In June 2009 — as the Affordable Care Act was taking shape on Capitol Hill — Safeway CEO Steven Burd preached the gospel of corporate wellness from the op-ed page of The Wall Street Journal.
In his column, Burd took on the question at the heart of health-care reform: How can public policy improve citizens’ health outcomes while also containing the aggregate cost of care? The grocery executive’s answer was simple: Allow employers to punish the unhealthy behaviors of their workers more severely.
Burd explained that, in 2005, Safeway had instituted a “voluntary” wellness program, which gave employees the opportunity to undergo tests of their tobacco usage, body fat, blood pressure, and cholesterol levels. If they passed all four tests, their annual premiums were reduced by $780 for individuals and $1,560 for families.
Or, put another way, if Safeway employees failed any of the tests — or refused to participate in the “voluntary program” — their premiums were increased by $780 for individuals and $1,560 for families.
This system allowed Safeway to achieve the unthinkable: Between 2005 and 2009, the company kept its per capita health-care costs flat, even as most American companies saw theirs increase by 38 percent.
“Today, we are constrained by current laws from increasing these incentives,” Burd noted. “If these limits are appropriately increased, I am confident Safeway’s per capita health-care costs will decline for at least another five years as our work force becomes healthier.”
Burd’s message was cheered on both sides of the aisle. Technocratic liberals appreciated Safeway’s nanny-state-esque approach to nudging its employees into healthier choices, while conservatives welcomed any opportunity to increase the freedom of bosses’ to coerce the behavior of their workers.
“The Safeway program has proven so successful that the company wants to increase its incentives for rewarding healthy behavior,” Mitch McConnell said, shortly after Burd’s op-ed was published. “Unfortunately, current laws restrict it from doing so.” One month later, Barack Obama hailed the “great job” Safeway had done “in helping encourage its employees to get fit.”
The so-called “Safeway Amendment” was added to the ACA. Now, if you fail, or refuse to take part in, your employer’s “voluntary” wellness test, it can increase your premium by 30 percent — or, if you’re a smoker who refuses to quit, by 50 percent.
There is no evidence that this new rule produced a significant drop in America’s health-care costs. And that isn’t terribly surprising — since Burd’s column was composed almost entirely of lies.
“[A] review of Safeway documents and interviews with company officials show that the company did not keep health-care costs flat for four years, the Washington Post reported in January 2010. “Those costs did drop in 2006 — by 12.5 percent. That was when the company overhauled its benefits … the decline did not have anything to do with tying employees’ premiums to test results. That element of Safeway’s benefits plan was not implemented until 2009.”
In other words, Safeway reduced costs for a single year by raising its employees’ deductibles. It didn’t save money by encouraging its workers to lead healthier lives — it saved money by making its workers pay a larger portion of their health-care costs.
And this is the story of the corporate wellness craze, more broadly. As Slate’s L.V. Anderson explains:
A government-sponsored 2013 analysis of large employers’ medical and wellness data by the nonprofit RAND Corporation was unable to detect a statistically significant reduction in health care costs as a result of wellness program implementation. RAND also challenged the notion that financial incentives produce thinner employees: according to their analysis, $10 in incentives is associated with 0.03 pounds of weight loss. At that rate, a company would need to spend $10,000 to get an overweight employee to lose 30 pounds.
So what are employers actually after when they implement wellness programs tied to large financial incentives? Cost-shifting. Under the ACA, wellness programs are a legal way to shift a significant portion of the cost of premiums onto employees deemed unhealthy. Wellness programs don’t save money by preventing expensive medical claims—and in fact, they might even increase claims costs due to encouraging unnecessary doctors’ visits. But wellness programs can save money if enough employees fail them or opt out.
This conclusion isn’t just supported by virtually every study on corporate-wellness programs that isn’t funded by those who profit from them. It’s also supported by common sense. Many serious health conditions aren’t especially sensitive to behavior (asthma, Crohn’s disease, etc.). And those that can be impacted by lifestyle interventions aren’t common in the working-age population. As Anderson writes, “cancer, heart attacks, stroke, and diabetes usually don’t hit until retirement, even among people who have had bad habits all along.”
Now that it’s public knowledge that the story behind the Safeway Amendment was a lie — and that there is little science to support that lie’s broader premise — you might think that Congress would scrap the provision.
If so, you don’t know Congress.
Rather than roll back the Safeway Amendment, the House GOP is working to expand its reach. Per Stat News:
A little-noticed bill moving through Congress would allow companies to require employees to undergo genetic testing or risk paying a penalty of thousands of dollars, and would let employers see that genetic and other health information.
Giving employers such power is now prohibited by legislation including the 2008 genetic privacy and nondiscrimination law known as GINA. The new bill gets around that landmark law by stating explicitly that GINA and other protections do not apply when genetic tests are part of a “workplace wellness” program.
The House’s bill is one part of “phase two” of the GOP’s health-insurance-reform plan — a package of regulatory reforms that can’t pass through the reconciliation process, and, thus, need Democratic votes in the Senate.
The American Benefits Council, which represents large employers, argues that their inability to coerce workers into presenting their genetic information puts “at risk the availability and effectiveness of workplace wellness programs,” thereby depriving employees of “improved health and productivity.”
Under the terms of the bill, employees’ names would be removed from their genetic tests before those tests are handed over to employers. This would, ostensibly, allow companies to target the aggregate genetic vulnerabilities of their employees through their wellness programs, while preserving individuals’ privacy rights.
However, at a small company — where it isn’t terribly difficult to match a genetic profile to an individual — it could allow a firm to covertly identify workers who present a high risk of becoming expensive in the future. Which is to say: It might provide them an end run around their workers’ disability protections.
It also might allow the “wellness” firms that companies contract with to make a quick buck. As Stat notes:
[P]rivacy concerns also arise from how workplace wellness programs work. Employers, especially large ones, generally hire outside companies to run them. These companies are largely unregulated, and they are allowed to see genetic test results with employee names. They sometimes sell the health information they collect from employees.
As a result, employees get unexpected pitches for everything from weight-loss programs to running shoes, thanks to countless strangers poring over their health and genetic information.
It’s almost as though entities that define their own wellness by the size of their profit margins can’t be trusted to promote the “wellness” of the human beings that they view as labor costs.