Posted October 1, 2007

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Wellness — Or Else!

Should Employees Pay for Unhealthy Habits?

One of the new buzzwords in health care is "wellness" — something the private sector has been utilizing with great success. One national survey finds that half of all large companies have wellness programs, and another reports that half of multinational companies intend to put one in place. Earlier this year, the National Governors Association declared a Wellness Week, stating that "a comprehensive wellness program consisting of health benefits, supportive workplace environment and personal accountability can improve employees' health management." The governors' Web link cites progressive efforts in Arkansas, North Carolina, Ohio and Virginia.

Most public agencies have no choice but to pursue wellness programs. Their health care costs for employees and retirees are rising faster than their tax revenues even when the economy is expanding. (See my companion column on rising health care costs.) Nassau County, N.Y., hopes to save $4 million through its Healthy Nassau initiative, which is just one part of a broader effort to rein in medical costs. State associations, such as the North Carolina League of Municipalities, are expanding their employee assistance programs to include voluntary wellness counseling and support programs. The New York state controller's office has included wellness initiatives in its toolbox for financial survival. For retirees, the cost savings can be substantial — as much as $640 annually, according to one report.

Many of these efforts began as voluntary initiatives, included in the health care services package offered to employees. But now there is a new twist. Essentially, employers are telling employees to "get with wellness or else." What had been just a carrot is now becoming a stick.

For some public employees and retirees, the downside of the emerging wellness movement is higher insurance premiums for those who don't "live right." Efforts by private health care management companies to charge higher premiums are already attracting attention, both positive and negative. Employers are likely to favor the cost-sharing implications of charging those whose lifestyles result in higher costs. Some will have no choice as they face increasingly higher cost hurdles in the future. But employees and their labor representatives are likely to balk. The problem is where to draw the line — especially if the penalty for undesirable lifestyle is more than just a modest co-payment or premium differential and this ultimately leads to exclusion from coverage.

Should firefighters be forbidden to smoke, in light of the occupational hazards that their jobs require? (See the next paragraph for a relevant lawsuit.) Should cities set weight limits on police officers? What about body-mass-index-based insurance premiums for overweight office workers whose job performance is unaffected by their obesity but whose medical costs are arguably higher? Should retirees pay higher premiums or lose benefits if they don't get with the program and stay in shape? Will public employers now requiring a drug-free workplace expand their scope to include their employees' private lives, in pursuit of lower medical care costs? Will life-sustaining medical treatments become unavailable to expiring elderly retirees who failed to "live well" and thus disqualified themselves from "extended morbidity"?

Some argue that this could lead to a "police state" or "Big Brother" mentality in workforce management. Just as we have seen discrimination lawsuits over pre-employment testing of job candidates, it's foreseeable that litigation and court decisions will ultimately determine the boundaries for employment wellness programs. For example, a private employer has been sued by a smoking employee who was allegedly refused employment because he flunked the company's drug test for nicotine, a policy imposed on the basis of health care costs.

Meanwhile, public sector managers and policy makers must tread a fine line in their efforts to provide market-competitive health benefits with limited resources, control their costs of retiree medical care, and treat their employees as partners and not as cattle. Thoughtful communication will be vital in these initiatives, as employees must first understand what's at stake and how they can make a difference in their own lives. Those who most need the help are much harder to influence than the fitness buffs. If there ever were a case for a patient, incremental but persistent approach to change management, this would be it. And keep your eye on the private-sector litigation: the parasitic "tobacco attorneys" are always looking for a new host.

Finally, don't believe for a moment that a national health care system would avoid the same dilemmas. The burgeoning costs of Medicare benefits will ultimately force Congress and the Medicare trustees to face this issue on a national level as well.

Last month:
· Retirement Vendor Kickbacks
· Pensions, Housing & Mortgage $$$
· The St. Louis Pension Bond Debate

Index of recent columns

Girard Miller, an analyst of benefits and investments with 30 years of experience in the public, private and nonprofit sectors, can be reached at Girardinmalibu@charter.net.
More biographical information.

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