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 Beginning in 2014, the law known as Obamacare raised the financial
incentives that employers are allowed to offer workers for
participating in workplace wellness programs and achieving results.
The incentives, which big business lobbied for, can be either
rewards or penalties - up to 30 percent of health insurance
premiums, deductibles, and other costs, and even more if the
programs target smoking.
Among the two-thirds of large companies using such incentives to
encourage participation, almost a quarter are imposing financial
penalties on those who opt-out, according to a survey by the
National Business Group on Health and benefits consultant Towers
Watson (For graphic see http://link.reuters.com/byr73w)
For some companies, however, just signing up for a wellness program
isn't enough. They're linking financial incentives to specific goals
such as losing weight, reducing cholesterol, or keeping blood
glucose under control. The number of businesses imposing such
outcomes-based wellness plans is expected to double this year to 46
percent, the survey found.
"Wellness-or-else is the trend," said workplace consultant Jon
Robison of Salveo Partners.
 Incentives typically take the form of cash payments or reductions in
employee deductibles. Penalties include higher premiums and lower
company contributions for out-of-pocket health costs.
Financial incentives, many companies say, are critical to
encouraging workers to participate in wellness programs, which
executives believe will save money in the long run.
"Employers are carrying a major burden of healthcare in this country
and are trying to do the right thing," said Stephanie Pronk, a vice
president at benefits consultant Aon Hewitt. "They need to improve
employees' health so they can lead productive lives at home and at
work, but also to control their healthcare costs."
But there is almost no evidence that workplace wellness programs
significantly reduce those costs. That's why the financial penalties
are so important to companies, critics and researchers say. They
boost corporate profits by levying fines that outweigh any savings
from wellness programs.
"There seems little question that you can make wellness programs
save money with high enough penalties that essentially shift more
healthcare costs to workers," said health policy expert Larry Levitt
of the Kaiser Family Foundation.
FOUR-FIGURE PENALTIES
At Honeywell International, for instance, employees who decline
company-specified medical screenings pay $500 more a year in
premiums and lose out on a company contribution of $250 to $1,500 a
year (depending on salary and spousal coverage) to defray
out-of-pocket costs.
Kevin Covert, deputy general counsel for human resources,
acknowledged it was too soon to tell if Honeywell's wellness and
incentive programs reduce medical spending. But it is clear that the
company is benefiting financially from the penalties. Slightly more
than 10 percent of the company's U.S. employees, or roughly 5,000,
did not participate, resulting in savings of hundreds of thousands
of dollars.
Last year, Honeywell was sued over its wellness program by the Equal
Employment Opportunity Commission. The EEOC argued that requiring
workers to answer personal questions in the health questionnaire -
including if they ever feel depressed and whether they've been
diagnosed with a long list of illnesses - can violate federal law if
they involve disabilities, as these examples do. And, if answering
is not voluntary.
"Financial incentives and disincentives may make the programs
involuntary" and thus illegal, said Chris Kuczynski, an assistant
legal counsel at the EEOC.
Using the same argument, the EEOC also sued Wisconsin-based Orion
Energy Systems, where an employee who declined to undergo screening
by clinic workers the company hired was told she would have to pay
the full $5,000 annual insurance premium.
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SICK? PAY MORE.
Some vendors that run workplace wellness for large employers promote
their programs by promising to shift costs to "higher utilizers" of
health care services, according to a recent analysis by Lorin Volk
and Sabrina Corlette of Georgetown University Health Policy
Institute - and by making workers "earn" contributions to their
healthcare plans that were once automatic.
Consider Jill, who asked that her name not be used for fear of
retaliation from the company. A few years ago, her employer,
Lockheed Martin, provided hundreds of dollars per year to each
worker to help defray insurance deductibles. Since it implemented
its new wellness program, workers must now earn that contribution
by, among other things, quitting smoking (something non-smokers
can't do) and racking up steps on a company-supplied pedometer.
"Basically, if you don't participate in these programs, you have to
pay something like $1,000 out of pocket for healthcare before
insurance kicks in," said Jill.
Companies insist the penalties are not intended to be money-makers,
but to encourage workers to improve their health and thereby avoid
serious, and expensive, illness.
As evidence of that, said Honeywell's Covert, the company offers
employees "easy ways to get out of" some of the wellness
requirements, such as certifying that they do not smoke rather than
submitting to a blood test.
BALANCING THE WELLNESS BOOKS
Why are companies so keen on such plans?
Most large employers are self-insured, meaning they pay medical
claims out of revenue. As a result, wellness penalties also accrue
to the bottom line.
About 95 percent of large U.S. employers offer workplace wellness
programs. The programs cost around $100 to $300 per worker per year,
but generally save far less than that in medical costs. A 2013
analysis by the RAND think tank commissioned by Congress found that
annual healthcare spending for program participants was $25 to $40
lower than for non-participants over five years.
Yet at most large companies that impose penalties for not
participating in workplace wellness, the amount is $500 or more,
according to a 2014 survey by the Kaiser foundation.
"For economic reasons, most employers would prefer collecting the
penalties," said Al Lewis, a wellness-outcomes consultant and
co-author of the 2014 book "Surviving Workplace Wellness."
Lori, for instance, an employee at Pittsburgh-based health insurer
Highmark, is paying $4,200 a year more for her family benefits
because she declined to answer a health questionnaire or submit to
company-run screenings for smoking, blood glucose, cholesterol, and
blood pressure. She is concerned about the privacy of the online
questionnaire, she said, and resents being told by her employer how
to stay healthy.
Highmark vice president Anna Silberman, though, doesn't see it that
way. She said the premium reductions that participants get "are a
very powerful incentive for driving behavior," and that "people
deserve to be rewarded for both effort and outcomes."
(Reporting by Sharon Begley. Editor: Michele Gershberg and Hank
Gilman)
[© 2014 Thomson Reuters. All rights
reserved.]
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