Driving Down Health Care Costs

The New York Times reports that more employers are demanding that workers who smoke, are overweight or have high cholesterol shoulder a greater share of their health care costs. This is a shift toward penalizing employees with unhealthy lifestyles rather than rewarding good habits.

So far, companies including Home Depot, PepsiCo, Safeway, Lowe’s and General Mills have defended decisions to seek higher premiums from some workers, like Wal-Mart’s recent addition of a $2,000-a-year surcharge for some smokers. Many point to the higher health care costs associated with smoking or obesity. Some even describe the charges and discounts as a “more stick, less carrot” approach to get workers to take more responsibility for their well-being. No matter the characterizations, it means that smokers and others pay more than co-workers who meet a company’s health goals.

Current regulations allow companies to require workers who fail to meet specific standards to pay up to 20% of their insurance costs. The federal health care law raises that amount to 30% in 2014 and, potentially, to as much as half the cost of a policy.

Many programs that ask employees to meet certain health targets offer rewards in the form of lower premiums. At Indiana University Health, employees who do not smoke and achieve a certain body mass index, or BMI, can receive up to $720 a year off the cost of their insurance. “It’s all about the results,” said Sheriee Ladd, a senior vice president in human resources at the system.