A lot of business executives I talk to get really excited when they hear that they are now officially allowed to charge smokers a higher insurance premium for their group health insurance, and some might even like to push it a step further and include other preventable conditions, such as obesity. Nowadays, we’ll take any break we can get, and rightly so. Especially if it encourages people to take better care of their health and thereby reducing the long term cost of care… right?
Eh, not so fast, I’m afraid. For one thing, HIPAA is still alive & well. So although you can technically charge a higher insurance premium for smokers (or, presumably: obese employees), these rate differentials can only be offered as a reward within a bona fide wellness program, and according to the HIPAA regs, the program must be set up to provide an “alternative standard” for those who are not able to achieve the goal. Otherwise, the policy could be considered discriminatory against specific health conditions (i.e. nicotine addiction, metabolic syndrome). The alternative standard? Well, for those smoker premiums, it’s usually completion of a tobacco cessation program. NOTE: not actually quitting. So the bottom line is that in establishing the premium differential, it is only those employees who will refuse to participate that will end up paying the higher premium… so why not simply structure it as a participation-based program?
Yet another side of this is the human element. Safeway has gotten a lot of attention for maintaining flat insurance premiums over the past several years by being very aggressive about their approach and charging substantial premium differentials based on health factors. Trouble is: no one knows the long-term impact of this approach in terms of eliciting the true goal: meaningful, long-term behavior change. In his book “Drive”, Dan Pink presents a compelling case about “the surprising science of human motivation”, which, in a nutshell says: pay for performance doesn’t work, at least not for long.
Full disclosure: I’m an ex-smoker and formerly obese. And the truth is, no amount of money was going to make me change those things in a meaningful way until I was truly ready. The average smoker requires 6 or more attempts to quit… more or less. So it is both personally and professionally that I have to say that I think we’re better off with carrots (perhaps literally!) than a tax on the unhealthy.