As healthcare costs continue to escalate, employers are getting pickier. Now some businesses are even taking action against employees whose unhealthy habits take place at home, not at the office.
Howard Weyers, owner of Weyco, an insurance consulting firm near Lansing, Mich., recently came under fire for terminating the employment of two model employees who smoked outside the workplace. Giving his staff 15 months’ notice, he unapologetically implemented a no-tolerance company policy January 1, 2005, that called for the immediate dismissal of employees with nicotine in their body. Because Michigan, like Mississippi, is an employment-at-will state, the move was legal.
“Howard is a friend of mine, and I remember thinking it was gutsy for him to ban smoking entirely,” said Joe Damore, CEO of Mission Hospital in Asheville, N.C. “But his insurance premiums dropped, and that’s what he was after.”
Federal law protects very obese workers, whose healthcare is among the costliest. But many companies and municipal governments refuse to hire smokers, even requiring affidavits and the use of lie detector tests to enforce the policy.
Last month, it was reported that an internal memo sent to Wal-Mart’s board of directors proposed several ways to reduce healthcare spending, including hiring more part-time workers and discouraging unhealthy people from applying for a job at Wal-Mart. To accomplish the latter goal, Susan Chamber, Wal-Mart’s executive vice president for benefits, suggested designing “all jobs to include some physical activity.”
Already, the world’s largest retailer has been criticized for excessive penny-pinching on wages and health coverage. Less than 45% of Wal-Mart’s 1.33 million U.S. employees receive health coverage, and a staggering 46% of their children are uninsured or on Medicaid.
How far are Mississippi businesses willing to go to wrangle healthcare costs?
“I don’t know of anyone that has taken such drastic measures,” said state insurance commissioner George Dale. “I do know that last year, Blue Cross Blue Shield of Mississippi (BCBS) was the largest writer of health insurance in our state. We’ve encouraged them to move more into preventive medicine. By virtue of that, they were giving rate consideration for people taking preventive measures, such as payment for exams like mammograms.”
Assessing the future
Billy Sims, vice president of human resources for Jackson-based Southern Farm Bureau Life Insurance Company, heads up the Farm Bureau Health Insurance Plan. Covered by BCBS, the $9-million premium covers nearly 2,000 lives.
“It’s an absolute screaming battle for everybody,” said Sims. “Every company is cringing at how we’ll continue to battle this. We now have tremendous new biotech drugs to help battle Alzheimer’s, Parkinson’s and other diseases, but they’re extremely costly, anywhere from $2,000 to $20,000 a month.”
Employers are facing continual double-digit rate increases, reflecting a combination of higher medical (10% to 12%) and pharmaceutical (15% to 18%) costs. Also, reinsurance costs are skyrocketing, Sims pointed out.
“In the old days, you’d raise deductibles and maximums, but historically that has not been done in correlation with education to make the consumer smarter,” he pointed out. “Now we’re in a group of about half of all large employers, trying to develop some type of consumer-driven health plans, which educates consumers to better manage healthcare dollars. They’re learning it’s okay to question a doctor about the cost of a procedure and ask about alternatives. When they get drugs, they ask about the cost savings of generic brands. On the flip side, you don’t want employees to neglect healthcare. However, we’ve wrestled all we can, and consumers now have to be part of the solution.”
Nelson Morrison, president of Southern Administrators and Benefit Consultants Inc. in Ridgeland, said employers are giving some premium savings back to employees through Health Reimbursement Accounts (HRAs), 100% employer-funded spending accounts and Health Savings Accounts (HSAs), a flexible spending account under a company’s cafeteria plan.
“For instance, Methodist Rehabilitation Center is offering three different plans, all with high deductibles that qualify for HSAs,” he explained. “Employers that want more control over money are putting that money into HRAs.”
Some hospitals have wellness plans for employees who are non-smokers and exercise routinely to keep fit, Morrison pointed out.
“In one case, if employees qualify, they get a two-premium grace period,” he said.
Contact MBJ contributing writer Lynne W. Jeter at firstname.lastname@example.org.