Yesterday afternoon, CMS released a call for states to participate in a demonstration project to deploy wellness programs on the individual market.
- Workplace wellness programs don’t change healthcare spending
- Most benefits flow to people who were already in good health/shape/habits
- Administratively a nightmare
My first thought that this is an invitation for cherry picking. Employer based wellness programs, in well controlled randomized evaluations, don’t work (Song 2019, Jones et al 2018). Or at least they don’t work in changing healthcare spending for people with moderate chronic diseases who are healthy enough to be employed enough hours to get insurance through work.
Wellness programs have been a big deal for over a decade now. The ACA allows for significant “voluntary” incentives (which is another way of saying penalties) for compliance/non-compliance with workplace wellness programs. The theory of change was facially plausible: the US has a lot of lifestyle amenable chronic diseases (hypertension, diabetes, obesity etc) so getting people to walk more, go to the gym a couple of days a week and show lower blood pressure readings after six months or a year could theoretically lead to lower costs and healthier people. That just never happened. But it was a facially plausible way to save money, and improve health while embracing the rhetoric of choice and individual responsibility all while without touching the prices paid to providers nor interfering with patient-provider decision-making. It sounded facially plausible.
Workplace wellness programs are, however, a good way of shifting net costs to sicker folks and shoveling goodies to people who are likely to have low valuation on health insurance as part of their compensation package because they barely use health insurance. For instance, if Duke had a general wellness program that paid for half the cost of a gym membership conditional on it being used at least twice a week, I would accept the extra cash and not change my behavior at all as I am already going to the gym three or more days a week. I would also probably qualify for good blood pressure control rewards as my current resting baseline is between 110/60 and 115/70. The incentives would not change my behavior as there is no need for my behavior to change. However the screening and administrative problem of targeting people who could see clinically and economically significant health improvements for small incentives and small changes in behavior is a complex problem. Most of the benefits go to people who don’t need to change their behavior.
The ACA individual market has not had wellness programs. The ACA individual market is an extremely high churn market. People churn in and out of the ACA individual market from other forms of insurance and uninsurance. People also routinely switch from Insurer A to Insurer B. Twenty four months of continual coverage at a single insurer in a competitive region is a very long length of stay for anyone who is not seriously ill. Most people are also significantly subsidized and the subsidy structure strongly encourages the people with the lowest probability of using care to go to narrow network, low actuarial value plans already. There is a cream skimming system already in place that is counter-acted by the risk adjustment transfers that pulls money out of Bronze premiums and sends it to Silver and Gold.
The request for participation in these programs are asking for the administrative moon:
Any state applying to participate in the wellness program demonstration project must clearly show that its program will not result in any decrease in coverage or increase in cost to the Federal Government in providing financial subsidies through the Exchanges. States must also ensure that their wellness programs do not discriminate based on health status.
We should not expect significant net cost claims cost savings to occur if the ACA individual market experience is anything like the employer sponsored insurance experience. Costs have to be neutral to the federal government so that means any incentives that are paid out in the form of lower than expected premiums or rewards to folks who meet administrative criteria have to come from whatever pool of likely small to non-existent savings, or from other funds or from other premiums. If there are other, state based funds coming into the individual market to make everyone whole, that is a weird way to support the individual market, but at this point, we have Silverloading doing a Herculean task effectively but inefficiently so one more weird twist is no big deal. However, I think that is unlikely.
Instead, the extra revenue has to come from somewhere, and the most likely spot is from non-participants’ premiums. The proposal layers on administrative burden and frictions for opt-outs and exemptions. The people who are most likely not participating in wellness programs are those with significant health expenses and barriers to access and ability to navigate complex administrative systems. Given the criteria laid out in the request for participation, lawsuits are almost certain to happen as state programs that are not the recipients of significant local funding will have a hard time meeting these hurdles.
And from the state perspective, they would be getting an administratively complex and expensive system to set up. It would probably be “easiest” to set up a program like this on a state based marketplace/exchange data stack instead of Healthcare.gov but the states that have their own marketplaces don’t, as a class, want to push health insurance in the direction that the current CMS wants it to go. I’m trying to figure out what is going on here beyond lawyer full employment?