Why Lake County employee health bonuses cost taxpayers $167,373

When Lake County's annual 5K run got underway last year it cost taxpayers an additional $11,850.

That's because 237 government employees registered for the race and received $50 each for participating thanks to the county's fitness reimbursement program.

As part of the county's health and wellness offerings, employees can make up to $600 a year extra for things like playing basketball in a county-sanctioned tournament, participating in a dance program, going to the dentist, watching health-related webinars once a month and donating blood.

In 2014, the reimbursement program was more popular than ever, paying 468 employees a combined $167,373. Since 2006, employees have received $635,550 in wellness bonuses, according to county financial records the Daily Herald obtained through a Freedom of Information Act request.

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Lake County officials defend the wellness bonus program, which is unique among suburban counties, saying healthier employees have kept the county's insurance costs from rising as rapidly as the national average.

However, economics experts and researchers don't give such programs high marks.

“These programs do not save money,” said Soeren Mattke, a senior scientist at the nonpartisan global economic policy think tank RAND Corporation. “There was a great deal of optimism and enthusiasm at the outset that companies or governments spend a little bit of money and gets substantial returns, but that never materialized.”

Mattke, who co-wrote what is considered the most comprehensive study on wellness programs to date, said that on average these types of wellness programs generate 25 cents in health care savings for every dollar spent. The 2013 study reported “wellness programs are having little if any immediate effects on the amount employers spend on health care.”

The RAND study indicated 69 percent of private and public employers with wellness programs use financial incentives to encourage employees to participate.

Lake County officials say the wellness programs benefit taxpayers and employees.

“Our cost increases are well below the national average, but we didn't start to experience that until our wellness program matured,” said Rodney Marion, the county's director of risk management and human resources.

From 2013 to 2014, Lake County's health insurance costs rose 3.5 percent, according to the county's most recent audit. By comparison, DuPage County experienced a 3 percent decline in costs over the same time period.

Lake County is also spending nearly $9 million more a year on health insurance than DuPage County even though Lake County has about 530 fewer employees. DuPage doesn't offer a wellness reimbursement program.

But Lake County officials say health insurance costs would be higher without the wellness programs.

“People are being informed they have medical issues, and while we're incurring those costs because they're taking care of that issue, we're not having to pay for more expensive treatments down the line,” Marion said.

Not everyone agrees.

“It's called hyperdiagnosis.” said Al Lewis, a Harvard economist and lawyer who heads Quizzify, a company that offers employee health care education online. “Everyone goes to a screening and they find out something may be wrong, so they go to a doctor and that drives up health insurance costs because now everyone is seeing a doctor when they probably don't have anything wrong with them.”

Started in 2005, Lake County's wellness program began offering financial incentives the following year for employees to participate in healthy activities and events. Workers get points, which translate to $1 per point, for taking part in various wellness program activities. Employees must take part in multiple initiatives before being eligible for the bonuses, Lake County spokeswoman Jennie Vana said.

The maximum bonus has climbed to $600 over the years. In the first year, only 82 employees qualified for the bonuses, which totaled a combined $7,100, according to the county's finance records. By the next year, participation had more than doubled and payouts had quadrupled.

Last year, qualifying employees averaged bonus wellness payouts of $358, according to the county's records.

The Lake County Forest Preserve District offered a similar program to its employees until 2009, when district officials said a fitness reimbursement program was axed due to The Great Recession.

“We were looking for every way to economize then,” said district spokeswoman Katherine Hamilton Smith. “We still have a wellness program, but no reimbursements.”

The forest preserve kept records of the last two years of the program's existence. Those records show the district paid $57,030 during that two-year span to 180 employees. The employees were reimbursed up to $200 for a variety of fitness-related purchases.

During those two years, district taxpayers spent $22,371 on reimbursements for gym memberships, $8,521 on bicycles and nearly $10,000 on reimbursements for the purchases of treadmills, elliptical machines, kayaks and canoes by district employees.

The invoices submitted by district employees also covered costs for racquetball league fees, yoga classes, smoking cessation programs and personal trainers.

Damon Jones, a public economics professor at the University of Chicago, is researching the effectiveness of wellness programs. He said the evidence currently doesn't show much benefit, but there are ways to ensure the programs aren't a waste of money.

Jones believes wellness vendors should not be paid based on participation in programs because the vendors then will offer programs designed to increase participation, not maximize outcomes. He also suggests not creating a blanket incentive for activities. Paying an employee who is a marathoner to run a 5K is a waste of money, he said.

But he's not throwing in the towel on wellness programs, just yet.

“Are they any good? Given the increasing share of public money that is being spent on health care costs, I would put my thumb up halfway,” Jones said. “If you're going to be spending public money on these programs, do it in a way you can evaluate the benefit.”

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Contact Jake at jgriffin@dailyherald.com or (847) 427-4602.