Lose Weight or Lose Cash? Overweight Individuals Face Financial Penalties

It's getting more and more expensive to be overweight in America.

Alabama made news around the world in August 2008 when it became the first U.S. state to initiate a financial fine for obese state employees. Although a state government charging people for being overweight sounds like a novel concept, this decision by the Alabama legislature was just the latest in a long line of corporate-sponsored and government-approved efforts to "encourage" adherence to health-related standards by offering financial incentives - or threatening to charge those who fail to comply.

STATE LAWMAKERS TARGET OBESE EMPLOYEES

Under the Alabama plan, the state's 37,527 employees will be offered free health screenings. According to an Aug. 22 Associated Press article, those who refuse the screenings, or who fail to follow recommendations that result from the exams, will be penalized:

If the screenings turn up serious problems with blood pressure, cholesterol, glucose or obesity, employees will have a year to see a doctor at no cost, enroll in a wellness program, or take steps on their own to improve their health.

If they show progress in a follow-up screening, they won't be charged. But if they don't, they must pay [$25 per month for health insurance that all employees now receive for free] starting in January 2011. "We are trying to get individuals to become more aware of their health," said state worker Robert Wagstaff, who serves on the insurance board....

The board will apply the obesity charge to anyone with a body mass index of 35 or higher who is not making progress. A BMI of 30 is considered the threshold for obesity. The board has not yet determined how much progress a person would have to show and is uncertain how many people might be affected because everyone could avoid the charge by working to lose weight.

Alabama isn't alone in its effort to pass legislation aimed at overweight or obese individuals. Earlier in 2008, the Mississippi legislature became the target of widespread derision over a proposal to revoke the health department licenses of restaurants that serve food to obese customers.

 

Though many have criticized these states' approaches to promoting wellness, few have failed to understand the motivation behind the measures: According to the 2008 version of the annual state-by-state obesity report that is released by the Trust for America's Health and the Robert Wood Johnson Foundation, Mississippi's 31.7 percent adult obesity rate is the highest in the nation, with Alabama (30.1 percent) placing third.

CORPORATIONS REQUIRE WELLNESS PARTICIPATION

As the news coverage indicates, dramatic anti-obesity legislation such as those laws proposed in Alabama and Mississippi remain relatively rare among U.S. states. But within the corporate world, wellness programs are on the rise, as are companies that penalize employees who fail to participate.

According to a July 10, 2008 article in the "On Health and Money" section of the U.S. News & World Report website, more than 50 percent of the 561 companies that were surveyed reported that they planned to expand their in-house wellness programs within the next two years.

Though studies have indicated that employees are not particularly fond of such programs, writer Michelle Andrews noted that employers believe that the efforts can have a beneficial effect on the organization's bottom line:

After years of asking employees to pick up more of the tab for their health insurance, many employers believe they're reaching the limit on how much they can shift costs, says Michael Thompson, a principal in the firm's New York health and welfare practice.

But costs continue to rise. Premiums rose 6.1 percent in 2007, less than the double-digit growth earlier in the decade but still far outstripping the 3.7 percent increase in worker earnings, according to the Kaiser Family Foundation. Something's got to give, and employers hope healthier employees will cost them less. "There's a strong belief that we need to get at the underlying issues and decrease the demand for healthcare, and a major way to do that is to change lifestyle," says Thompson.

Although most employers still try to entice employees with proverbial carrots, a small but growing number are beginning to use sticks to get employees to participate in wellness programs. ... Some companies are charging employees more if they smoke or don't meet weight, blood pressure, or cholesterol targets, among other things. The jury is still out on what type of incentives works best.

THE CARROT VS. THE STICK

 

Writing on the Workforce Management website, Joanne Wojcik reports that about two-thirds of workplace wellness programs include financial incentives for participation. Reduced insurance premiums are the most common monetized motivators, she wrote, with cash awards coming in second. However, using Scott's Miracle-Gro Co. as an example, Wojcik noted that many companies are finding that penalties are more effective than rewards:

• In 2004, employees of Scott's Miracle-Gro Co received $120 in cash if they completed a health risk appraisal. Seventy percent of those eligible for the reward took the test.
• In 2005, the company's wellness policy was revised to include a financial penalty. That year, the insurance premium for employees who didn't take the health risk appraisal was $40 greater than the premium of those who got the assessment. Participation rose to 90 percent.
• In 2006, employees who had been identified as moderate- to high-risk in the appraisal were assigned health coaches. Individuals who failed to consult with, or heed the advice of, these coaches had to pay an additional $67 per month for insurance starting in 2007. This policy change, Wojcik reported, resulted in an 88 percent participation rate.

Though every company policy and state law must be evaluated on its own merit, the general concept of rewarding or penalizing employees for their wellness progress (or lack thereof) has been determined to be a legal option.

"You can really design incentives in conjunction with your health plan for healthy behavior and even health improvement," Alison Earls, a benefit consultant and attorney, told Wojcik. "And if you follow the five-part exception to the [Health Insurance Portability and Accountability Act] nondiscrimination rule, you can provide incentives for not only education and learning about health, but actually for changing your blood pressure, your weight, your cholesterol, getting certain kinds of treatment."

WELLNESS RESOURCES ONLINE

One factor that all of the above plans have in common is that their wellness efforts begin with health assessments, which are followed by advice from trained professionals. Getting a physician's approval before starting any weight loss or exercise plan is essential, not only for the success of the program, but also for your continued health.

In addition to the information and guidance your doctor provides, the Internet also offers a wide range of resources to help you achieve your goals. To educate yourself before meeting with your health care provider - or for continued information and motivation as you adapt to your new healthy lifestyle - websites such as Obesity Treatment and Weight Loss Central are excellent resources for health news, diet information, and much more.