On January 1, 2008, the University of Minnesota began offering the Fitness Rewards Program (FRP) to eligible employees across the state. The FRP provides a monthly credit toward an employee’s fitness center membership dues if the employee exercises at a participating facility at least eight times per month. The objective of this study is to evaluate whether regular exercise in conjunction with the FRP is associated with statistically significant decreases in employees’ medical care expenditures and absenteeism from work.
Data for the study were taken from medical claims for 2006 and 2007 (two pre-incentive years) and 2008 (one post-incentive year) for about 17,000 active employees of the university. Data on absenteeism were available for unionized employees. We matched the medical claims and absenteeism data to information on employee demographics obtained from the university’s human resources department and to data on FRP sign-up and regular exercise, conditional on signing up.
We used a differences-in-differences modeling strategy, which controls for unobserved sources of variation in medical expenditures and absenteeism by using repeated observations on FRP exercisers and non-exercisers from the pre- and post-FRP periods. Our models addressed well-known econometric challenges associated with variables that have a large number of zero values and are positively skewed. We used two strategies for estimating the models: a two-part model and a Generalized Linear Model (GLM).
Results indicate a statistically significant inverse relationship between regular FRP exercise and average monthly medical expenditures. The average reduction in monthly expenditures exceeds the incentive payments and a modest administrative cost, suggesting that the program has a positive ROI. Analyses of subgroups of regular exercisers show that the returns are concentrated among males and employees with high prior medical expenses. We find no effect of regular FRP exercise on absenteeism.