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Most Company’s Health Wellness Programs – fail to save any money

In an attempt to reduce the skyrocketing costs of health care, many companies have employee wellness programs. On average, employees spend about 6 K while companies spend about $16,000 per employee on health care. The attempt at cost-saving has not shown any success in saving money and has not proven effective in better health.

Over 80%  of large employers have a wellness program that may include free screenings of BMI, cholesterol, blood pressure, and other health indicators. There are various incentives to stay healthy, from subsidized health classes to insurance discounts to cash payouts for meeting specific goals, such as quitting smoking. 

Research has shown that preventing cardiovascular disease or other chronic diseases is the best way to save costs. Therefore companies thought that taking the preventive role some of these programs offer could help them pocket some of those savings.

Sadly, companies aren’t getting much bang for their buck with these wellness programs. This has become a $50 billion industry, and the marketing for these programs is prolific. The market is so good that 66% of those companies want to expand their wellness programs, even though very few firms have not seen any savings over the past decades.

Wellness programs do not work for various reasons, but behavioral economics is the main reason. People are more likely to stay the course when they receive an immediate reward for staying the course when the goals are abstract and distant, such as lowering cholesterol. 

Despite some minor evidence that wellness programs work in some cases, randomized trials found no difference in:

  • Health outcomes 
  • Cost savings 
  • Reduced absenteeism

Even though wellness programs sound like they should work – if we give you a little nudge, maybe you’ll take better care of yourself – the data does not support it.

The employees who benefit the most from wellness programs are already those in good health. No evidence suggests that healthy people are more likely to increase their healthy behaviors when participating in a wellness program. They exercise regularly and see their doctor, so getting a gym voucher just rewards what they are already doing. To receive the program’s benefits, they register.

It is when we talk to people who aren’t engaged with their health that they see these incentives and they want to act, but their lives are so complicated  many lower-income workers have some comorbidities; this is such an enormous cognitive burden that adding more routines is difficult.”

The goal of living longer without pain or disease is valuable to most people. Although wellness programs are well intended, they aren’t working.

The idea that these side benefits would alter the calculations for these people is just completely illogical. There is a fundamental point here: these programs redistribute incentives from the unhealthy to the healthy, but neither group changes its behavior.

Do wellness programs help you save money?

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