In addressing the ever increasing costs of health care in the United States, Congress is looking at options that would theoretically make health insurance more affordable to Americans. The task of making health insurance more affordable to all is monumental. President Obama has said, “There’s no quick fix; there’s no silver bullet.”
One of the ideas being considered by Congress is to provide incentives to employers to sponsor wellness programs. Employers have had imaginative wellness programs designed to make their employees healthier and, in turn, decrease their use of the company’s group health plan. The jury is still out on the success of these programs. Let’s take a look.
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What’s an employer to do?
Employers know that to attract and keep the best employees, they must offer health insurance as a benefit. Employers also know that health insurance is costly and is becoming more costly every year. Historically speaking, employers have tried a number of ways to address the rising cost of health insurance. The experiments have, in large part, failed. Health insurance costs and premiums have continued to rise faster than inflation. In fact, it’s anticipated that health care spending in the United States will reach $4 trillion in 2015, or 20 percent of the gross domestic product.
What’s the cause of this significant rise in cost? The bottom line is that Americans are using the health care system more than ever. Americans are living longer and because of poor lifestyle choices are among the most unhealthy individuals in the world. Lifestyle challenges, including obesity, smoking, drug abuse, and physical inactivity, have contributed to an increased use of our health care system. According to the Centers for Disease Control and Prevention (CDC), more than 75 percent of an employer’s health care costs and productivity losses are related to employee lifestyle choices.
In response, insurance companies have raised premiums substantially, making it a challenge to find ways to address the rising costs. In the ’80s and ’90s, health maintenance organizations (HMOs) were first introduced to hold down costs. When HMOs proved too restrictive, preferred provider organizations (PPOs) were introduced in the late ’90s. By 2002, however, many employers realized that PPOs weren’t containing health care costs. In response, employers began to reduce benefits offered and instituted cost sharing.
Still, premiums continue to rise. Now employers have refocused their thought process toward preventive care — if utilization is the problem, can employers offer a program that encourages employees to change lifestyle habits to decrease use? Thus, the idea of wellness programs was born.
Are wellness programs the answer?
What is a wellness program? A wellness program may include the following:
- annual health and lifestyle assessments;
- health results evaluation sessions (group workshops);
- individual goals and action plans;
- referral of high-risk persons (e.g., someone with high blood pressure) for needed care;
- an opportunity for employees to participate in risk-reduction interventions and health enhancement programs such as blood pressure reduction, weight control, fitness, cholesterol reduction, and wellness campaigns;
- monthly tracking/accountability programs to monitor progress toward goals, including exercise logging, health events, health screening, self-study projects, and wellness challenges; and
- annual health outcome reports showing changes in whole organizations.
Other popular choices include health screenings, health fairs, subsidized flu shots, health risk assessments, and subsidized or discounted off-site programs or memberships.
The Obama Administration
It is clear that we cannot continue to sustain the ever increasing costs of health care. During his campaign, President Obama promised to address the issue and find a way to make health care affordable to every American. President Obama clearly wants to encourage employers to embrace wellness programs. As he stated at a town hall meeting, “We can all take steps to become healthier. There is nothing wrong with us giving a little bit of a nudge in moving people in the direction of healthier lifestyles.” President Obama has also directed the Office of Personnel Management, the National Economic Council, the Department of Labor (DOL), and the Office of Management and Budget to examine successful employer wellness and prevention practices that lower health care costs and improve employees’ health that could, in turn, develop a wellness program for federal employees.
One of Obama’s eight principles for health legislation is that it must “invest in prevention and wellness.” Thus, Congress is considering proposals to provide tax credits or other subsidies to employers who offer wellness programs that meet federal criteria. The various proposals will make it easier for employers to use financial rewards or penalties that are designed to promote healthier lifestyle choices. Some of the tax incentives will reward wellness programs that are designed to address health problems associated with blood pressure, obesity, and diabetes. Proposals are also being considered that will provide tax credits for programs that offer screenings for health problems and that offer counseling to employees to help them adopt healthier lifestyles. Such tax credits focus on programs that assist in smoking cessation, physical fitness, nutrition and depression.
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Privacy and other issues
Do wellness programs make sense? The Wellness Council of America says they do. It estimates that a $1 investment in a wellness program saves $3 in health care costs. Under the current state of the law, employers must be cautious to avoid disability and privacy issues when instituting a wellness program.
The Americans with Disabilities Act (ADA) and the amendments to it passed in 2008 prohibits employers from inquiring about employees’ medical conditions unless the inquiries are “job related and consistent with business necessity.” According to the Equal Employment Opportunity Commission’s (EEOC) 2002 enforcement guidance, “Disability-Related Inquiries and Medical Examinations of Employees,” employers may conduct voluntary medical examinations and activities, including taking voluntary medical histories, that are part of an employee health program. They may do so even if the questions aren’t job-related or consistent with business necessity. Medical records acquired as part of the wellness program must be kept confidential and separate from personnel records.
But what does it mean to be “voluntary”? The EEOC states that the wellness program is “voluntary” so long as an employer neither requires participation nor penalizes employees who don’t participate. It’s predicted that as employees are required to take on an increasingly larger share of the costs of employer-sponsored health coverage, wellness programs may face challenges that premium rebates or decreased co-payments are inherently coercive and violate the ADA.
But wait! What about the Health Insurance Portability and Accountability Act (HIPAA)? HIPAA’s non-discrimination provisions generally prohibit group health plans from charging similarly situated individuals different premiums, deductibles, or copayments or offering rewards based on a health factor (e.g., health status, medical condition, claims experience, and medical history). There are exceptions for wellness programs, however. It’s unclear whether compliance with HIPAA’s proposed “total reward” regulation would satisfy the EEOC’s requirement that a program be voluntary to avoid an ADA violation.
In dealing with employee lifestyle choices, employers have also faced increased pressure to deal with issues outside the workplace, such as employees who smoke or abuse alcohol or drugs.
No easy answers to ever-increasing health care costs
Wellness programs may be the answer, but employers need to be aware that as with any new idea, litigation inevitably will ensue until the “kinks” are worked out. If you choose to institute a program, be sure to have it “vetted” for legal compliance and to assess whether savings will be the result. Maybe this Congress will pass legislation that can address some of these thorny legal issues and alleviate the inevitable litigation.