Are big insurance discounts for healthy behavior unfair?

Kaiser Health NewsJuly 27, 2009 

WASHINGTON — Employers and health insurers could give larger discounts to employees who lose weight or lower their cholesterol under one health care overhaul proposal that's moving through Congress.

However, the AARP, the American Heart Association and other groups think it's unfair and fear it could result in higher premiums for people who don't achieve those fitness goals.

The discounts are being pushed by Safeway chief executive Steve Burd, who said that rewarding healthy behavior has helped keep the Pleasanton, Calif., supermarket chain's health care costs flat while other companies' have skyrocketed. He's met with several lawmakers on Capitol Hill.

The proposal, which involves the sensitive issue of how aggressive employers can be in trying to induce workers to change their behavior to reduce their risks of disease, draws skepticism from many patient advocates.

"If you give one person a discount, someone else is going to end up paying more," said Paul Cotton of AARP, one of more than 60 groups that's fighting the provision. "So the people who aren't able to change their behavior or participate in the program will end up paying more. Our fear is that premiums will become unaffordable for people who can't change their behavior."

Under current law, employers and insurers are permitted to give discounts of up to 20 percent on premiums, co-payments or deductibles to workers who take part in wellness programs, which include anti-smoking and weight-loss programs. Some wellness programs simply require participation in order to get the discount, but others require employees to reduce their weight, blood pressure or cholesterol by specific levels.

Health care overhaul legislation passed by the Senate Health, Education, Labor and Pensions Committee would allow employers to increase those discounts to 30 percent, and up to 50 percent if the secretaries of Labor, Health and Human Services and Treasury agree. A proposal in the House of Representatives would allow employers to charge workers who participate in wellness programs 50 percent less than workers who don't.

Proponents say that the measure would improve health and lower costs, and that workers who can't hit specific targets could seek a medical exemption.

"There is significant savings and significant positives to encouraging people to live healthy lifestyles and reward people monetarily for doing it," said Sen. Judd Gregg, R-N.H., a co-sponsor of the amendment to the health committee bill. "That's just common sense and we should do it. If you create a healthier work force by incentivizing healthy lifestyles you reduce the overall cost of health care for everyone."

The groups fighting the provision say that while many employees might want to exercise and eat right, some might find that work schedules and family commitments prevent them from making the lifestyle changes needed to improve their health. Lower-income workers, in particular, might not be able to afford gym memberships, even with employers' subsidies.

"We are very concerned that individuals not be penalized — either financially or by exclusion from coverage or services — if they are sick or if they presently engage in specific behaviors or have certain health conditions, such as smoking or obesity," the groups wrote to Congress. The groups signing the letter include the American Diabetes Association, the American Lung Association, the American Federation of State, County and Municipal Employees and the American Cancer Society Cancer Action Network.

Some health advocates are more comfortable with linking financial incentives to other factors, such as refilling prescriptions or monitoring blood sugar on a regular basis, as opposed to meeting a specific fitness target.

"Once you get into paying more for specific outcomes, for many people that does cross over the line," said Ken Thorpe, executive director of the Partnership to Fight Chronic Disease, a coalition whose members include groups representing patients, health care providers and business and labor.

Employer groups are urging lawmakers to increase the discounts in premiums, co-pays and deductibles they can give to workers who participate in wellness programs.

"The value of health insurance premium discounts or rebates to promote employee participation in wellness programs has had and will continue to have a cost savings effect on multiple levels for our health care system," the groups, which include the Business Roundtable and the U.S. Chamber of Commerce, wrote to members of the House Energy and Commerce Committee. "They clearly motivate healthy behaviors as well as reduce health care costs."

A Senate GOP aide said the amendment includes language to prohibit any discrimination against individuals who can't attain specific fitness goals because of medical reasons or other factors. People who feel they can't meet the standards can request waivers or alternative standards from their employers. Employers can also ask for physician to certify that employees have existing medical conditions that would prevent them from meeting specific health goals. The programs must be "reasonable" and not "overly burdensome," open to all employees, and participation must be voluntary.

Safeway's Burd, whose company has given financial incentives to non-union employees to lose weight, cut tobacco use and reduce blood pressure and cholesterol levels, has said that obesity and smoking rates among employees in the voluntary program are roughly 70 percent of the national average. In the past four years, Burd has said, his company's health care costs have been flat "while most American companies' costs have increased 38 percent over the same four years."

By Safeway's calculations, "if the nation had adopted our approach in 2005, the nation's direct health-care bill would be $550 billion less than it is today," Burd wrote in a June 12 op-ed in The Wall Street Journal.

Critics say Burd's data haven't been independently verified. A Safeway spokeswoman acknowledged that there hasn't been an independent analysis, but "we were able to see savings clearly and immediately the first year we implemented the program."

(Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy-research organization that isn't affiliated with Kaiser Permanente.)

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