bend the medical cost trend, employee behaviors must change. The outcomes-based strategy is promising because it drives reach, but those using an outcomes-based strategy should also provide tools and skills to help create a culture of health and support employees as they adopt new behaviors.
Employers who use incentives should remember that the combination of immediate, positive rewards and simple administration will probably work best.
1. Redesigning Employee Health Incentives - Lessons from Behavioral Economics. Volpp, Asch, Galvin, Loewenstein. N Engl J Med 2011; 365:388—39.
In good health,
The WellSteps Team