Policy of prevention: Medical utilization under a wellness plan

Wellness programs constitute central components of disease prevention efforts under the Affordable Care Act and are likely to remain a component of employer provided health insurance. This paper evaluates the impact of such programs on medical utilization 4 to 7 years after enrollment in the plan. Using a unique suited data provided by a large private employer, I analyze medical expenditure and utilization for individuals enrolled in a wellness plan. The analysis compares expenditures and visits between wellness members and nonmembers who are matched through propensity score methods. The results show that although the wellness program increases utilization of preventive and outpatient care, by as much as 1.57 visits per year, there is no comparable decline in emergency or inpatient care, resulting in an overall increase in medical expenditure of around $507 per person per year. The increase in medical expenditure persists even 6 to 7 years of continued enrollment in wellness. I find some evidence of improved health, as diagnoses of diabetes decline 0.8 percentage points among wellness members. The results suggest that employer savings stemming from improved health and more judicious use of medical services are not likely to materialize in this wellness program.