Take Two for March 5, 2013

Workplace wellness programs are getting costly

Workplace wellness programs

Kelley Weiss/CHCF Center for Health Reporting

Kimberley Macgregor, a bookkeeper at a Burbank Ralphs, looks over which “healthy activities” she’ll choose to do to offset her health care costs.

Workplace wellness program

Kelley Weiss/CHCF Center for Health Reporting

The Southern California United Food and Commercial Workers union agreed to expand the wellness program for its members in 2013. If Ralphs workers get a flu shot, the company will contribute about $150 towards their health insurance costs.


Most companies have wellness programs, which provide free flu shots, blood pressure checks, and the like. But a growing number of businesses are changing the definition of a “wellness” program. Some are charging workers more for health insurance if they smoke or are overweight. Others are reducing their contribution to workers’ health care coverage, and requiring the workers to take steps to get that money back. 

That's what happened to Kimberley Macgregor, a bookkeeper at a Ralphs supermarket in Burbank. Up until this year, Ralphs automatically gave employees $550 to use towards their $1,000 health insurance deductible. Now it has slashed that amount to $175, but it will contribute up to an additional $575 if Macgregor chooses to do four of the seven "healthy activities" offered by the company, such as joining a gym or getting a checkup.

Sitting at her mother's kitchen table, Macgregor  flips through Ralphs' wellness program, a glossy pamphlet featuring an array of fruits and vegetables and a woman meditating. 

Macgregor opts first for a biometric screening that uses a blood sample to check things like cholesterol and blood pressure.

“All and all it’s good for you because it gives you awareness of where you stand when it comes to health issues and maybe it can catch diseases early so that you have enough time to change it,” she says.

Macgregor says she’ll do the activities to offset her health care costs, but she finds the whole thing a bit creepy.

“Your health is not between your doctor and you anymore,” she says. “You might as well invite the insurance company to sit in that little chair to the right and you might as well invite the company that you work for to...be in the room with you with your doctor.”

Approximately 78 percent of companies offer wellness programs, from free flu shots and health fairs to health insurance discounts if you join a gym.   -- American Institute for Preventive Medicine

The union representing Macgregor and about 65,000 Ralphs, Vons and Albertsons members agreed to this approach. Covered spouses or domestic partners also can participate in the wellness program.

But at least one union official isn’t happy about it. Kathy Finn, a negotiator with the Southern California branch of the United Food and Commercial Workers (UFCW), says at first glance the wellness program looks great because for each activity workers can earn back about $150 towards their deductible.

“But in my opinion it’s kind of like it’s a stick masquerading as a carrot,” Finn says. “If you compare it to what we had just in our last contract, we took something away and we’re forcing you to earn it back.”

Ralphs parent company Kroger and the California Grocers Association did not respond to repeated requests for comment.

Finn says the union took the deal because it was the best i t could do.

“If somebody does participate, their deductible didn’t go up, their copays didn’t go up, there’s no additional cost on them. So in the environment that we’re currently in that was seen as a very, very good deal,” she says.

But there’s a problem: workers often don’t take advantage of wellness programs. For example, last year only 10 percent of grocery union members in the wellness program chose to get a physical. About 60 percent of UFCW members are eligible to participate in the program.

Finn says the union sends lots of e-mails, newsletters and snail mail about the program, but the message isn’t getting through.

Kimberly Macgregor wasn’t even aware of this year’s change to her deductible, and she’s a union shop steward. She says she found out about it when a reporter contacted her.

“They need to make it a little more convenient for us to jump through their hoops so that we can take advantage of their programs and their funding,” Macgregor says.

In 2012, 13 percent of employers reported rewarding or penalizing workers for meeting or not meeting certain health goals like losing weight or lowering their cholesterol.  By 2015, that number could rise to 74 percent. --  Towers Watson 2012 Health Care Trend survey of midsize and large employers, "Health Care Changes Ahead."

But even with good rates of participation it’s unclear that wellness programs make people healthier.

“I think the key question is really going to be how effective are these programs in modifying behavior among high-risk employees who are low-wage employees,” said Dr. Kevin Volpp, Director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania School of Medicine.

If lower-paid workers fail to take advantage of a wellness program, Volpp says, they will suffer a disproportionate financial hit.

Meanwhile, American workers will be seeing a lot more of these programs. A survey shows more than half of large businesses are considering adopting wellness plans with financial penalties in coming years.

And Volpp says the trend is towards even tougher-minded wellness programs.

“Most of the action is going to be in employers moving to using outcome-based incentives to a much greater degree,” he says.

In an outcome-based program, workers pay more for health insurance if they fail to get in better shape – by not lowering their cholesterol or losing a certain amount of weight, for example. That could end up costing the worker thousands of dollars.

President Obama’s health care law supports this trend. Under Obamacare, employers can impose an even larger financial penalty starting next year.

In Southern California, the grocery workers union expects Ralphs, Vons and Albertsons to push for an outcome-based approach when contract talks resume next year.

Is there a certain type of activity you would like your company to include in its wellness program? Send us a tweet at @KPCC.

This story was produced in collaboration with the California HealthCare Foundation Center for Health Reporting, a nonprofit news organization that focuses on California health issues.  Based at the USC Annenberg School for Communication and Journalism, the center is funded by the nonpartisan California HealthCare Foundation.

[This story was corrected on March 5, 2013. The original version stated an incorrect amount for Ralphs' original contribution towards its workers health care deductible, as well as the final amount it is offering to cover.]


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