Last week, Gov. Jay Inslee and a coalition of two dozen public-employee unions announced they had reached a tentative agreement on health care benefits for calendar year 2015. It’s difficult to assess whether or not the deal is a good one for state workers or the state’s taxpayers, or both.
Both sides emerged happy from the negotiations, so it sounds like a win-win. But the deal is difficult to assess because few details of the new plan are known. Contract negotiations took place behind closed doors and a key component to driving down costs — incentives for maintaining a healthy lifestyle — seem to have been agreed to in principle only.
It appears that in exchange for the status quo on the cost sharing of insurance premiums, co-pays and continuation of other benefits, such as long-term disability, employees will allow implementation of the pharmaceutical provisions of the Affordable Care Act. That’s likely to mean higher out-of-pocket costs for prescription drugs.
The wild card in the deal is the creation of a wellness plan that both sides hinted could dramatically lower the state’s health care expenses. It makes perfect sense, of course, that when employees quit smoking, lose weight, exercise regularly and eat fewer junk foods, they also consume fewer health care resources.
But is there hard data to support these claims, or is it just wishful thinking?
A congressionally mandated RAND Corporation report released in May found that workplace wellness programs were less effective in improving employee’s health or in saving money than commonly believed. Still, they reported a positive benefit.
In a study of 600 employers with 50 or more employees, RAND concluded that programs became “cost-neutral after five years.” It also detected meaningful effects of wellness incentives on health risk factors.
The study stops far short, however, of reporting the kind of spectacular results claimed by King County. According to a 2012 report, King County says its Healthy Incentives program saved nearly $30 million from 2007 to 2011. The savings were directly attributable to “improvements in the health of employees, dependents and covered spouses or partners.”
That report also shows that the county shifted $10.8 million of health care costs to employees.
Considering the underwhelming results — King County notwithstanding — it’s logical to ask why wellness programs have gained such recent popularity in the workplace. That may be because only 2 percent of the corporations RAND studied had done a detailed analysis of their savings. Fewer than half of the companies bothered to do any evaluation at all.
That’s an important lesson for the state as it begins to design a wellness program in collaboration with employees.
It’s natural to support programs that encourage healthy living. But the state must look beyond mere participation rates in education programs for weight control or nutrition. It must track hard-core data about the number of employees who, for example, quit smoking or reduce their cholesterol. Absenteeism rates have to be monitored and compared, along with use of emergency rooms and hospital care.
And it must be careful not to shift a disproportionate share of costs to lower paid workers whose inflexible schedules or part-time status prevent them from taking the same advantage of wellness incentives as other workers.
Without scientific data from a disciplined evaluation method, the state will have no idea whether its wellness program is working, and if it’s treating all employees equally.