Business
More workers must pay for unhealthy habits
■ Smokers are the first to feel the financial wrath of employers desperate to find ways to cut their health care costs.
By Mike Norbut — Posted March 20, 2006
- WITH THIS STORY:
- » Related content
Businesses long have offered the carrot of bonuses or gifts as incentives to employees for participating in wellness and prevention programs. But now, in response to spiraling health costs, businesses also are reaching for the stick.
They're charging extra for health insurance or even not paying for it at all for employees who engage in unhealthy habits -- most notably, smoking. They're also saying they won't hire employees who use tobacco, or will fire those who do.
Medical societies for the most part have not set policies on companies using punitive methods regarding wellness, though generally doctors say punishment shouldn't come without a company offering assistance to employees to help them break unhealthy habits, something companies generally do. AMA policy states that health insurers should pay for smoking cessation efforts.
A growing number of businesses see wellness as not just good for the employee, but good for the company's bottom line, and they have less tolerance for those perceived unhealthy employees who would drag it down.
"I found the carrot doesn't work," said Howard Weyers, president and CEO of Weyco, a medical benefits company based in Okemos, Mich., which has attracted media attention for its heavy use of the stick on its 200 employees. "When you're using the carrot, you're dealing with fewer people. You have to get after the high-risk people, and if there's no consequence, they don't do it."
Weyco has all but eliminated smoking over a three-year period through a gradual, penalty-based process. Applicants who test positive for tobacco are not hired, and employees who test positive after a random tobacco test are sent home for a month without pay, said Weyers, who says he has never smoked. Four employees who refused to take the test were fired.
Weyco is not the only firm to take such an aggressive stance against tobacco. The Scotts Miracle-Gro Co., based in Marysville, Ohio, says it will not employ smokers beginning later this year. Still more companies have made the decision not to hire employees who use tobacco.
Other firms are making smoking employees pay extra for health insurance. For example, Grand Rapids, Mich.-based grocery chain Meijer Inc. assesses a $25 surcharge on monthly insurance premiums for employees who smoke and do not participate in a cessation program. Food products giant Pepsico Inc., based in Purchase, N.Y., charges employees and covered spouses who smoke an extra $100 annually unless they participate in a program that can help them quit.
Going further is Crown Laboratories, a pharmaceutical and consumer products company based in Johnson City, Tenn. It announced that tobacco-using employees will pay their own health insurance premiums in full, with no company contribution, if they don't quit by 2007. Smokers have been offered the chance to participate in a smoking-cessation program run by a local physician practice.
One advantage businesses see with the strategy is flexibility. Firms of all sizes can assess a surcharge on premiums for any health plan. They also can use it in conjunction with packages tied to health savings accounts. In many ways, experts said, higher premiums and consumer-directed health plans share the same purpose: They are designed to compel insured members to take ownership in their health and recognize their own costs.
Those costs aren't cheap, consultants said. "Employers feel like they're running out of options, and they can only shift so much cost to the employees," said Michele Becker, a vice president in Aon Consulting's Somerset, N.J., office. "There's so much literature and proven evidence related to smoking, so they're really focusing on that issue."
Companies that have instituted a surcharge plan say it's too early to calculate what their savings will be. Even Weyco is waiting for its return on investment, Weyers said.
But how far can the trend go? Some experts see companies expanding their reach to issues such as obesity and high cholesterol as a natural progression in the promotion of wellness. Others see them teetering on the edge of a slippery slope, where companies could start trying to mandate health based on risk factors not as easy to measure and explain.
"It's more difficult to monitor, say, do you exercise enough?" Becker said. "How do you isolate being overweight? It's hard to separate that from other categories."
There are legal issues to consider as well. Privacy laws and lifestyle protections vary by state, attorneys said. For example, only 21 states allow employers to fire employees for smoking. Federal laws also prevent companies from learning specific health information about employees or discriminating on the basis of health status. Businesses that ask employees to take a health risk assessment, for instance, only receive aggregate results from the administrator.
As the trend continues, doctors might see an influx of patients seeking services such as nutrition counseling and spa treatments, said Phil Polakoff, MD, MPH, national practice leader of clinical consulting and lifetime health strategy for Buck Consultants.
These patients also likely will demand more of a physician's time and resources, said Alan Mindlin, MD, president of the Michigan State Medical Society.
In the meantime, Weyco has turned its attention to obesity and exercise. The company offers carrots to employees in the form of bonuses and insurance premium breaks for taking part in exercise and nutrition programs or taking an annual health risk assessment. The stick is never too far away, though; employees who refuse to take the health risk assessment must pay extra in health insurance premiums. "We're trying to eliminate self-inflicted illness," Weyers said.