Employee Benefit Views

Do Obamacare wellness incentives penalize the poor and overweight?

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Posted December 10, 2013 by David Roddenberry and Jimmy Fleming at 11:14AM. Comments (3)

Starting January 1, 2014, the Affordable Care Act will dramatically expand the ability of companies to penalize employees for lifestyle issues, including being overweight or smoking, in the name of “wellness incentives.” Overweight and obese employees may now face staggering financial penalties of up to 30% of the cost of their health plan, and up to 50% of the cost of their health plan if they smoke.

Wellness incentives are powerful behavior-change tools. Trouble is, none of the penalty programs that companies are planning to administer under Obamacare’s expanded penalization allowance bear any resemblance to the wellness incentives that academic, clinical and industry research have shown to be powerful tools that promote behavior change. In fact, there is no published academic research to show that the government’s penalization programs lead to weight loss, but there is ample evidence that these programs are inequitable cost-shifting tools, disproportionately burdening those least able to afford health care.

This impending Obamacare program is not voluntary – all employees are forced to lose weight or be penalized. A typical program supported by the ACA:

  • Penalizes individuals who are overweight in the form of an increased monthly health insurance premium (i.e. employees with a BMI above 30 pay an extra $100/month for health care), or
  • Rewards employees who are at a normal BMI (i.e. employees get an extra $100/month in their paycheck for having a BMI below 30)


Proponents of this program believe that there is currently an insufficient incentive for employees to get and remain healthy. Unfortunately, this short-sighted approach assumes that employees are overweight by choice and that a $1,200/year incentive is enough to change their thinking. Alternatively, supporters argue that people who are overweight should pay more because they are higher cost risk to insure.

Proponents liken this penalty for being overweight to an auto insurance penalty for a driver who has previously been in an auto accident or received multiple speeding tickets. However, penalizing employees for their health status violates one of the major purposes of health reform – preserving and expanding access to affordable, adequate, high quality insurance coverage for all Americans.

 

Research funded by the Obama adminstration has failed to demonstrate that such typical programs actually improve health. The recent RAND report mandated by the Affordable Care Act reviewed all of the literature on wellness incentive programs and concluded that any change in health due to wellness incentives "is small and unlikely to be clinically meaningful.

Obamacare incentives are discriminatory and regressive as obesity rates are highest among minorities and lower paid employees. Obesity rates are highest among non-Hispanic blacks (49.5%), compared with Mexican Americans (40.4%), all Hispanics (39.1%) and whites (34.3%). Higher income women are less likely to be obese than lower income women. Our direct experience shows that joining and succeeding in a weight loss incentive program depends on ample communication, but that mission-critical frequent communication is more difficult with employees at the lower end of the economic scale. Field employees and employees without a company email address, are the least likely to sign-up for, and benefit from, these incentive programs. Even if employees do not even hear or know about the advent of the program they are unfairly penalized by them.

Alternatively, an effective wellness incentive program is one that’s voluntary and grounded in the best practices literature around behavior change. There are proven, voluntary programs that provide carefully-structured systems of rewards based on discrete behavior-change goals and timeframes. Such choice-based wellness incentives are often implemented to help people avoid procrastination by providing participants with a specific start time, end time and goal, and proffering professional and peer-based support and motivation along the way.

As part of the continued discussion around Obamacare, we should re-think how wellness incentives are offered. Incentives — when thoughtfully designed and administered—can be more than triple the effectiveness of weight loss programs and properly harnessing the power of this approach is paramount.

David Roddenberry and Jimmy Fleming are co-founders of HealthyWage, a purveyor of financial incentive-based weight loss programs for individuals and businesses. They can be reached at www.HealthyWage.com.

3 Comments

Posted by: ilene d | December 10, 2013 10:39 PM

I totally agree with Steve H. couldn't have said it better. Except for a very, very small minority who have genetic issues, Obesity is the result of choices made regarding eating and exercising. As for smoking, that is totally the choice of the smoker. Since there is ample documented evidence that obesity and smoking generally result in higher health costs, charging higher rates makes total sense.

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Posted by: Steve H | December 10, 2013 5:01 PM

One person's penalty is another's incentive. The fact is that both excess weight and smoking are personally controllable conditions and that both are health risk factors and not health conditions. It's also true that both obese people and smokers have medical costs approximately 40% higher than people without those health risks. The principal argument for the premium variances is that people who maintain the (often difficult but achievable) discipline to not smoke and keep their weight-based risk factors low should not be forced to subsidize those who do not. Finally, there is ample research showing that financial incentives have been quite effective in getting people to access or to just accept readily available help to change their unhealthy behaviors.

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Posted by: Phil D | December 10, 2013 1:56 PM

Sorry but this article is very self serving and very misguided. You should put the link to your business at the top of the article and just come out and say that your business can provide better incentive design solutions than what the ACA allows employers to do.

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