December 05, 2007

Yesterday, the Wall Street Journal ran an interesting article on how more employers, particularly at small companies, are charging employees with unhealthy life-styles extra for health insurance:

Financial penalties do motivate some workers to improve their health. Three years ago, Melissa Bergman, who works at Bank of Geneva in Geneva, Ind., was upset when her health insurance deductible rose to $2,500 from $500 the prior year. Her employer informed her that she could reduce her insurance deductible if she met health benchmarks in a screening for cholesterol, body mass index, blood pressure and tobacco use. Through this voluntary, supplemental plan, each test passed would earn her a $500 credit toward the deductible in her core medical plan.

While the 35-year-old earned one credit for being a nonsmoker, she learned in a screening her cholesterol was dangerously high. Within days, her father died of a heart attack, and Ms. Bergman went on a regimen of cholesterol-reducing drugs and exercise. Last year, she passed the blood-pressure test and this year she hopes to earn a credit for cholesterol, she says. "I'm eating lots of oatmeal."

Read the whole thing. Like drivers who are in frequent accidents, employees who smoke, or who are seriously overweight, drive up health care costs for everybody else. Since many - but not all - of these behaviors are within an individual's control, it makes sense to charge individuals extra (or give them extra discounts) to encourage them to embrace healthier lifestyles.

Ultimately, however, individuals should also control their own insurance policies with their own spending - through vehicles like Health Savings Accounts. This would still give workers an incentive to stay healthy (and keep monthly insurance premiums low) but would also alleviate the privacy concerns that come with having employers poking into their employees health status.

Posted by Paul Howard at December 5, 2007 01:46 PM

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