April 15th, 2013
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Here is the link to a new article in Fortune/CNN Money on employer wellness programs. I was glad to contribute a quote: “The best scientists and clinicians in the world have trouble getting these conditions (Ed: obesity, diabetes, hypertension) under control. Why do we think HR can do it?”
March 11th, 2013
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The New York Times reports that a New York State Supreme Court judge has thrown out Mayor Mike Bloomberg’s ban on large size serving cups of sugar sweetened beverages. The judge apparently concluded that the statute was ‘arbitrary and capricious’ because other high calorie drinks were not covered and not all establishments selling beverages were covered.
The Court’s opinion states, “The simple reading of the Rule is nevertheless fraught with arbitrary and capricious consequences. The simple reading of the Rule leads to the earlier acknowledged uneven enforcement even within a particular City block, much less the City as a whole. Furthermore, as previously discussed, the loophole in this Rule effectively defeat the stated purpose of the Rule. It is arbitrary and capricious because it applies to some put not all food establishments in the City, it excludes other beverages that have significantly higher concentrations of sugar sweeteners and/or calories on suspect grounds, and the loopholes inherent in the Rule, including but not limited to no limitations on re-fills, defeat and/or serve to gut the purpose of the Rule.”
These problems with the law were easily foreseeable, as I wrote in Note to Mayor Bloomberg. The judge’s opinion also appears to reflect recent decisions of the Supreme Court which are likely to limit similar, broad approaches to obesity.
February 22nd, 2013
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CNBC reports Obama’s Wellness regulations will raise healthcare costs on employees. See report
February 21st, 2013
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The Department of Health and Human Services issued final regulations defining “Essential Health Benefits” which will have to be included in insurance programs listed on state exchanges and all non-grandfathered health insurance plans in the group and individual markets. The EHB covers 10 categories covering hospitalization, prescription drugs, etc. See Fact Sheet.
The regulation is generally close to the proposed regulation with the exception of expansion of mental health, habilitative care and pediatric dental and vision services.
Last July, interim final regulations were issued which require these plans to include under prevention and wellness, the US Preventive Services Task Force recommendations, which include Intensive Behavioral Counseling for Adult Obesity.
Unfortunately, it appears that HHS has no problem with allowing most state exchanges to use “benchmark” plans which exclude bariatric surgery, according to a report by the Obesity Care Continuum. Coverage of prescription medicines for obesity is murky. The EHB regulations state that plans must provide at least one drug in each category or class of the US Pharmacopeia. But it uses version 5.0 for Medicare. Under the Medicare statute, Part D, drugs to treat obesity are excluded so they don’t appear to be covered. However, this might be challenged under the EHB rules that the benefits must be designed in a manner which does discriminate based on age, disability, or expected length of life and must take in the needs of a diverse population.
The regulations limit deductibles to $2,000 for individual coverage and $4,000 for family coverage.
The STOP Obesity Alliance and my own comments, had argued for more clarity in the inclusion of obesity treatments.
February 20th, 2013
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NPR’s Morning Edition had two segments on employer wellness programs on February 20, 2013. The first featured Cornell economist John Cawley, whose research on the military and mothers working outside the home have been featured before.
February 14th, 2013
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A new survey finds that the American public finds the acceptable size of penalties for workplace wellness programs is much smaller than advocates for higher penalties have supported. A population-level on-line survey was fielded to 1,000 US residents. Positive incentive programs were favored by a factor of 4. The magnitude of acceptable penalty was around $50… 14 times lower than that advocated by then Safeway President Steve Burd and far above the 36 times greater than the penalty proposed by the Obama Administration. Harald Schmidt of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania, author of the study, notes, “ ‘Carrots’ were clearly preferred over ‘sticks.’ In contrast to the preferences of advocates of increasing the legal limits of incentives, there was little support of large penalties in any of the strata. Opposition was strongest among low-income groups, the overweight and the obese. The findings can suggest that where larger penalties are used, frustration and perhaps even pushback is possible. Care is required to ensure that employees do not perceive any form of incentive program merely as unfair cost-shifting, and reject the approach as a whole.”
February 7th, 2013
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Workers who are obese receive lower wages than their non-obese peers, especially white women working in firms which provide health insurance for their employees.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) prohibits employers from varying employee contributions based on health related factors. The current HIPAA provisions provide an exception which allows employers to vary contributions if they participate in employee wellness programs. The proposed regulation under the ACA expands the amount of the penalty/incentive to up to 30% of the cost of the employee’s health insurance premium for those meeting specified biometric targets, including Body Mass Index (BMI) or related weight metric.
Since this provision broadens the exception to the non-discrimination provisions, it is important to consider the extent, insofar as it can be determined of existing discrimination against persons because of their body weight. An expansion of the HIPAA provision should then be read in context of increasing the penalty paid by some employees for their excess body weight.
The justification for the ACA provision was that employees with poor lifestyle behaviors, especially smoking and obesity, should bear more of the employer-paid health insurance costs or demonstrate their efforts in making lifestyle changes in voluntary or mandatory wellness programs. Current research indicates that this premise is not accurate.
So who are most affected by these programs?
The biometrics used in such programs, include obesity, elevated triglycerides and blood pressure, are part of what is known as the metabolic syndrome. Approximately 34% of adults meet the National Cholesterol Education Program’s criteria for the metabolic syndrome. Older males and females from 40-59 years of age are about 3 times as likely as those 20-39 to meet the criteria for the metabolic syndrome. Males and females over 60 were more than 4 and 6 times respectively to meet the criteria. Overweight and obese males were 6 and 32 times as likely as normal weight males to the meet the criteria and overweight and obese females were 5 and 17 times as likely to meet the criteria. (See, Ervin RB, Prevalence of metabolic syndrome among adults 20 years of age and over, by sex, age, race and ethnicity, and body mass index: United States, 2003-2006. National Health Statistics Reports; No. 13. National Health Statistics metabolic syndrome – PubMed Results )
The prevalence of obesity and hypertension has significantly increased in non-Hispanic Whites and non-Hispanic Blacks in both men and women. Non-Hispanic Blacks have the highest prevalence of obesity and hypertension. Diabetes is increasing overall with Mexican-Americans showing the higher rates. Smoking is declining in all groups. Romero CX, et al, Changing Trends in the Prevalence and Disparities of Obesity and Other Cardiovascular Disease Risk Factors in Three Racial/Ethnic Groups of USA Adults. Adv Prev Med. 2012:172423.
The study by Jay Bhattacharya and M. Kate Bundorf of the Stanford University School of Medicine looked at the issue: Who pays the healthcare costs associated with obesity? Using data from the National Longitudinal Survey of Youth and the Medical Expenditures Panel Survey, they made some startling findings:
Workers who are obese and who receive health insurance through their employers earn lower wages than their non-obese peers.
Workers who are obese and at firms not providing health insurance earn about the same as their thinner colleagues.
A substantial part of these wage penalties at firms offering insurance can be explained by the difference between obese and non-obese in expected medical care costs.
The obese with employer-sponsored health coverage bear the full cost of the incremental medical care associated with obesity, approximately $732.
Thus, their study finds that while it is nominally employers who pay for health insurance premiums, it is really employees who bear the cost of employer-sponsored insurance. Further, the wages of obese workers are lower than those of their normal weight peers, and in the case of white women, the relationship appears to be causal. It is obese white women who bear the burden of lower wages due in part to the higher costs of insuring these workers. In firms providing employer based health insurance, obese women experience a wage penalty of $2.64 per hour. The penalty comes out to $5,784, above the average individual health insurance premium or 1/3 of a family premium. In firms which do not provide health insurance, there is no significant wage penalty.
Not surprisingly, men and women with obesity report a higher percentage of common medical conditions, including diabetes, asthma, hypertension, non-specific joint pain and arthritis. Women with obesity are nearly 10% more likely to have arthritis than their non-obese peers, while for men with obesity, the differential is only 6%. It is only for arthritis that obese individuals spend more than thin individuals. They state, “For female workers with arthritis, the medical expenditure difference between obese and thin individuals is $1,956; for male workers with arthritis, the difference is $1,224. Clearly, differences between men and women are an important part of the reason why obese female workers spend so much more on medical care than thin female workers, while obese male workers spend about the same as thin male workers.” The authors calculate the yearly wage penalty on obese women employed in firms providing health insurance is $5,784. Bhattacharya J, Bundorf, MK, The incidence of the healthcare costs of obesity, Journal of Health Economics 2009 May;28(3):649-58.
Two points from this study are critical. First, women with obesity already pay their health insurance premium through a reduction in wages. Thus, a mandatory health contingent program in which the employee is penalized for not attaining an employer determined health metric, such as BMI, actually has the worker paying up to 130% of the health insurance premium. It is this figure which is the true impact of the proposed rule.
Second, the medical conditions of men and women with obesity such as asthma, arthritis, hypertension, etc. can make physical activity difficult or impossible, due to both the physical limitations of such conditions as well as the time and out-of-pocket costs of managing these conditions.
The wage penalty may actually be higher, especially for both men and women at the upper end of the BMI spectrum. In a paper published in 2011, Lisa Powell and colleagues found that a one-unit increase in BMI is directly associated with 1.83% lower hourly wages for women. Late-teen obesity is indirectly associated with 3.5% lower hourly wage for both men and women. Therefore, the wage penalty is significantly larger than previous studies indicated. Han E, Norton EC, Powell LM, Direct and indirect effects of body weight on adult wages. Economics & Human Biology 2011 Dec;4(11):381-392.
The wage penalty may explain the greater perception of employment discrimination among persons with obesity. In one study, results indicate that women are over 16 times more likely than men to perceive employment related discrimination and identify weight as the basis for their discriminatory experience. In addition, overweight respondents were 12 times more likely than normal weight respondents to report weight-related employment discrimination, obese respondents 37 times more likely, and severely obese respondents more than 100 times more likely. Roehling M, Roehling P, Pichler S, The relationship between body weight and perceived weight-related employment discrimination: the role of sex and race. Journal of Vocational Behavior, 71; 2 (Oct 2007);300-318.
February 7th, 2013
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There were three particularly noteworthy comments on the proposed regulations on employer wellness plans.
The U.S. Chamber of Commerce challenged the proposed regulations statement, “A health-contingent wellness program is not “reasonably designed” unless it makes available to all individuals (who do not meet the standards based on the measurement, test, or screening) a different reasonable means of qualifying for the reward.” The Chamber says that this is contrary to the Affordable Care Act provisions. They state, “Wellness programs should not be required to coddle apathetic participants as the Proposed Rule’s pursuit of an “everybody wins” approach will thwart the very motivation that a rewards based program is designed to create.” The Chamber urged that the penalties be raised to 50% for all programs, not just smoking cessation. They also called for “stacking” whereby the penalties would be additive: 50% for not meeting the smoking standard plus 30% for not meeting the other health-contingent plan biometrics or up to 80% of the cost of the worker’s health insurance premium.
Other comments were less harsh. Gloria Sorensen and Deborah McLellan of the Harvard School of Public Health, Center for Work, Health and Well-being, wrote that the wellness programs need to encompass the worksite itself, “Risk factors for cardiovascular disease that may occur at work include exposure to chemicals in tobacco smoke; organizational factors such as work schedules (e.g., long hours and shift work); and psychosocial factors such as high demand-low control work, high efforts on the job combined with low rewards, and organizational injustice,” they wrote.
They note, “Additionally, many traditional wellness efforts have had low participation rates by populations at highest risk for unhealthy eating, smoking, and physical inactivity… such as those in working-class occupations. Such workers may lack the time and energy to engage in these programs, either because the programs are often held during the day when workers cannot attend, or after work when employees many need to leave for another job or family responsibilities. Notably, these populations are also frequently at high risk for exposures to workplace hazards.”
Ted Kyle, writing for the Obesity Society, the Obesity Action Coalition, the American Society for Metabolic and Bariatric Surgery, the Yale Rudd Center for Food Policy and Obesity, the American Institute for Cancer Research, the Academy of Nutrition and Dietetics and Mental Health America, notes that, “there is little evidence supporting the effectiveness of employer BMI and other biometric-based incentives on actually producing sustainable weight loss or lowering healthcare costs…There are many individuals who are not overweight e.g., with a BMI in the ‘normal weight range) who have chronic health conditions such as hypertension, hyperlipidemia, diabetes, or engage in other health risk behaviors. Conversely, there are people who are overweight who are in good health, have healthy nutrition and activity habits, and whose blood pressure and cholesterol are in the healthy range.” The Kyle letter rightly points out that these programs penalize pre-existing conditions.” The letter recommends employers not use BMI or body size only metrics without consideration of additional health indices and that the employers insurance programs cover evidence-based obesity treatments.
All comments on the proposed regulations can be viewed at www.regulations.gov.