Workplace Wellness Programs– Making Insurance Too Expensive For Those Who Need It Most

Note to readers: before reading this post, you may want to read the post below which questions just how effective workplace wellness programs really are.

Often, Workplace Wellness Programs use financial carrots to reward employees who participate.. In some cases, workers  will not have to contribute as much to their health care insurance premium if  they “get with the program” and meet specific standards related to their health. Typically, these “outcome-based wellness programs” offer discounts to employees who quit smoking, or who meet specific metrics for blood pressure cholesterol or body-mass index.

Meanwhile some companies charge workers higher premiums if they continue to smoke, or do not participate in a wellness program. 

Even if a company doesn’t use financial “sticks,” the carrots can mean that some employees contribute far less to the cost of their insurance.. The employer must make up the difference, and as a result, he is likely to make the “standard” employee contribution that much higher. Thus, employees who don’t receive the discount help subsidize the carrots for their co-workers.

                                                  Is This Fair? 

Last week, the Obama administration issued new rules which say that under reform, wellness program rewards can equal 30 percent of the cost of coverage, defined as the total amount that employer and employee contribute to premiums (Under current law, discounts are limited to 20 percent.) The regulations also allows a reward of up to 50 percent for employees involved in programs designed to prevent or reduce smoking.

The new rules, issued by the Labor, Treasury and Health and Human Services departments, gives this example of a permissible wellness program: “The annual premium for coverage in an employer’s group health plan is $6,000, of which the employer pays $4,500 and the employee $1,500. The employer offers a $600 discount to employees who participate in a wellness program focused on exercise, blood sugar, weight, cholesterol and blood pressure. 

 At the same time employers will be able to hike premiums for smokers by 50 percent .

Penalties Could Mean That Workers Will Be Forced to Opt Out of Insurance

This could make insurance unaffordable for some workers, and  keep the sickest workers from affording the care they need,” Alan Balch, vice president of the Preventive Health Partnership, an alliance of the American Cancer Society, the American Diabetes Association, and the American Heart Association, recently told Business Week. In that case “Wellness Program” penalties could undermine a major aim of the Patient Protection and Affordable Care Act—ensuring  that all  Americans  have access to insurance.
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Ignore the Hype: Why Health Insurance Premiums Won’t Skyrocket in 2014

Health reform’s critics are sounding the alarm: in 2014, they say, health insurance premiums will climb, both for small businesses and for individuals who purchase their own coverage. “Hold onto your hat,” writes  Bob Laszewski, editor of Health Care Policy and Market Place Review. “There Will Be Sticker Shock!” 

Laszweski’s piece has been cross-posted on popular blogs, and his forecasts have been popping up in mainstream newspapers, including  USA Today Such wide circulation makes Laszewski’s warnings worthy of attention, and compels me to ask an important, if impertinent, question: Is what he says true?

Cherry-picking a CBO report

The Congressional Budget Office expects  that the ACA will have a “negligible” effect on the premiums that large employers pay for insurance, and most experts agree. But in the individual market, Laszewski claims that CBO projections show “10% to 13% premium increases.”

Here is what the CBO actually said:

About 57 percent of people buying [their own] insurance would receive subsidies  via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium.

“Thus, the amount that subsidized enrollees would pay would be roughly 56 percent to 59 percent lower, on average, than the premiums charged under current law.”

Wait a minute: “56 to 59 percent lower?” Where does Laszweski get “10 percent to 13 percent higher?

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U.S. Media Loves “Fiscal Cliff” Metaphor; The Economist Recognizes that It’s An Imaginary Line in the Sand

In the U.S., pundits cannot resist the fiscal cliff metaphor: it’s colorful, punchy and easy to understand. It’s just two words long. What’s not to like?

It’s not true.

The metaphor assumes that if Republicans and Democrats fail to reach an agreement on the budget by the end of the year, the U.S. economy falls over a cliff,  crashes, and burns.  The “cliff “metaphor complements the equally imaginative “iceberg metaphor” that some fear-mongers use to portray the deficit. (Think Titanic) 

It’s all a bit more complicated than the metaphors suggest.

What few conservatives mention is that the deficit has already begun to dissolve:  since 2009 the deficit has fallen from 10% of GDP to 7% in the fiscal year that ended on September 30th.  By historic standards this is still enormous, and must be addressed. But  the numbers demonstrate that, over time, we can reduce the deficit without renting the nation’s safety nets.

As for the cliff, there is no precipice—just an imaginary line, drawn in the sand, as Republicans and Democrats play “chicken.”

The Economist understands all of this. The lead story in the most recent issue focuses on the “cliff” and points out that “worries” about what will happen if we go over that precipice are “understandable”  but “overblown.” The “risk of economic catastrophe is minimal.” Any damage would be short-term. 

I don’t always agree with the Economist: the UK publication has its own sometimes eccentric slant on things. But on the whole, it is a thoughtful publication—well-researched and fact-checked.  Moreover, in this case, distance may give the Economist a perspective on the problem that some in the U.S. lack.

                                   Exaggerating the Threat to the Middle-Class      

Yesterday’s New York Times suggests that if we cross that line in the sand, an already beleaguered the middle-class will suffer great hardship, and this “Complicates Democrats’ Stance in Talks.” 

The analysis suggests that Democrats don’t dare just stand back and let Bush’s tax cuts expire– as they will if party leaders don’t reach a settlement by year-end: “Only a small handful of policy voices on the left are making the case for the tax cuts to fully expire. In part, that is because the economy is still growing slowly, and tax increases have the potential to weaken it.” But it is also because “If the two parties fail to come to a deal by Jan. 1, taxes on the average middle-income family would rise about $2,000 over the next year. That would follow a 12-year period in which median inflation-adjusted income dropped 8.9 percent, from $54,932 in 1999 to $50,054 in 2011.”

This assumes that once we miss the January 1 deadline, tax hikes for the middle-class would become permanent—which, of course, is not true. Talk about how much more a family would pay over the course of 2013 falls somewhere between hyperbole and hysteria, ignoring what everyone knows:

If the Bush tax cuts expire, Democrats will presumably simply propose to restore them in January for those [families] earning less than $250,000,” the Economist observes, “daring Republicans to block them.” 
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Does your state protect Older Boomers … and should younger Americans help subsidize Boomers’ coverage?

The following post originally appeared on the healthinsurance.org blog.

The Affordable Care Act leaves it to the states to decide whether they will allow insurers to charge older Americans more for coverage. If a state takes no action, a 64-year-old buying his own health insurance in the individual market will pay up to three times more than an 18-year-old.

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Why Free Birth Control Will Not Hike the Cost of Your Insurance

The following post originally appeared on the TIME Moneyland blog.

Initially, the controversy over President Obama’s proposal that all insurers cover contraception focused on religious liberty. After polls revealed that 98% of sexually active Catholic women have used birth control, though, some who oppose Obamacare tried to shift the argument from religion to money: “If insurers are forced to offer contraception without co-pays,” they warn, “they’ll hike our insurance premiums.” But will that actually happen?

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Health Care Spending Levels Off: Temporary Blip Or Start of a Trend?

The following post originally appeared on the TIME Moneyland blog.

The nation’s health care bill rose by less than 4% in both 2009 and 2010. In 50 years, health care spending has never increased at such a slow pace. Could this mean that, after a half century of eye-popping inflation in health care expenditures, efforts to rein in costs are actually working?

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How Health Care Reform Can Create Jobs — and Cut Costs

The following post originally appeared on the TIME Moneyland blog.

Nobody would be surprised to hear that spending more on healthcare will result in new jobs. But a new program announced by the Obama administration last week seeks to create new healthcare jobs and at the same time reduce healthcare costs. Is such a trick possible?

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Why Are Customers of This Health Insurer So Happy?

The following post originally appeared on the TIME Moneyland blog.

Kaiser Permanente’s stand-out performance in Consumer Reports’ national rankings of some 830 insurance plans raises an obvious question: What makes Kaiser so different? In a word: collaboration.

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Health Insurers in the Spotlight

Consumer Reports Publishes Quality Rankings; HHS Makes Rate Increases Public; They Can Run, But . . .

Are health insurance plans with big brand names better than smaller insurers that most people have never heard of? “Not usually,” says Nancy Metcalf, senior program editor, at Consumer Reports. Unless of course, the plan’s name is “Kaiser.” As Metcalf points out, Kaiser Permanente, a non-profit that insures some 8.8 million Americans nationwide, stands “head and shoulders” above the other large insurers. In general, smaller plans outranked the well-known names, and surprisingly, when it comes to patient satisfaction, Health Maintenance Organizations (HMOs) received higher marks than Preferred Provider Organizations (PPOs) even though HMOs require that the patient remain “in network.”

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