Unhealthy Habits Have Growing Effect On Insurance Premiums

Insurance News Net reports:

“If you’re overweight, have high blood pressure, smoke or are diabetic, your employer may soon require you to improve your health, get counseling on the issue or pay a fine, especially if you work for a large corporation.

In an effort to rein in soaring medical-insurance costs — now estimated at more than $12,000 per employee — big companies are increasingly turning from incentives to penalties to change their workers’ unhealthy habits.

The most recent example is CVS Caremark, which has ignited controversy by requiring its 200,000 employees across Florida and the nation to undergo screenings to record their weight, body fat, blood glucose and blood-pressure levels. If they don’t do so by May 1, they’ll have to pay an extra $600 for health insurance in the coming year.

Already, 20 percent of firms surveyed impose consequences on employees if they “don’t utilize the health-awareness tools the company provides,” according to a recent report from human-resources researcher Aon Hewitt. And roughly 60 percent of employers said they plan to impose penalties in the next three to five years for workers who don’t take action to improve their health.

The shift is drawing fire from patients’ rights groups, which consider the policies coercive and a violation of privacy. At Michelin North America, the tire manufacturer, workers with thick waistlines — 40 inches and over for men, 35 and over for women — will have to pay up to $1,000 more a year in health-insurance premiums than their leaner coworkers.

And Honeywell International Inc. has imposed a $1,000 penalty for workers who undergo certain joint-replacement or back surgeries without first participating in a program that provides data on nonsurgical options.

“We have had a lot of discussion about sticks versus carrots,” said Karen van Caulil, president of the Florida Health Care Coalition, an employer group. “Studies have shown that some people are more motivated by concerns of loss than by gain or positive reinforcement.”

But Dr. Michael Siegel, a professor at Boston University School of Public Health, sees policies such as CVS’ as “a slippery slope.”

“What are people going to be penalized for next?” Siegel said. “Will they ask how many times you go out for fast food each week? Are they going to ask how much people drink? Are they going to ask about sexual behavior? What if an employee is having unsafe sex? It opens the door to asking people all kinds of personal questions that have nothing to do with how well you do your job.”

For its part, CVS insists the policy is merely “the most effective way to encourage our colleagues to take control of their own health, reduce risks and manage their costs.” Further, chief medical officer Dr. Troy Brennan said the requirements “meet all federal and state privacy regulations.”

The information will be handled by a third party, the company said, and not shared with any CVS personnel. Nor will there be penalties for workers whose results reveal health problems.

Patient Privacy Rights, a national bipartisan nonprofit based in Texas, labels the program “coercive” and “invasive” and complains it “doesn’t give patients any control over the extremely sensitive health information they are required to submit. Not only can they not be certain that their employer will never see this information, the data can also be collected, sold, and used in different circumstances without their knowledge or consent.”

Supporters claim that’s far-fetched.

LuAnn Heinen, vice-president of the nonprofit National Business Group on Health, said few employers would risk intentionally misusing such information.

“It would be stupid on so many levels — for ethical reasons, for business reasons, for legal reasons, for employee relations,” Heinen said. “Of course, there is the fear of the technological glitch, and, yes, every once in a while somebody’s records get stolen.”

Her agency recommends that employers implement more than a single incentive or penalty, but rather a comprehensive wellness strategy. That should include healthy food in the cafeteria and vending machines, a walking program, gym membership subsidies, free filtered drinking water and perhaps time off from work for “health-promoting activity.”

Only if incentives fail, she said, should penalties be considered.

“What companies are really trying to do is get people more involved — to get more skin in the game,” she said, “because we are giving our pay raises to the health-care system, and we have been for a long time.”

That’s because escalating health care costs have outpaced pay hikes. Employees now contribute 42 percent more for health care than they did five years ago.

In many ways, the trend toward penalties began with cigarette smokers, who for years have been charged higher rates on individual health policies before being banned from lighting up on employer property. Starting this month, Orlando Health joined the 4 percent of employers across the country who won’t hire smokers — period.

“When it was just a matter of charging smokers higher rates, everybody understood that it made economic sense,” said sociology professor James Wright of the University of Central Florida. “And the same can be said to some extent for the obese and the sedentary. If that’s the lifestyle you choose to lead, then you have to pay the cost.”

While federal law bans employers from discriminating against workers with disabilities, insurance surcharges that penalize workers for unhealthy behavior have yet to be tested in court. Even if they withstand challenges, though, some business leaders say the harm to employee morale may make penalties unsavory in the long run.

For now, two of Central Florida’s largest employers, Walt Disney World and Lockheed Martin, said they have no plans for penalties. Both rely instead on an incentive-only approach.

Lockheed’s Orlando workers, for instance, are rewarded up to $600 a year for exercising, and they’re given free entry into four cycling and running events — the Tour de Cure, Relay for Life, Heart Walk and the Jingle Bell Run/Walk.

“Lockheed Martin wants to have the healthiest workforce in the aerospace and defense industry,” said corporate spokeswoman Kelli Raulerson. “We believe offering incentives … will create long-lasting healthy behaviors.””