Employers Get Tough
The Georgetown authors cite one wellness program that wields a stick. It suggests employers raise deductibles from, say, $500 to $2,500. Workers can then “earn credits” worth $500 each to lower the deductible if they meet certain targets for four factors: body-mass index, blood pressure, cholesterol, and tobacco use. A nonsmoking, normal-weight employee with healthy cholesterol and blood pressure winds up back at the $500 deductible. “If you’re on the wrong end of any of those four tests, your costs have gone up,” says Volk.
Full study by Volk J.A. and Corlette S. from Georgetown University. HT: Sarah Kliff.
It’s good to provide incentives for your employees but these are a little too intrusive don’t you think? I wouldn’t want my employer to monitor my weight, cholesterol levels, etc to decide how much I must pay for insurance premium. There sure has got to be a better way!
To Keith
At first glance, this tactic might seem intrusive, but the reality is the only way to reduce health care costs is for people to be healthier! Consumers who are safe drivers receive discounts on their auto insurance, why shouldn’t people who practice healthy lifestyle behaviors also be rewarded through reduced health insurance premiums. Employees should be held accountable for their part in the rising health care costs. And for some people, the only catalyst for change is a hit to the wallet.
Ouch!
I agree with Elaine that people should be rewarded through reduced health insurance premiums. Raising deductibles is a good first step, but they need to be raised a lot more than $2,000 a year.
They need to be raised $10,000-$20,000 per year.
Instead of a $500 credit here and a $500 credit there for healthier lifestyles, why not have the employee accumulate a paid-up policy with each monthly contribution?
In 3-4 years, he could have a $50,000 paid-up policy, and save 80% on the premiums.
I and 3 others are working with Milliman on this concept. We should have their actuarials in another month or so, in hopes of establishing a 501(c)(4) insurer which would be a subsidiary of a commercial life insurer.
Don Levit
To Don:
Interesting concept
Economists believe that employee health benefits are not merely the cost of doing business. Rather, employers only offer health coverage to their workers if the workers are willing to forgo an equivalent amount of cash wages. Health benefits are just a (non-cash) portion of employees’ total compensation.
The problem is: employees (and sometimes) human resources does not understands this fact. I’m surprised more firms don’t only design health benefits in such a way as to run off all the unhealthy workers and retain those who are healthy. This could easily be done. That it’s not done more often must mean that less healthy workers are more productive (i.e. mature workers have higher medical costs but also more experience).
I’ve always wondered why more firms don’t do this. I think it’s a great idea to internalize all the negative externalities in employee health coverage.