December 24, 2018 / 4:28 PM / in a month

Breakingviews - Wellness programs and waists spread together

Google employees take part in a yoga class at the Google campus near Venice Beach, in Los Angeles, California January 13, 2012. REUTERS/Lucy Nicholson

NEW YORK (Reuters Breakingviews) - Wellness programs and American waists are spreading together. Most big U.S. companies now offer programs intended to improve employee well-being – despite little proof that they work. Vista Equity Partners’ deal on Monday to buy yoga and gym software firm Mindbody for $1.9 billion shows how big the business has become. Benefits such as curbing healthcare costs and attracting talent will keep the wellness craze going.

Firms know they can’t ignore employee health. Rising medical-insurance costs consumed a third of all compensation increases to workers with above-average pay from 1980 to 2015, according to Willis Towers Watson. Meanwhile the population is aging. The idea that companies can somehow prevent employees from getting sick is beguiling, especially when the tightest job market in nearly 50 years makes it hard to find replacements.

How best to do this isn’t obvious. Human resources departments have taken a “let a thousand flowers bloom” approach. Most encourage annual physicals and subsidize gym memberships. Others offer carrots ranging from healthy breakfasts to free fitness trackers to yoga classes. And startups have tried to create a patina of healthy fun over soul-crushing workloads through measures such as paying employees not to check email while on vacation to reduce stress.

Instead of targeting the worried healthy with vague goals, companies should focus on their sickest employees. Five percent of people account for over half of medical expenditures, according to the Kaiser Family Foundation. “Disease management programs” to help workers with diabetes, emphysema and the like to reduce smoking, take medication and receive regular doctor’s care do work. A Rand study of one big employer showed nearly a fourfold return on investment. 

Wellness programs for the average employees show no such payback. Economists at the University of Illinois designed a program for a big company and found no change in medical costs or exercise. Healthy people who already went to the gym merely did so on the company dime. Other studies have shown similar results.

That won’t stop these programs from flourishing. Paying for gym classes may help morale, and it obeys a fundamental rule of medicine – first, do no harm. Cynical employers may latch onto other benefits - generous programs can attract already healthy job candidates. And over the past decade, firms have steadily made employees pay more for less generous health insurance. Wellness programs are a cheap way to appear concerned about workers.

Breakingviews

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