Can Your Healthcare Costs Go Up If You're Obese?

By glblguy

Employee Smoking RoomOn July 1, 2007 new rules for the Health Insurance Portability and Accountability Act (HIPPA) went into effect. These new rules provide additional clarity around how employers can reward or penalize employees based a specific health results.

Clarian Health Partners Inc. was among the first companies to take advantage of these new rules. I first read about Clarian’s changes in an article published by MoneyNing. Since then further details have been announced and along with them a tremendous amount of controversy and discussion on the web.

Effective in 2009, Clarian will begin charging employees more for their health care coverage if they meet any of the following conditions: BMI (Body Mass Index) exceeds 30, Cholesterol levels are too high, Blood Pressure levels are too high,Glucose levels are too high, Smoking.

The price for not meeting these standards? $10 per paycheck if their BMI is too high, and $5 per paycheck for the others. Previously, Clarian had a program similar to many other companies that rewarded employees for staying in shape. But no more. The message is now stay in shape or pay the the price. Of the company’s 13,000 employees, about 8,000 are enrolled in the company’s health plan. The company estimates that as many as 34% of its employees will meet the definition of being obese, while it expects lower levels for other health measures. About 26% are tobacco users.

Clarian president and CEO Daniel Evans was quoted saying “For several years, we’ve had a reward program, where if you cease smoking and do a self-assessment, you receive a reduction in your [health care] premiums, [But] our health care costs were going up and our employees were not taking full advantage of the programs we had in place.”

Most would argue a carrot is more effective than a stick, and thus this bold move by Clarian is causing a great deal or stir amongst employees, companies, and worker support groups. Many argue that policies like this both invade employee privacy and confidentiality. Even with a controversy, a number of companies are changing to similar “stick” policies.

On one side, I can see the companies perspective on this around reducing costs and having a healthier workforce. On the other hand, I can fully understand the privacy issues and really question a companies right to tell an employee how to live their life.

I believe Clarian and similar companies are taking the right approach. Companies like Clarian have a responsibility to their shareholders, customers, and employees to keep costs down and profits up. They also want healthy employees who will be at work and have minimal health issues.

What are your thoughts on this issue? Would you work for a company that had a similar policy? If you were employed, would you continue to work there?

15 Responses (including trackbacks) to “Can Your Healthcare Costs Go Up If You're Obese?”

  1. justin Says:

    I’m not sure this isn’t discrimination. Some ethnic groups are more prone to health issues, women usually have more health issues than men. Maybe they’ll start charging them more, next?

  2. glblguy Says:

    @Justin – Not if it falls under discrimination, as that generally deals with race, ethnicity, nationality, sexuality and sometimes religion and political views. But I could be wrong. Regardless, I understand what you are saying. If definitely brings to question where can companies draw the line, and this is most certainly a slippery slope.

    In my research, it did say that employees who had signed letters from their doctors would be exempted from the policy.

  3. justin Says:

    I wonder what a signed letter can do…

    Yes, legally it’s not discrimination because it’s not under the legal protections of race, sexuality, etc. However, they are talking about higher costs for people with hereditary issues, diabetes, cholesterol, even weight(high or low metabolism at the very least) can all be passed on down the family tree.

  4. glblguy Says:

    Not sure on the signed letter, but Clarian has publicly said that if there was a medical reason they would not incur the additional charges. Guess we’ll see if they walk the walk or not.

    I agree on hereditary, and I think that is the point of a doctor certified letter. It seems to me, they really are trying to be reasonable about, and only trying to penalize the employees making unhealthy decisions.

  5. Las Vegas Lawyer Says:

    I see a debate on this health topic for many years to come.

  6. glblguy Says:

    @ LV Lawyer – I agree!

  7. kitty Says:

    “However, they are talking about higher costs for people with hereditary issues, diabetes, cholesterol, even weight(high or low metabolism at the very least) can all be passed on down the family tree”
    This is exactly my problem with plans such as this. There are many people (myself included)who are slim, active, eating right and exercizing regularly who nevertheless cannot get LDL below 130 without drugs because of heredity. I am not sure that a signed letter from a doctor would work in this case – they could just say – “take statins”. But this would be a) direct interference in our right to refuse medication b) ill-advised in cases where the overall 10-year heart attack risk is low. For example, say your absolute 10-year risk of heart attack is only 1% even with LDL over 130. Let’s say statins can reduce this risk by 30%. 30% of 1% is only .3% and that in 10 years; is this small probability of benefit really higher than the equally small risk of side effects? c) expensive – consider how many people in low risk category will be treated with prescription drugs for how many years to prevent one case of heart attack.

    Moreover, I doubt this plan is going to save Clarian money (except for smoking policy – this is probably the only cost saving measure). Even with obesity things are far from clear if you consider possible results of such a policy in real life. Diet conseling will cost money; some people may go on unhealthy crash diets, some will engage in exercise that may be a bit too much – this will increase risk of injury – $$$. Some will take drugs. Not all obese people get diabetes or are sick. So, you still need to consider how much they’ll spend on several people in order to save money on one person. But the plan is bound to cause some otherwise healthy low-risk people to take prescription drugs, and this is going to be expensive.

    People often confuse absolute risk reduction with relative risk reduction; it is important to understand the difference. It is also important to understand how many people need to be treated for how many years for one person to benefit when you consider cost (NNT – number needed to treat, I am surprise a health company like Clarian doesn’t understand basic epidemiology). It is easy to say “it is cheaper to give people prescription drugs than to treat a heart attack”, but when you say it you are forgetting that you need to treat many in order to save money on one. There have been many studies showing that except for some very high risk categories such a treatment is not cost-saving. BTW – if you are going to look up such studies keep in mind the differece between cost-effectiveness and cost-saving. A measure is considered cost-effective if the cost of quality-adjusted life year gained is under 50K. While this is worthwhile, it doesn’t mean the measure is cost-saving.

  8. glblguy Says:

    kitty, thanks for providing sch a thorough perspective on the topic. Really appreciate you taking the time to leave such and informative comment. It will be interesting to see how all of this pans out.

  9. vh Says:

    Excuse me? The last I heard, what goes on between you and your doctor is privileged information. It’s not between you and your doctor and your boss! That is an unconscionable invasion of privacy.

    If my employer pulled a stunt like this, I’d be looking for another job. Forthwith.

  10. glblguy Says:

    @vh – Guessing there are a lot of folks that would have a very similar reaction. Thanks for your comment!

  11. Luigi Yielding Says:

    It depends on the amount to be financed. RV loans can be up to 20 years.