4.4.1. Perceived Cost Savings
Data from the RAND Employer Survey suggest that employers view the impact of their wellness programs overwhelmingly as positive (Figure 4.21). More than 60 percent stated that their program reduced health care cost, and around four-fifths reported that it decreased absenteeism and increased productivity. But less than half of the employers (44 percent) reported regularly evaluating their wellness programs, and only 2 percent provided actual savings estimates.
Case study findings also suggest that employers perceive programs as improving affordability of coverage, even though four of the five case study employers have not yet formally evaluated the program’s impact on health care cost or return on investment, because of lack of access to data, limited capabilities and methodological questions. Results of a study conducted at
Figure 4.21: Percentage of Employers Reporting Benefits from Their Wellness Program
SOURCE: RAND Employer Survey, 2012.
NOTE: The graph represents information from the subset of employers with at least 50 employees that offer a wellness program (51 percent).
61% 78% 80% 0% 20% 40% 60% 80% 100%
Medical costs Absenteeism Productivity
Employer E support the importance of verifying program impact. When Employer E conducted an evaluation of its fitness leave benefit, which provides paid leave time of up to three hours a week for fitness activities, it found that every 20 hours of fitness leave was associated with only a one hour reduction in sick leave.
Employer C’s health plan evaluated savings derived from the wellness program by comparing the employer’s health care cost trend against an industry benchmark. The evaluation showed that the employer saved $111 per member in 2009 and $261 in 2010. Managers at Employer C shared that the wellness programs constitute an investment of less than 1 percent of their total health care costs but has reduced medical expenses by approximately two to three percentage points below industry trend since 2009. Although leaders were not able to pinpoint the exact sources of the savings, they noted that savings align with measurable changes in care utilization patterns: “We noticed the savings since we’ve begun wellness initiatives . . . our emergency room visits have gone down, and we are above benchmark for all preventive care screenings.”
Employer A commissioned a study to inform its program evaluation strategy in the same way that other organizations measure the impact of their wellness programs. The study recommended focusing on measuring program participation and satisfaction through surveys of participants and nonparticipants. Organizational leaders at Employer A explained that researchers who led the evaluation recommended tracking selected outcome metrics, such as absenteeism and satisfaction, rather than ROI because “many experts even question whether you should look at ROI.” Absenteeism was the only metric that the researchers felt was measurable and useful for Employer A’s ROI analysis. Productivity was deemed impossible to measure given the nature of labor at the organization, whereas health outcomes were ruled out because of privacy concerns. Privacy issues can become a hurdle “because it’s difficult to get people to give up personal information about their weight and health issues.”
4.4.2. Evidence for Cost Savings
We estimated the impact of wellness program participation using the CCA data. Figure 4.22 displays unadjusted trends in medical costs for the four employers included in the analytic sample for this analysis.
Figure 4.22: Trends in Health Care Costs per Health Plan Member per Month Among Employers in the CCA Analytic Sample
SOURCE: RAND analysis of health plan claims and screening and wellness program data in the CCA database. NOTES: PMPM data are not available for Employer 3 in 2005 and Employer 4 in 2010. Costs are adjusted to 2011 dollars using the Consumer Price Index (annual average, CPI, all urban consumers, U.S. city average, all items).
Figure 4.23 shows our analysis of the association between wellness program participation and overall health care cost for employers in the CCA database. Program participation is associated with a trend toward lower health care costs, but the changes are not statistically significant. We estimate that program participation is associated with a reduction of $2.38 PMPM in the first year and that the effect increases to up to $11.12 PMPM in the fourth year, both nonsignificant changes (Figure 4.23). This change roughly corresponds to a 0.5 percent and 2.5 percent decrease in cost of coverage,23
respectively. A power calculation shows that we would have been able to statistically detect a difference of $31.50 in PMPM cost, almost three times the actually observed point estimate.
Figure 4.24 shows the results of our simulation analysis, which compares trends in overall health care cost of program participants and nonparticipants over five years. The graph illustrates the
nonstatistically significant trend toward lower health care cost of program participants. Over a five-year period, the cumulative difference between the two groups is $65.50 per member per month, implying average annual cost reductions of $157.
23 According KFF/HRET (2011), “The average premium for single coverage in 2011 is $452 per month or $5,429 per year.”
(KFF/HRET, 2011) We used 2011 insurance premiums, as the medical costs in the analysis were adjusted to the 2011 U.S. dollars. 100 150 200 250 300 350 400 450 500 2005 2006 2007 2008 2009 2010 Co st (2011 $) Year
Figure 4.23: Effect of One-Year Wellness Program Participation on Total Health Care Costs per Health Plan Member per Month
SOURCE: RAND analysis of health plan claims and screening and wellness program data in the CCA database. NOTE: 2005–2010 data are from four employers; 12,127 propensity score matched pairs.
*p < 0.05; **p < 0.01.
Figure 4.24: Cumulative Simulated Effect of Wellness Program Participation on Total Health Care Costs per Health Plan Member per Month
SOURCE: RAND analysis of health plan claims and screening and wellness program data in the CCA database. NOTE: Simulation results are based on continuous participation in 2006–2010 of a population that has the average characteristics of the estimation sample; p > 0.05 for all years in 2006–2010. CI = confidence interval.
-2.38 -3.60 -4.52 -11.12 -3.46 -12 -10 -8 -6 -4 -2 0
Current year 2nd year 3rd year 4th year 5th year
To ta l c ost (2011 $) 200 250 300 350 400 450 To ta l PMPM C ost (2 01 1 $) 2005 2006 2007 2008 2009 2010 Year No participation 95% CIs Participation in 2006-2010 95% CIs
We decomposed the simulated trends in total PMPM cost, and the results suggest that the trends are primarily driven by the reduction in inpatient cost, accounting for nearly two-thirds of the total cost reduction. Reductions in outpatient costs and prescription drug cost account for 28 percent and 10 percent, respectively (Figure 4.25). Corresponding to these cost reduction trends are declines in inpatient admissions and emergency department visits. During the same time period, inpatient admissions and emergency department visits reduce by 22 and 42 per 1,000 employee years,
respectively (Figures 4.26 and 4.27). In contrast, inpatient admissions and emergency department visits among the comparison group either increase or slightly decrease. However, note that all estimates are not statistically significant at the 5 percent confidence level.