Move over Dr. Oz: America’s corporations and insurers are going to new extremes to make you healthy.
For all the debate over the new health law and its insurance mandate, 56 percent of Americans still get coverage through their workplace – and employers are becoming even more aggressive than government about reducing medical costs by enticing you to be healthier.
In this area, Ingram Micro is paying $5,000 in cash to employees who lose the most weight. Independent Health pays its customers to eat fresh fruit and vegetables. BlueCross BlueShield’s cafeteria cut the cost of whole-wheat pizza, hoping more employees would buy it instead of traditional pizza.
The stakes are high. Health insurance costs have risen 80 percent since 2003, according to the Kaiser Family Foundation – nearly three times as fast as inflation. The vendors that sell wellness programs tout savings of $3 or more for every $1 spent, and the Affordable Care Act allows subsidies for participating workers that can cut their premiums by 30 percent.
Conversely, the act also allows employers to charge more to employees who decline to join these programs.
“Sometimes you can take the carrot. And sometimes you can take the stick. And sometimes you can take the combination of the two,” said Pamela Pawenski, regional vice president of sales for Univera Healthcare.
Some analysts doubt the effectiveness of wellness programs and financial incentives.
Further, critics worry about employers intruding so deeply into personal lives. And they suggest penalties just aren’t fair, disproportionately affecting low-income populations and people genetically disposed to being heavy.
With health costs rising so fast, however, some experts argue there is little choice.
“A lot of this is employer-driven – they’re the ones paying the bill,” said Leslie Moran, senior vice president of the New York Health Plan Association.
State bars penalties
Drivers with a long histories of moving violations or accidents pay higher car insurance rates. But health insurance generally doesn’t work that way. For the most part, people in an insurance pool – a workplace or a region – pay the same premiums whether a person is a young, athletic nonsmoker or an older, obese smoker.
This concept is called community rating. The federal standard, which carries over in the Affordable Care Act, permits limited differences based on age and tobacco use. But in New York, companies and insurers must offer the same insurance rates regardless of age, sex, health status or occupation within each pool of insured people. Carriers may charge different rates only for single and family plans and within different geographic areas. (Companies that want to leave the community rating can choose to be “experience rated,” which can lead to different costs.)
So companies that want to encourage healthy living – and penalize bad habits – must be careful how they do it. The law says companies can offer incentives meant to encourage healthy choices.
“The programs that we offer cannot be outcome-based,” said Mary Miller, director of business planning and product management for BlueCross BlueShield of Western New York. “What we do instead is opportunities. You have an opportunity to participate in this program.”
Cold cash, cheap fruit
In some cases, the opportunities come with nice sums attached. Univera Healthcare offers ActiveUnivera, which gives customers the chance to earn up to $500 a year by, for example, completing a wellness profile, quitting – or never – smoking and finishing a fitness program.
More than 95 percent of BlueCross BlueShield employees have signed up for a three-step program that screens weight, cholesterol and other metrics; an online health assessment; and, if needed, work with a health coach, said BlueCross BlueShield’s Miller. The incentive: avoiding a deductible of $500 for individual coverage or $1,000 for family coverage.
And the company subsidizes the cost of food in its cafeteria to make sure the healthy option, such as pizza on whole-wheat crust, costs less than the unhealthy option, such as pizza with a white-flour crust.
“It’s about the small changes,” said Gretchen Fierle, the Blues’ senior vice president for marketing and communications. “You can’t ask somebody to go from A to Z.”
Independent Health offers an Empower benefits plan that promises lower, out-of-pocket expenses to members who complete a health assessment that shows they are non-smokers with good blood-pressure and body mass index readings. If the assessment shows an issue in one of those areas, members are still eligible for the lower expenses, but they must follow a physician-approved action plan.
Independent Health also subsidizes the cost of fruits and vegetables. For every $2 that eligible members spend on fresh produce, they earn $1 to spend later at Tops Friendly Markets. “It’s been very clear that if you lower the barriers, people will seek out services,” said Dr. Michael Cropp, Independent Health’s president and CEO.
No pizza and wings
Given the law requiring that everyone within a group be charged the same rates, employers have an interest in improving their entire work force’s health.
Ingram Micro, the wholesale technology distributor with an office in Amherst, had nearly 400 employees organize last year into about 50 teams and take part in a 12-week corporate “Lose to Win” contest. The employees lost a total of 1,130 pounds. Ingram Micro finished second to Tops.
Ingram Micro has seen some longer-lasting changes in employee habits, said Jeff Streb, the company’s North American senior director of human resources. Workers who always used to order pizza and wings switched to salad and grilled chicken. “That’s something that really got traction once we launched this contest,” he said.
Northtown Automotive Cos. started biometric screening of all of its employees in 2010, including a blood draw and weigh-in. The few workers who opt out of the screening pay higher out-of-pocket costs as part of their coverage, said Terri Alverson, Northtown’s director of human resources.
Between 2011 and 2013, the proportion of Northtown employees with good cholesterol readings rose from 66 percent to 71 percent, and those with normal-range blood-pressure readings rose from 49 percent to 57 percent.
“We have reduced the number of smokers. We’ve absolutely seen our premiums decrease,” Alverson said.
Tops Markets has introduced wellness programs, biometric screening and has signed up for the “Lose to Win” contest two years in a row. Overall participation in the contest has gone from 215 workers last year to 593 workers this year, the company says.
“Health care costs have risen faster than anybody’s ability to keep pace,” said Jack Barrett, senior vice president for human resources at Tops. “We participate in anything and everything they have to encourage and incent our employees to participate.”
High cost of smoking
The ACA allows subsidies of up to 30 percent of the value of an employee’s premiums, or an average of $1,620, for workers to take part in wellness programs – or a penalty of up to the same $1,620 for those who opt out.
Before an employer can use the stick of higher premiums for insurance, however, a “reasonable alternative” must be offered the employee to avoid paying a surcharge, according to a U.S. Labor Department rule.
For example, the alternative might be enrollment in a smoking-cessation plan.
The average smoking employee costs a company an extra $5,816 per year, over a nonsmoker, in health care benefits, absenteeism, smoking breaks and other expenses, according to research published in the journal Tobacco Control.
But it is difficult to scare, guilt-trip, berate or persuade someone to permanently quit smoking, said Dr. Martin C. Mahoney, a professor of oncology at Roswell Park Cancer Institute and medical director of the New York State Smokers’ Quitline.
An employer-provided smoking-cessation program can be “another arrow in the quiver” along with higher taxes on cigarettes, clean indoor air laws, motivation from family members and the social stigma against smoking, he said. “Smokers, or anyone looking to change a behavior, are ultimately unlikely to be successful unless they have internalized that desire to change,” Mahoney said.
A long-term fix?
Wellness programs are a $6 billion industry for the vendors that market them to employers large and small, according to Reuters. But can these programs, tied to incentives, lead to better health?
A major clinical research study, the Diabetes Prevention Program, found that modest weight loss, stemming from increased physical activity and changes in diet, sharply lowered the participants’ risk of developing Type 2 diabetes, according to the U.S. Department of Health and Human Services.
“It’s measurable. They can link premiums to measurable outcomes,” said Tina Colaizzo-Anas, associate professor in SUNY Buffalo State’s dietetics and nutrition department.
However, a report from the RAND Corporation, required under the ACA legislation and released earlier this year, found that employees who took part in wellness programs had medical costs, on average, that were just $2.38 less per month than nonparticipants in the program’s first year and $3.46 less in the fifth year. These modest savings couldn’t be definitively linked to the programs.
It is not clear whether financial incentives offer a permanent solution to better health.
Three researchers published a paper in the Journal of the American Medical Association in July reporting on the incentives included in the ACA and calling for more study of their health effects. “It’s very clear to me that you can use financial incentives to change behavior in the short term,” said Kristin Madison, a professor of law and health sciences at Northeastern University. “What’s less clear is whether you change behavior in the long term.”