The Devil in the Details, Part IV

Who benefits from wellness incentives—an overweight colleague, your boss, insurers, or you?

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.

Unhealthy workers may have to present a doctor’s note to show that they can’t possibly meet the targets even by participating, or they may have to faithfully participate every week—an onerous requirement for some. At the same time, healthy workers check in once a year, meet the targets, and are golden. There may be no requirement for them to exercise or otherwise maintain good health behavior. As one regulator told me: If employers want an exercise program, why not make it available for everyone?

The media have been MIA on the wellness incentive story—the exception being The Washington Post. In a fine story last fall, the paper discussed what it called a “colossal loophole” that wellness incentives could create, and clearly laid out what’s at stake.

The incentives could attack a national epidemic of obesity. They also cut to a philosophical core of the health-care debate. Should health insurance be like auto insurance, in which good drivers earn discounts and reckless ones pay a price, thereby encouraging better habits? Or should it be a safety net in which the young and healthy support the old and sick with the understanding that youth and good health are transitory?

The strongest part of the Post’s story was the anecdotes it presented about the noose tightening around the necks of unhealthy workers. Valeo, an auto parts dealer, raised deductibles from $200 to $2,200 for individual coverage and from $400 to $4,400 for family coverage. Then Valeo told its workers it would reduce the deductible if they quit smoking and met goals for blood pressure, cholesterol, and body mass index. “If they don’t comply, they end up being penalized, if you will, but we refer to it as a Healthy Rewards program,” said director of human resources Robert Wade. If Valeo workers choose not to submit to yearly medical assessments, they get a different coverage with higher premiums.

Other employers talked of the downsides. Jake Flaitz, benefit director for Paychex, a payroll management company, told the Post that “employees could be doing everything right and still not achieve the desired outcome.”

Last month, the Robert Wood Johnson Foundation and the Trust for America’s Health released a public opinion survey showing that 71 percent of Americans favor increasing investments in prevention. “Prevention is clearly one of the most popular parts of health reform,” said Al Quinlan, president of Greenberg Quinlan Rosner Research, which conducted the poll. The question is: Will prevention still be popular when workers find out that their jobs may be on the line, or they have to pay even higher premiums because losing weight is hard?

This all sounds like something that deserves further media exploration, no?

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.