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Despite push, US employers wary of health incentives

Bruce Wolfeld (top), a product manager at EMC Corp., worked out at the company’s fitness center in Hopkinton.LANE TURNER/GLOBE STAFF

WASHINGTON — Would $1,700 a year motivate you to drop a few pounds? How about $3,000 to quit smoking?

That is how much, on average, the government is allowing employers to reward their workers beginning in January 2014 for doing things like losing weight, lowering their cholesterol, and keeping their blood pressure in check. A new, little-known provision of the Affordable Care Act boosts the maximum incentives for workplace programs that encourage employees to get healthier in hopes of lowering insurance costs.

Most large companies already offer programs to keep their employees healthy, but on a far more modest scale, such as on-site gyms and stressing healthy eating.


Taking the next step — paying workers to reach specific health goals — has been far more controversial. Rewarding those who maintain the ideal body mass index can seem like a penalty for those who don't, raising the potential for discrimination claims and negative publicity.

"The incentives help get people's attention, but companies worry about how their employees will perceive them playing such a paternalistic role," said Kristin Van Busum, who coauthored a 2013 RAND report to Congress on workplace wellness programs that was commissioned as part of the Affordable Care Act.

The three-year RAND study found that fewer than 10 percent of companies with employee wellness programs use results-based financial incentives. Even among the ones who do, the size of the incentives come nowhere close to next year's federal limit of 30 percent of the total premium cost.

EMC encourages its employees to take swimming, yoga, and meditation classes during lunch.LANE TURNER/GLOBE STAFF

"Many employers are hesitant to penalize and differentiate employees based on their personal health habits," said Cathy Hartman, vice president of prevention and wellness at Blue Cross Blue Shield of Massachusetts, whose team of consultants help employers design such programs. "But we expect to see more of that in the future."

A 2013 National Business Group on Health survey showed that 47 percent of companies indicated they are considering rewarding employees who hit certain cholesterol, blood pressure, and weight index goals in 2014.


The theory behind the push for incentives is that building a healthier workforce will curb the use of expensive medical care and hold down overall health plan costs. Having fewer obese people should reduce heart and diabetes treatments, for instance.

President Obama's health care law raises the incentive discount limit next year from 20 percent, where it has been since 2006. For smoking cessation, the incentive can rise to 50 percent of the total premium.

The law allows incentives to be introduced as penalties, rather than discounts, but that has proven even less popular.

"Some studies show more success with sticks, but that's not something most corporations feel comfortable doing. It's a very tricky area," said Nancy Chockley, chief executive of the National Institute for Health Care Management.

EMC Corp., a Hopkinton-based information technology company, encourages healthy eating in the company cafeteria, where salad bar tongs are color coded — green for veggies, red for blue cheese dressing and bacon bits.

EMC also encourages its 60,000 employees worldwide to take swimming, yoga, and meditation classes during lunch. Just for participating in activities like getting flu shots and meeting with a lifestyle coach, employees will get a 20 percent discount on premiums, which is equal to $700 for employees with individual coverage. That is an increase from the current 12 percent discount. About 70 percent of EMC's US-based employees already receive the reduction, and the company is hoping to increase participation to 80 percent.


So far the company has not yet rewarded people based on outcomes, said Lauri Tenney, EMC's director of benefits and programs.

"We thought it would be a good time to turn up the dial to continue to engage more people," Tenney said.

Many researchers have found that society is more accepting of charging smokers more for coverage than it is of discriminating against people who are obese. More companies reward or punish workers based on their tobacco use, with 42 percent of companies currently doing so and 62 percent saying they plan to in 2014, according to the National Business Group on Health.

One of the few companies that reward employees for meeting goals is SPS New England, a Salisbury-based road and bridge construction company with more than 350 employees. Wayne Capolupo, chief executive, said he received conflicting legal advice when he decided to encourage his workers to meet health goals.

Capolupo said the company has been able to save 10 to 15 percent on health care costs since it began offering incentives. And so far, he has not been sued. In fact, he says he has never received a complaint.

"I observed that we had a number of employees who were doing everything they could to stay in shape and stay healthy, and quite honestly, a number of employees who were not, and it struck me as unfair that people who were working hard to stay healthy got no reward for it whatsoever," Capolupo said.


Healthy workers were being penalized with constantly rising premium costs, in part because of the strain caused by unhealthy colleagues, he said.

The company set four health targets that employees could choose from to receive premium discounts, with the biggest discount — 10 percent off — given to nonsmokers, "because that's the one that rankles me the most," Capolupo said.

Employees can also earn credit for meeting individual goals for blood pressure, cholesterol, and body mass index — for a maximum of a 20 percent discount. The company has not decided whether to bump incentives to 30 percent in 2014 as allowed by the law.

"As long as you put forth a good faith effort, you get the benefit of the doubt," Capolupo said. "But a certain number of people just don't seem to care, and it's frustrating to me. I'm hoping that as the cost of health care continues to rise, the monetary incentives that this program provides will motivate more and more people to participate."

Such measures can create a public backlash. Faculty at Pennsylvania State University over the summer revolted against the school's plan to have nonunion employees go to their doctors, complete biometric screening measures, and fill out a lengthy online health risk survey. The penalty for noncompliance would be a $100-a-month deduction from their paychecks. The university shelved the plan following protest from professors who complained that it violates their privacy.


CVS Caremark, based in Rhode Island, faced similar problems in March when it announced that employees who did not go through a confidential health screening that measured height, weight, body fat, blood pressure, glucose, and body lipids would pay $600 more in insurance premiums.

Even though participation remains low across the nation, companies say they want flexibility to put teeth into future incentives. Business groups objected after the Obama administration said workers who cannot meet health targets can still qualify by meeting a "reasonable" alternative — such as taking part in a smoking cessation class or diet program, even if they never stop smoking or lose weight.

"You try to encourage people who have a [body mass index] twice as high as it should be to lose 2 pounds a week, but then you have to create an alternative for everyone who gets a doctor's note saying, 'I'm just big boned,' " said Katie Mahoney, executive director of health policy at the US Chamber of Commerce. "Regulations that water down the ability to offer those meaningful incentives will also water down the ability to change behavior, and that's unfortunate."

Tracy Jan can be reached at Follow her on Twitter @GlobeTracyJan.