Every lobbyist swarming Capitol Hill these days knows that, when it comes to legislation, the devil is always lurking in the details, not lounging in the concepts. Yet concepts, not details, are drifting down to the public—who will be in for a surprise when they realize that reform is not what they think it is. How these details are hashed out or slipped into a bill at the eleventh hour is crucial to the success or failure of reform. This is the fourth of a series of occasional posts that will look at where the devil lies in key provisions of the health care bill. The entire series is archived here.
All of a sudden it stopped—the talk from members of Congress about preventive care’s role in reducing the cost of medical services. When the pols pushed up their sleeves and got to work writing bills, they tucked in some preventive care provisions, largely ignored by the media and everyone else. The fine print gives employers some powerful tools to shape their workers’ health behavior—but, in doing so, some state regulators say they could become another way for insurers to consider health status in setting premiums.
In short, the Senate bill increases employers’ incentives for establishing wellness programs; they can use these incentives to reward their workers for participating in programs and meeting certain health targets, like having a low body mass index or low cholesterol levels. Sounds good and reasonable, right? But hold on, regulators say. Devils do lurk in the details.
Under the current HIPAA regs, employers can create wellness incentives based on health factors. What does that mean? The value of those rewards can be no greater than 20 percent of the combined premium paid by both the employer and employee. Suppose you pay $1000 and your boss pays $4000 for a total premium of $5000. Your boss has decided to zero in on body mass index as a way to help employees lose weight. You’re lucky because your BMI is less than 26—the target your employer has selected—so you qualify for the “discount” of $1000. That could mean you don’t have to pay any premiums; the employer pays the full amount.
But what about the premiums paid by co-workers who don’t hit the target? “Obviously, that means they can jack up the overall premiums,” says one state insurance regulator. “It’s a backdoor way to charge healthy people less and at risk people more.” That, of course, benefits insurers, because they get more premiums to compensate for what they believe is a greater risk.
Employers benefit too, because they might pay lower premiums overall if they can get enough employees to meet the targets. They could even offer two different plans—one with rewards for the healthy and one with higher premiums for the unhealthy. As an added bonus, employers might ultimately get a healthier, more productive work force, although some employment experts fear that employers could use the targets as hidden reasons for firing workers. If you can’t lower your BMI, you’re out the door—that sort of thing.
The business community has been busy helping to fashion language in the Senate bill that increases the incentives for good behavior while raising the bar for workers who cannot lower their cholesterol or their BMI. If the Senate language remains in the final bill which lands on the president’s desk, the amount of the reward will increase to thirty percent—which means a “good, healthy” employee could get a thirty percent reduction in the premium, coinsurance, copayments, or a combination. The Secretary of Health and Human Services would have authority to increase the discount up to fifty percent.
Helen Darling, who heads the National Business Group on Health, a group of some 280 large employers, told me she did not think businesses would use the fifty percent incentive. But, she said: “We really like the flexibility. The aim is to move everyone to choose healthier life styles. It’s real simple. I can earn my differential by having a healthy weight, or I can agree to participate in a program to lose weight. Under current law, it has to be something they can do. Nobody is making it too burdensome yet.”
Yet? What exactly do employers have in mind down the road? Here’s where HIPAA comes in again. To prevent discrimination against workers, employers that choose the incentive route must offer workers who don’t meet employers’ targets an alternative program. But regulators point out that the alternative programs can stack the deck against employees who don’t meet the targets.