Coming Soon to a Workplace Near You: 'Wellness or Else'
By REUTERS
JAN. 13, 2015, 7:09 A.M. E.S.T. - New York Times
NEW YORK — U.S. companies are
increasingly penalizing workers who decline to join "wellness" programs,
embracing an element of President Barack Obama's healthcare law that has raised
questions about fairness in the workplace.
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 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.
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
Joann 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."
(This version of the story corrects
name, Lorin Volk, in 16th paragraph, to Joann Volk)
(Reporting by Sharon Begley.
Editor: Michele Gershberg and Hank Gilman)