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Health Policy

Teamsters, doughnuts, and body mass index – more on the fairness of health insurance incentives

As a follow-up to today’s earlier blog post, “Who bears the responsibility for health and the cost of health,” the concept of “wellness” at the employer level—and the issues of fairness and appropriate incentives— is getting a lot of national attention.

Per this article in the Los Angeles Times, this focus began with the approval of the so-called Safeway Amendment as part of President Obama’s healthcare  reform (PPACA, or Patient Protection and Affordable Care Act), which allows employers to provide employees with reimbursement of up to 20% of insurance premiums (rising to 30% in 2014 or 50% with special approval) if they participate in reasonable wellness programs.

According to the National Business Group on Health, which represents large employers including Wendy’s, about 68% of its members either offer a discount of several hundred dollars on health insurance premiums to employees who quit smoking, or provide other incentives or penalties to make it happen. This article in the New York Times explores how a particular group—Teamsters hired by BNSF Railway—is responding to the push to lose weight and increase overall health.

As the LA Times notes, the idea of employee “wellness” raises another important angle in the debate over health care cost containment: lower-wage workers tend to have higher rates of the health problems [we’re] trying to fix: smoking and obesity.

The evidence is mixed on how well incentives work, but large employers are already embracing them to encourage good diets and exercise—with an eye toward keeping their employees from missing work and to keep health costs down.

The situation brings together many different aspects of health care issues, including how to promote good health, how “good health” is measured from an employer (and insurance risk) standpoint, socioeconomic differences in good health and lifestyle, and whose responsibility it is to encourage the workforce in general to adopt a healthier lifestyle, or bear the cost of maintaining lifestyles which statistically are shown to lead to long-term—expensive—health problems.

Who bears the responsibility for health and the cost of health?


I am troubled on many levels by themes in this article from The New York Times: The concept that individuals need to be incentivized with cash for taking care of themselves is perverse. Those who care about their health should need no incentive to take care of themselves on an ongoing basis. And the notion that employers must bear the burden of flagrantly poor health choices of their employees appears to underlie employers taking on the creation of incentives to change.

In the US, it is illegal to discriminate in hiring on the basis of a number of attributes, most of which are out of the control of the individual, such as age, gender and national origin. But employers discriminate regularly on the basis of past experience, academic standing and accomplishment, interviews, references and many other factors, some of which—but not all— may be under the direct control of the applicant, or at least flow from choices made at the application process or over time. Employers make no apology for such discrimination and applicants expect to be measured on many qualities.

Is an employer well served who ignores or downplays choices of prospective employees that increase their health risks? Is there a correlation on work quality and employment costs that can be observed among employees who engage at the time of hiring in fewer risky health behaviors? And what is the actual success rate of employer incentives, “wellness” programs (the trendy word “wellness” itself is in dire need of its own rehab – “health” would suffice), in creating long term results and change?

What would be the impact of employers making hiring decisions in part based upon legal discriminators that are health related, such as smoking, physical fitness appropriate to age and other factors. We tell our children to get a good education to increase their chances of successful employment, and this is strong incentive for study. Were there similarly explicit conversations about the relative employability of individuals based upon their physical lifestyle choices, might it have a positive social impact on the health of society overall?

Our declining health status and dramatic increases in chronic diseases relating to lifestyle—such as Type 2 diabetes—is creating billions in expense and much human tragedy. Society’s conversation on who bears the responsibility for health and the cost of health is one that must continue.

Reaping Royalties, Medicare Bounty

This article from the Wall Street Journal is important in a number of ways: Implant surgery is both highly expensive as well as hotly debated as to efficacy and indications. The article suggests that not only are the surgeons profiled therein highly compensated for their expertise in the operating room (and are not compensated nearly as well for declining to perform a procedure), but they appear to be receiving incentives from the device manufacturer for their relationship – one that is more than likely contingent upon continued use of and promotion of the devices.

The article discloses relationships of the sort that in the past were unreported but significant. Spine surgery is often suggested in workers’ compensation cases as well as auto accidents. The indications and cost of such procedures is highly relevant to those overseeing such claims.

Beyond continued scrutiny and perhaps regulation, what other suggestions are in order? One is that any patient should ask and have the right to know if their prospective surgeon is receiving compensation of any sort from device and pharmaceutical manufacturers, including the amount and the rationale behind the royalties. If surgery is proposed and a device by a company compensating the physician is to be used, it would be reasonable to get a second opinion from a physician who has no such interests.

Paying peanuts for health care after 500 billion percent inflation?

Yes, the IMF estimates that prior to 2008 Zimbabwe’s rate of inflation reached 500 billion percent.

Since then, a power-sharing government has formed after years of decline under President Robert Mugabe, and the economy has stabilized. Zimbabwe abandoned its currency last year, replacing it with the American dollar, and inflation has fallen to a demure 3.6 percent. Teachers are back in their classrooms and nurses are back on their wards.

But a recent United Nations report suggests how far Zimbabwe has to go. It is still poorer than any of the 183 countries the United Nations has income data for. It is also one of only three countries in the world to be worse off now on combined measures of health, education and income than it was 40 years ago, the United Nations found. And in the past 25 years, life expectancy has dropped by 14 years on average: a child born in Zimbabwe today can expect to live to the age of 47, nearly 40 years shorter than the longest lifespans enjoyed on the planet today.

In the wake of such a disastrous state of affairs, this New York Times article explores how Zimbabweans are paying for their medical care – through the barter system.

Guess Who Opposes Reversing the Individual Mandate in Health Reform?

The individual mandate of the health care reform act (PPACA – Patient Protection and Affordable Care Act) is now under attack in the courts and on Capitol Hill by Republicans, libertarians, and Tea Party enthusiasts who call it an affront to personal liberty.

The industry, however, views it as the bedrock supporting the entire health reform law and is lobbying to keep it (the prospect of a vastly bigger market has helped spark a 7.4 percent rise since Jan. 1 in the Standard & Poor’s 500 Managed Health Care Index of publicly traded health-care companies). Follow the debate in this Businessweek article.

Sarah Palin Stews Over Government Food Rules

Food is about to become the next battle ground for, well, a whole menu of Washington favorites.  Sarah Palin has found a new way to channel the Tea Party movement’s anti-big-government fervor—and tweak First Lady Michelle Obama at the same time.  Starting with a classroom visit and a couple of dozen cookies, former vice presidential candidate Sarah Palin plunges into the national debate on the role of government and childhood obesity, as detailed in this Business Week article.

Bartering Art for Health Care

This article from Business Week illustrates a disturbing outcome of our current health care system: working individuals who must attempt to trade their services for health services due to lack of coverage and access, and/or lack of income.

These individuals are not slackers or avoiders, but include individuals who provide value to society through their creative efforts. Few if any other industrialized countries’ health systems leave such individuals out in the cold to fend for themselves.

At least artists are attractive to health providers who might go out of their way to provide bartered services. What of the small business owner/entrepreneur engaged in a start-up with no resources to spare? Does our current health care system lock individuals into jobs that provide care when they would be better suited and society better served by the business they dream of starting—but for the inability to afford health care for their family?

Those who “fall through the cracks” are not just the unemployed and marginally functioning. They include many of us: our families, neighbors and friends. What would you have to barter if your health coverage went away? And how many practitioners and hospitals would take you up on your offer?

Low-Cost Dental Care Reflects Wider National Debate

There’s a debate shaping up in Alaska regarding whether dental therapists should be allowed to perform procedures such as administering fillings and completing extractions. Alaska is currently the only state which allows for dental therapists to perform invasive procedures; ten other states are considering legislation to expand (or recognize) the role of dental therapists in a similar manner per this New York Times article.

The debate highlights multiple hot topics in health care discussion today:

  • Access to healthcare (The therapists, who receive two years of training, help fill a vacuum: Alaska has long had trouble attracting and retaining licensed dentists. Given Alaska’s huge size and rural population, for many state residents a trip to the dentists – or any health care practitioner – can be a lengthy event.).
  • The ethnic and socioeconomic divide in health care: 60 percent of Alaska Native children ages 2 to 5 have untreated decay, and 20 percent of Native adults over 55 have no teeth at all.
  • Which professions have the legal right to treat patients in what manner.  
  • Long-term care/preventive care medicine vs. short-term care. (When discussing the ramifications of a dental therapist performing an extraction, Dr. Raymond Gist, the American Dental Association president, notes that: “If you have a person suffering from pain, that person has advanced disease,” said  “I would want that person to see a licensed dentist without delay.” Would an extraction necessarily prevent disease from spreading, or will the patient end up needing yet another extraction as disease spread?)

No one is arguing that patients shouldn’t receive care. But how this particular discussion plays out is an important reflection of a much wider national discussion.

Shifting Health Costs to Higher Paid Employees

With health care costs climbing even higher during this enrollment season, more employers are adopting a tiered system to pass on the bulk of those costs to their employees by assigning bigger contributions to workers in top salary brackets and offering some relief to workers who make less money.

A progressive tax structure is not a new idea; prominent economists for centuries including Adam Smith in The Wealth of Nations (first published 1776) have written on the merits of a progressive structure. Now, given that a worker’s share of a family policy is approaching $4,000 a year on average, employers are having to explore more creative ways to allocate expenses including through a progressive model, as noted in this article in The New York Times article.

Insurers Press GOP on Its Health-Care Agenda

As noted in the Wall Street Journal, Health-industry groups are pressing to roll back key provisions in the Obama administration’s health-care overhaul if Republicans recapture the House, but they’re also worried that the party could go too far.

If they win the House, Republicans have promised that one of their first votes will be to repeal the health-care law passed in March. That would ultimately be stopped by the White House, or first by the Senate if Democrats retain control of it.

But Republicans will have the power to block appropriations funding for the least popular parts of the overhaul. And health-industry groups, which aligned themselves with Democrats to pass the overhaul, are now reaching out to Republicans to help shape the GOP’s health-care agenda.

Insurers want to reverse tax increases and loosen restrictions on insurance premiums, and several groups hope to tack on medical malpractice protections.

At the same time, the health-care industry is concerned that Republicans want to remove the requirement that most Americans carry health insurance—a provision that rewards health-care providers with millions of new customers.