Health care insurance premiums continue an alarming trend upward. What’s a
conscientious employer to do?
“Health care costs continue to spiral out
of control for many employers,” says
Michael J. Stief, a partner at Jackson Lewis
LLP. “Many employees who work for smaller companies don’t have company-paid
health care at all. Other employers are
slashing health care benefits.”
A report titled “Guide to Health Care
Cost Control, 2008” by the Institute of
Management and Administration says that
employers today pay 59 percent more and
employees contribute 79 percent more than
five years ago for employer-sponsored health
plans. In 2002, employers paid an average of
$4,342 in medical costs for employees; in
2007, those costs jumped to $6,924.
Smart Business talked to Stief about corporate alternatives to increasing health care
premiums, including the adoption of some
employee wellness programs.
What are wellness programs designed to do?
Workplace wellness programs are designed
to create a culture of health in the workplace.
They often offer incentives for employees
who adopt healthier lifestyles, such as discounts on group health premiums, and penalize those employees who do not.
This is somewhat of a new phenomenon,
and it’s really because employers are faced
with a health care system that’s broken.
But there’s also a hidden benefit: a healthier work force lives longer and is happier.
Employee wellness programs are a good
idea. They work. But programs should be
created only after employers really think
through just how much they want to dictate the lifestyle choices that their employees make.
How much can a wellness program affect a
company’s health insurance premiums?
It depends on a lot of things, like the census
of its work force and how aggressive the
wellness program is. The proof is in the pudding. If you reduce health care costs over the
course of a year, that will play a big role in
your premiums being lowered.
How can wellness programs become controversial and even illegal?
Employers can get very aggressive. For
instance, some have created policies where
people cannot use tobacco products at any
time and still be employed at the company.
This is different than not smoking while at
work; this is not smoking at all — and that is
a very controversial policy.
A good number of states have lifestyle-rights laws that protect employees’ right to
smoke when they’re not at work. Pennsylvania is not one of those states. If an
employer in Pennsylvania so chooses, it can
adopt that type of policy. However, that’s a
very important step that must be well
thought out. Obviously, there are employee
relations implications. Will such a policy
affect morale? Will it lead to a union-organizing drive among workers? Could it affect
the company’s ability to recruit or keep top
talent?
The depth of these questions shows you the
radical steps that employers may be willing
to take in order to cope with this health care
crisis. Dictating off-duty lifestyle activities is
the exception rather than the rule right now.
But if costs continue to spiral, you may see
more employers adopting this kind of policy.
Are those corporate lifestyle policies legal?
If you are in a state that has no lifestyle discrimination laws, then an employer that
adopts a smoke-free work force would most
likely have the legal right to terminate any
employee that uses tobacco products at any
time. The decision to adopt such a strict policy is something you need to go over with
labor and employment counsel because
there may be legal issues under the national
Americans With Disabilities Act or under
your state’s disability-discrimination law or
under a state lifestyle-discrimination law.
Are there other ways for employers to avoid
rising health care costs other than adopting
strict wellness programs?
Many employers today try to shop
around every time their insurance goes up
— which is just about every year — to get
the best rate they can. However, to call that
a negotiation with insurance companies is
a misnomer because the insurance companies have most of the power, especially
when smaller employers are involved.
Where is the whole trend toward dictating
wellness programs and even off-duty
lifestyle activities going?
Employers are faced with a real Hobson’s
choice when it comes to spiraling health
care costs. It seems like our system is broken and no remedy is on the horizon, and
employers are doing what they think is in
the best interests of the entire work force.
It goes without saying that people who live
unhealthy lifestyles, including those who
smoke, use their health insurance more.
Some would say it’s unfair that healthy
employees have to share in the same costs
as unhealthy employees.
With the 2008 U.S. presidential elections on
the horizon, some politicians are talking
about the need to correct the health care
problem. However, it doesn’t appear that
they have any substantive solutions, and the
debate whether this country should go to
socialized medicine is very controversial.
MICHAEL J. STIEF is a partner at Jackson Lewis LLP. Reach him at (412) 232-0138 or [email protected].
