Health insurance companies are always coming up with new ways to encourage healthier habits. Aetna (NYSE: AET ) recently started a program to help college students fight the "Freshman 15" with healthy tips delivered to students' smartphones. Humana has set up bike-sharing programs to help encourage people to be more active.
But to really get people healthy, they might need to steal an idea from companies in other industries. To lower their employees' health-care costs, companies are threatening to attack the one place it really hurts: the wallet.
Safeway offers a discount of up to 20% off their portion of health insurance coverage for those employees who can meet certain healthy requirements: no tobacco use, healthy weight, and keeping their blood pressure and cholesterol in check.
But that's unfair!
Well, sort of. On one hand, insurance is there for unexpected issues, and if they're unexpected, why should anyone have to pay more? On the other, the discounts are given for things that people have control over. It's not like charging more for people who have lymphoma or rheumatoid arthritis.
As Safeway's Executive Vice President Ken Shachmut points out, it's not that different from how auto insurance is priced. Reckless drivers who speed are more likely to get into accidents, so their rates are higher. Smokers and people with uncontrolled blood pressure are more likely to have higher health-care costs, so they should pay more.
There's also a transparency component that encourages workers to shop around for reasonable prices for procedures, because Safeway's health-care plan won't pay above a certain "reference" price.
These complementary initiatives have helped Safeway keep its health-care costs essentially flat over the four years since starting the program. So far, that has been $150 million in savings.
Same issue, different discount
Whole Foods Market (Nasdaq: WFMI ) is also encouraging its employees to get healthy, but the company has tied the incentive to its employee in-store discount rather than health insurance premiums. The company covers the premiums for full-time employees, so offering a discount there may not have been an option.
The voluntary program, which starts in January, will offer a 20% discount, and as much as 30%, based on blood pressure, cholesterol levels, body-mass index, and whether the employee smokes or not.
Let's hope employees take to the program better than the company's progressive shoppers took CEO John Mackey's recent comments on health-care reform. Hopefully, this will motivate employees to start eating Whole Foods' healthier selections rather than some of the food from McDonald's (NYSE: MCD ) or Yum! Brands' (NYSE: YUM ) KFC. The relatively easy-to-obtain base 20% discount should be a good start.
More to come?
Many companies give employees discounted or free gym memberships, and others such as Florida Power & Light, Dow Corning, and Sprint Nextel (NYSE: S ) charge more for unhealthy food in their cafeterias, a so-called "calorie tax."
This could be the tip of the iceberg. There's no better way to convince someone to do something than to make their wallet lighter if they don't. A push toward punitive actions on unhealthy activities could be a boon for people pushing a tax on soda produced by PepsiCo (NYSE: PEP ) , Coca-Cola (NYSE: KO ) , and others.
It's not going to come easy, though. People are likely to resist implementation the entire way -- Americans love their sweets and sedentary lifestyle. Plus, there's something that's just un-American about telling someone else how to live.
For health insurers, however, implementing sliding-scale premiums based on health could be complicated if not impossible. New requirements in the health-reform bills will require them to cover everyone regardless of pre-existing conditions. Lawmakers might make an exception for self-inflicted pre-existing conditions, but I wouldn't count on it.
Sensible idea or an unfair business practice? Discuss in the comments section below.
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