The Folly of Regulating Employer Wellness Policies
Today's illustration of the problems with a bureaucratic approach to health insurance comes courtesy of The Business Roundtable, which is worried that Obamacare regulations governing wellness incentives will be weakened to the point of uselessness. The health law allows employers to provide financial incentives to employees who agree to participate in wellness programs or hit certain health targets. But the allowable incentives have been continually watered down since the legislation passed.
Business Roundtable, a large trade organization representing business interests, is worried that the current draft of the regulation, which is now entering the final approval process, could weaken the incentives to the point where they are useless. The group has sent a letter to the Obama administration urging officials to allow employers to take action to ensure the incentives go to people who are meaningfully participating in the programs.
One minor complication is that, broadly speaking, employer-run wellness programs are already sort of useless, at least as far as improving employee health. The research into these programs enerally does not find that the incentives motivate employees to lose much weight or quit smoking in large numbers. It does, however, find that businesses can save money by charging less to employees who go for wellness bonuses, which in turns means that the employees who don't can end up paying more.
So you can see why, all else being equal, business interests would favor regulations that allow them more flexibility to design health and wellness programs that save money on employee health costs. And, again, all else being equal, why shouldn't they? Especially if there aren't substantially different health outcomes at stake.
Part of the push to weaken the incentive rules stems from the generalized liberal aversion to charging differential rates for health care. As one cancer activist told National Journal last month, the idea that employers might charge less to people in wellness programs "really does undermine [Obamacare's] community risk-pool concept." Maybe so, but what community rated insurance pooling ends up meaning is that costs go up for nearly everyone in order to pay for those with the highest expenses. On the macro level, if we're looking to reduce national health spending, then employer-run wellness incentives look fairly promising.
Somewhat lost in the back and forth between business lobbyists and the Obama administration, though, is a bigger question: Why should the federal government be regulating these sorts of wellness policies at all? If businesses want to provide health and wellness incentives to employees, that should be something that employers and their employees negotiate between themselves, just like other benefits and wages. It is, ultimately, a compensation issue. Except that instead of giving employees bonuses to make widgets, or sell hot tubs, businesses are paying employees to hit certain health targets, or to perform certain potentially health-promoting actions.
Like I said, the studies don't show that wellness programs improve health in aggregate. But you can see, in small scale, how they might, in certain circumstances. The Cleveland Clinic, for example, has been fairly aggressive about pursuing these sorts of policies, and has had some success in improving employee health measures. To be sure, the Cleveland Clinic, an ultra high-quality, high-prestige health care institution, is not likely to be representative of your average business, but it suggests the environment in which fairly aggressive employer wellness policies could be effective.
Too much of the health policy debate revolves around questions about how to take these results and scale them up, applying the same rules to everyone. That approach rarely works. Indeed, it usually leads to the exact sort of regulatory bickering we're seeing now. Rather than squabble over legislative particulars that apply to most everyone, we ought to be looking for ways to allow employers—and not just those in the health care field—to experiment with a wide variety of wellness policies. Some of them will work for some folks; many others will produce middling results or fail entirely. But we'd probably end up with more successes than with a single, centrally determined policy that's almost certain to work poorly for almost everyone.