Carrots and Sticks: Impact of an Incentive/disincentive Employee Flexible Credit Benefit Plan on Health Status and Medical Costs

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Abstract
Purpose.: Employee wellness programs aim to assist in controlling employer costs by improving the health status and fitness of employees, potentially increasing productivity, decreasing absenteeism, and reducing medical claims. Most such programs offer no disincentive for nonparticipation. We evaluated an incentive/disincentive program initiated by a large teaching hospital in western Michigan. Methods.: The HealthPlus Health Quotient program is an incentive/disincentive approach to health promotion. The employer's contribution to the cafeteria plan benefit package is adjusted based on results of an annual appraisal of serum cholesterol, blood pressure, tobacco use, body fat, physical fitness, motor vehicle safety, nutrition, and alcohol consumption. The adjustment (health quotient [HQ]) can range from –$25 to +$25 per pay period. We examined whether appraised health improved between 1993 and 1996 and whether the HQ predicted medical claims. Results.: Mean HQ increased slightly (+$0.47 per pay period in 1993 to +$0.89 per pay period in 1996). Individuals with HQs of less than –$10 per pay period incurred approximately twice the medical claims of the other groups (test for linear trend, p = .003). After adjustment, medical claims of employees in the worst category (HQ < –$10 per pay period) were $1078 (95% confidence interval $429-$1728) greater than those for the neutral (HQ between –$2 and +$2 per pay period) category. A decrease in HQ of at least $6 per pay period from 1993 to 1995 was associated with $956 (95% confidence interval $264-$1647) greater costs in 1996 than was a stable HQ. Conclusions.: The HealthPlus Health Quotient program is starting to yield benefits. Most employees are impacted minimally, but savings are accruing to the employer from reductions in medical claims paid and in days lost to illness and disability.