Wellness Programs Can Generate Savings

Amid soaring health spending, there is growing interest in workplace disease prevention and wellness programs to improve health and lower costs. In a critical meta-analysis of the literature on costs and savings associated with such programs, we found that medical costs fall by about $3.27 for every dollar spent on wellness programs and that absenteeism costs fall by about $2.73 for every dollar spent. Although further exploration of the mechanisms at work and broader applicability of the findings is needed, this return on investment suggests that the wider adoption of such programs could prove beneficial for budgets and productivity as well as health outcomes. I n an environment of soaring health care spending, policymakers, insurers, and employers express growing interest in methods of improving health while lowering costs. Much discussion has taken place about investment in disease prevention and health promotion as a way of achieving better health outcomes at lower costs. President Barack Obama has highlighted prevention as a central component of health reform, as havemajor congressional reform proposals. Workplace-based wellness programs, which could affect prevention, have been showcased in these reform proposals, the popular press, and congressional hearings. This enthusiasm for workplace programs stems inpart from the fact thatmore than60percent of Americans get their health insurance coverage through an employment-based plan, as well as from the recognition that many employees spend the majority of their waking hours in the workplace—which makes it a natural venue for investments in health. There are several reasons that employers might benefit from investments in employee wellness. First, such programs might lead to reductions in health care costs and thus health insurance premiums. Second, healthier workers might be more productive and miss fewer days of work. These benefits may accrue at least partially to the employer (such as through improved ability to attract workers), even if the primary benefits accrue to the employee. These factors may motivate the increasing interest in such programs among employers—and especially large employers. In 2006, 19 percent of companieswith500ormoreworkers reported offering wellness programs, while a 2008 survey of large manufacturing employers reported that 77 percent offered some kind of formal health andwellness program. Consistentwith the evidence presented below, small firms seem slower to offer such programs, and many of the programs offered are still quite limited in scope. Several well-publicized case studies have suggested a positive return to employers’ investment in prevention. For every dollar invested in the program, the employer saves more than the dollar spent. The Citibank Health Management Program reported an estimated savings of $4.50 in medical expenditures per dollar spent on the program. Studies from the California Public Employees Retirement System (CalPERS), Bank of America, and Johnson and Johnson have similarly estimated sizable health care savings fromwellness programs. Despite doi: 10.1377/hlthaff.2009.0626