Using carrot, stick to cut health costs

Workers are offered rewards, penalties to better their health, but effort by firms to curb medical expenses raises privacy issue


More companies are trying to rein in health care costs these days by asking workers to take better care of themselves and offering them financial incentives to do so.

The theory is that if workers adopt healthier habits, their chances of developing serious - and expensive - medical conditions will be reduced.

"Every company looks at cost [but] cost is not the root cause," said Andrew Scibelli, manager of the health management program for FPL Group Inc., parent of Florida Power & Light. "What is the root cause? It is lifestyle and behavior."

As many workers choose their health benefit plans for next year, more are being called on by their companies to voluntarily complete a questionnaire to help identify ailments for which they might be at risk. Then companies design programs to address the most common problems, such as stress and being overweight.

Some programs target employees with chronic illnesses, such as diabetes and asthma, by providing them with a health coach who checks to make sure workers keep up with their treatment.

Workers often worry about an intrusion of privacy and the boss using the information against them. And some experts said this new data collection raises legal and privacy concerns about how worker information will be used, how long it will be stored and who will have access to it.

"When you're at work, they can read your e-mails and monitor your work," but have no impact on your physical self, said Pam Dixon, executive director of the World Privacy Forum in San Diego. "This does. ... I wouldn't want to be told whether or not I have to take a particular medicine, or stop smoking or lose weight."

Federal law generally prohibits an individual's medical information to be shared with an employer, unless a worker waives this right, experts said.

And though an individual's medical information is off limits, an employer can ask workers about their habits, said Clifton R. Gaus, president of Health Professor Inc. and a former administrator with the Department of Health and Human Services.

To get reluctant workers to participate, companies promise a reduction in premiums, $50 gift certificates and other incentives. At Union Pacific Railroad in Omaha, Neb., for example, workers earn points that can be used to make purchases from a company catalog featuring items from water bottles to a Harley-Davidson motorcycle.

Some employers not only offer carrots but also are starting to use a stick to prod workers toward a healthier lifestyle.

Gannett Co., publisher of USA Today and nearly 100 other newspapers, will begin next year charging smokers $50 more a month for health insurance. The company, which will be asking workers if they smoke, for years has paid for prescription drugs to quit the habit, and it is now beginning to foot the bill for a smoking-cessation program, said Tara Connell, a Gannett spokeswoman.

So far, feedback on the new policy is limited and mixed, Connell said: "I would vouchsafe that smokers think it stinks and nonsmokers think it's great."

Companies say workers who participate in health programs tend to like them.

Doris Gorzo, a mailing coordinator at McCormick & Co. in Hunt Valley, is a convert.

The 55-year-old said initially she wasn't interested in undergoing a risk assessment and blood test two years ago offered by her employer because she figured she was healthy. But at the urging of her brother, Gorzo decided to pay $10 for the test. McCormick paid the rest of the $60 bill.

While reading the 19-page report on her results, Gorzo discovered she had abnormally high levels of iron in her body.

She visited her family doctor, who concluded there was no problem. But McCormick's physician advised her to see a specialist. Gorzo learned she suffered from hemochromatosis, where iron was building up in her liver and potentially could lead to liver cancer. She now has her blood regularly monitored. Her iron levels have been reduced by about half, she said.

"I would not have known this without taking my $10 test," said Gorzo, adding she didn't worry about privacy issues. "I caught it in time."

Wellness programs cropped up in the 1970s, often with the employer offering a fitness center on site or agreeing to subsidize a gym membership, said Bruce Kelley, a senior consultant with the benefits consultant Watson Wyatt Worldwide.

"They appealed to the lower-risk, already fit," he said. "It was more an employee perk and to improve employee health or loyalty."

But in the mid-1990s, as health care costs soared, some employers began to look at wellness programs as a means to address the underlying causes of health problems and to manage insurance costs, Kelley said.

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