| Subject: economics of personal responsibility |
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krz
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Date Posted: 11/17/04 10:22:32am
One of the sites I keep track of -- an interesting article on a health insurance product being marketed to employers that reward/punish - depending on your perspective - for lifestyle choices.
Bad Health Habits Carry High Price Tag
Christine Wiebe
Medscape Business of Medicine 5(2), 2004. © 2004 Medscape
Posted 11/03/2004
Introduction
With mounting evidence that lifestyle choices are driving up medical costs, employers and insurers are looking for ways to make consumers more responsible for those behaviors. Smoking is an obvious target, as well as obesity, high cholesterol, and high blood pressure.
Research shows that individuals with those health problems generally ring up higher medical bills. Singling out those workers can be tricky, however. Federal laws prohibit employers from discriminating against workers on the basis of their health status.
But companies increasingly are looking for ways around those restrictions, such as refusing to hire smokers. Some large employers, such as General Mills, have adopted a health insurance differential for smokers, insisting the cost -- say, $20 a month -- is a reward for those who do not smoke rather than a punishment for those who do. One Indiana company has gone further, introducing a "wellness tool" that officials believe will revolutionize health insurance and curb lifestyle-related medical costs.
Supplemental Insurance Product -- With a Twist
Tom Markle, an Indiana health benefits lawyer, routinely gets calls from employers looking for ways to cut medical costs without breaking federal laws. The more innovative their ideas, he says, the more skeptical he is.
"Usually, I take issue with it," he said. "There are a lot of scams out there." In fact, the federal government has been tightening its scrutiny of employer benefit plans.
About a year ago, however, a client approached him with an idea that earned his legal approval. The basic concept was to offer a high-deductible basic health insurance plan along with a no-cost supplemental product that would reduce workers' deductible if they met various health standards. That way, an employer could provide the same basic coverage to all workers, avoiding any discrimination claims.
"The only people who are impacted are the people with bad lifestyle choices," says Douglas Short, who designed what he calls a "wellness tool." By offering the supplemental insurance plan, employers can provide financial incentives for workers to quit smoking, lose weight, and control cholesterol and blood pressure levels. All of those factors have been linked to higher medical costs when not controlled.
"Lifestyle is something that people traditionally won't change without being motivated to change," says Short, Chief Executive of BeniComp Group, based in Fort Wayne, Indiana. The company is a third-party administrator of health benefits, in addition to offering the new insurance plan.
Thus far, insurance departments in 17 states have approved the BeniComp plan. Several large employers will introduce the program in 2005, Short said, giving workers several months to meet the lifestyle goals before the financial incentives go into effect.
Healthy Lives Produce Healthy Savings
The first company to adopt the BeniComp plan already is reaping financial rewards as well as health benefits, according to Andrew Briggs, President of the Bank of Geneva in Indiana. Medical costs were rising so sharply that they would have equaled the sum of workers' salaries in 8 years if not curbed, he said. So, he initiated the BeniComp wellness plan last January.
Bank workers now have an initial deductible of $2500 with their basic coverage. They can lower that figure by $500 for each of the 4 health measures. Most workers have met at least 3 of the standards, but obesity remains the most difficult problem, he said. In order to earn that discount, workers must have a body mass index (BMI) lower than 30.
Although not everyone meets that standard, about a third of the workforce has started exercising regularly in order to reach that goal, Briggs said. He has joined the weight-loss movement himself. "I was able to get into some pants today that I haven't worn in years," he said with a laugh.
In addition to those health improvements, the new plan is credited with making 2 "critical calls," in which serious conditions were detected during the routine screenings that are part of the program.
"By being proactive, we're finding illnesses before they occur," Briggs said. One employee was diagnosed as having diabetes after undergoing blood tests, for example, even though no symptoms had become apparent yet. Workers with high cholesterol or blood pressure levels can earn discounts for those measures simply by following their doctor's orders, such as taking prescribed medications.
The bank also has benefitted financially, Briggs said. The premium for the bank's basic health plan was reduced by about 30% because of anticipated savings on medical claims, he said. The bank already has saved about $30,000 to $40,000, even after paying the additional cost of the BeniComp supplemental plan. That savings is a stark contrast with the cost increases the bank had been experiencing in previous years, Briggs said.
Employees own a large percentage of the bank, he added, so they will share in the financial rewards. Still, some have resisted the efforts to change their lifestyles. In June, Briggs introduced another incentive to bolster lagging enthusiasm. He now gives workers $17.50 a month to buy exercise gear or pay health club dues. Beyond that, he leaves it up to them to decide whether the incentives are worth it.
"If you want to sit in your recliner and eat sugar and smoke cigarettes, then you're going to pay higher premiums," he said.
Stricter Approaches Needed
Health experts uniformly applaud efforts that help people adopt healthier lifestyles, but some question the fairness of attaching financial "rewards" to behavioral changes that are extremely difficult to achieve. Others say it is appropriate and even necessary for someone to lower the boom on people who make unhealthy choices.
"I think we ought to shine a light on this problem," said George Blackburn, MD, an obesity expert at Harvard Medical School, Boston, Massachusetts. Americans like to take the "live free or die" attitude on lifestyle choices, he said, but everyone pays more for those who choose unhealthy behaviors.
A new study, in fact, underscores the fact that obese individuals incur significantly higher medical costs.
"It's about time that we took the issue seriously," said economist Kenneth Thorpe, author of the study published recently in the journal Health Affairs. The study found that more than a quarter of the rise in US healthcare spending over the past 15 years was directly attributable to obesity.
"There's no question if you look at people with a BMI of 30 and above that they cost 37 percent more," he said, citing a key finding of the study. Programs that target obesity need to be implemented at all levels of society, said Thorpe, a professor of health policy and management at Emory University in Atlanta, Georgia.
"It makes sense to build in positive incentives for people to change their behavior," he said.
Obesity expert Dr. Blackburn agreed, saying he applauds workplace initiatives that encourage employees to lose weight. In fact, approaches like the Bank of Geneva's health discounts may be a "pivotal step" in the country's battle against obesity, he said.
"This epitomizes what we need the employer to do," Dr. Blackburn said. Workers and employers need to team up with health professionals to improve lifestyles and thus control medical costs. "The company and the employees will save money," Dr. Blackburn said. "But the main thing is the quality of your life. It's no fun having a BMI over 30."
Whether or not workers appreciate those benefits, momentum seems to be building for stricter adherence to health guidelines.
In Alabama, an expert panel recently recommended a $19 monthly health insurance surcharge for state workers who smoke. The group also studied other health risks, including obesity, but decided to target one problem at a time, a spokesperson said. The governor is expected to call a special session in November to consider legislation incorporating the panel's recommendations.
Christine Wiebe, freelance medical and health writer, Providence, Utah
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