Health Care and Insurance and Government

Bills push for health incentives: Measures dangle carrots to quit smoking, shape up

January 30, 2006

A couple of state senators want to tame rising health care costs by delivering extra motivation to help government workers get in shape and other employees quit smoking.

Sen. Vi Simpson, DEllettsville, has introduced a bill that would knock $100 off the annual health insurance premiums of state employees who complete a yet-to-be-designed wellness program.

Sen. Beverly Gard, RGreenfield, is pitching legislation making it easier for employers to dangle incentives to curb smoking. That could lead to cash rewards for employees, or other enticements, such as reductions in insurance co-pays or premiums.

"I think that once employers feel they have the backing of state government, they would become pretty creative," she said.

The ideas reflect a business benefits trend toward using incentives to motivate employees and, ultimately, control health care costs. However, few state governments have tread into this territory with their employees.

Some critics say such approaches are misguided. They don't think smokers should get a worse financial deal than other employees. And they don't think an incentive that targets a single group is an effective way to fight rising health care costs.

"For someone to simply say everyone should quit smoking so the insurance rates will go down, I just don't believe that," said Ken Zeller, president of the Indiana State AFL-CIO, which is lobbying against Gard's bill.

Wellness programs that promote good health have been around a long time, but offering money to participate in them has gained popularity only in the last few years, said Andrea Cranfill, vice president of FlashPoint, an Indianapolis human resources consultant.

"I think there's kind of this idea [to] put your money where your mouth is," she said.

Employers have attacked double-digit health care cost increases from several angles in recent years. They've searched for the best deal on provider networks and health plans. They've shifted more cost to employees.

Incentives are the latest frontier.

"What's left is really motivating the participants to be healthier or better consumers of health care," said Camille Haltom of Hewitt Associates, an Illinois human resources consulting firm. "It is kind of the next wave or the next way employers can really attack the health cost issue."

A Hewitt survey last year of 500 major U.S. employers showed that 30 percent offer an incentive to encourage employee participation in a wellness program, up from 21 percent in 2004.

The form of incentives varies. Some employers reduce premiums to reward good behavior, as Simpson's bill proposes. Others tack on a surcharge for high-risk groups like smokers, Cranfill said.

Last year, the Washington, D.C.-based American Institute for Cancer Research started offering a flat $500 payment to any employee who quit smoking for one year.

Institute leaders found it "really unfortunate" that they still had some smokers among their 90 employees, said John McIlveen, the institute's human resources director. He hopes the incentive eventually affects health care premiums and increases productivity by cutting down on smoke breaks at work.

"We think it's the right thing to do," he said. "It also makes smart business sense to put the money there."

Gard wants to give employers a chance to offer incentives like this in Indiana.

A state law commonly known as a "smoker's bill of rights" prevents employers from discriminating against employees who smoke, with respect to their salary or benefits, said Scott Tittle, special counsel and health policy director for Gov. Mitch Daniels.

Gard's bill would amend that law to allow for incentives. The measure has the backing of Daniels, who recently banned smoking anywhere inside the state government complex.

Tittle lobbied on behalf of Gard's bill before a Senate committee. The bill also received support from the state medical association and Indiana Insurance Commissioner Jim Atterholt, among others.

"There was a great coalition of support there behind the bill," he said.

It's too early to know how either measure will fare. Gard's bill passed out of committee last week 8-2 and awaits a second reading before the full Senate. Simpson's bill is awaiting a committee hearing. Simpson was motivated to introduce her bill by the success of a wellness program called "Heart Alive."

The program, piloted through the state Health Department's Office of Women's Health a couple of years ago, designed a support system to help each participant lose weight, lower cholesterol, quit smoking or reduce other health risks.

About 70 percent of the participating women met their goals within six months. Simpson wants to give the state's roughly 33,000 employees the same opportunity.

"I think it was successful because there was intensive management of people," she said. "In order for this program to be successful, you need that one-on-one attention."

The program would need case managers to help state employees reach their goals, and it might have to be implemented in stages, as funding allowed. But Simpson believes the investment would be worth it.

"If we save the expense of one heart attack by getting someone in this program, we've paid for the program because they're so expensive," she said.

Simpson added the $100 premium reduction as an incentive because a similar program in Delaware provides that. That's the only other state she knows of with a financial carrot.

Any incentive program would have to fall within standards set by federal programs like the Health Insurance Portability and Accountability Act, Haltom said. For example, an employer that sets separate insurance rates for smokers also has to offer help with cessation. These programs might show limited results at first. The impact might come 20 years down the road, when an ex-smoker doesn't wind up with cancer because a cessation program helped him quit, Cranfill noted. "If you're looking for gains in the first three to five years, you're probably not going to see a lot," she said. Both measures have their doubters. Zeller, an ex-smoker who tried four times to quit before succeeding, would rather see an incentive program that focuses on cessation classes or that makes resources available to help people kick the habit.

"It's kind of like controlling employees' lives off the clock, so that's why we were against that," he said.

He noted that many other factors, including unhealthful eating habits and doctor and hospital visits, increase insurance rates.

Regardless of what happens to the bills, human resources consultants say the need for incentives will continue to grow.

Haltom pointed to a simple health-risk questionnaire as an example. If an employer distributes one without an incentive, it can expect a 20-percent response rate. With an incentive, response rates jump as high as 90 percent.

"You'd hope that just being healthier is its own reward," FlashPoint's Cranfill added. "But let's face it, any incentive is a good idea."
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