Recently, the CVS Caremark Corporation began requiring employees to disclose personal health information (including weight, blood pressure, and body fat levels) or else pay an annual $600 fine. Workers must make this information available to the company’s employee “Wellness Program” and sign a form stating that they’re doing so voluntarily.
CVS argues this will help workers “take more responsibility for improving their health.” At one level, this makes a certain sense. Because the company is paying for their employees’ health insurance, they naturally prefer healthier workers. But at a deeper level, CVS’ action demonstrates a growing problem with our current system of employer-provided health insurance. If our bosses must pay for our health care, they will inevitably seek greater control over our lifestyles.
Although most Americans take it for granted that they receive health insurance through the workplace, this is an artifact of federal tax rules from World War II. When the U.S. government imposed wartime wage controls, employers could no longer compete for workers by offering higher salaries. Instead, they competed by offering more generous fringe benefits such as health insurance. In 1943, the IRS ruled that employees did not have to pay tax on health benefits provided by employers; in 1954, the IRS made this permanent.
The federal government thus distorted the health insurance market in favor of employer-based plans. If a company paid $100 for health insurance with pre-tax dollars, the employee enjoyed the full benefit. But if the employee received that $100 as salary, he could only purchase $50-70 of insurance after taxes. Over time, this tax disparity helped employer-based health insurance dominate the private insurance market. In 2008, over 90% of non-elderly Americans with private insurance received it through their workplace.
Hence, government policy artificially injects the employer into the relationship between a patient and the health insurance system. Normally, what a worker ate or whether he smoked at home would be of no concern to his boss (unless it affected job performance). But U.S. government policy makes it the employer’s business.
To make matters worse, ObamaCare reinforces this status quo. ObamaCare requires large employers to offer health insurance to workers (or else pay a penalty). As a result, more people are discussing how best to link employment to healthy behavior. For example, the New England Journal of Medicine recently featured a pair of high-profile editorials debating the merits of allowing companies to discriminate against smokers, “for their own good.”
Furthermore, ObamaCare pays government grants to encourage companies to implement these “wellness programs.” Hence, employers who wouldn’t otherwise concern themselves with workers’ lifestyles now have an incentive to do so in order to collect federal funds.
My state of Colorado is even attempting to lure businesses from other states by arguing that Coloradans are less obese (and thus incur fewer medical expenses).
Note that the issue of employers controlling employee lifestyles arises because the government artificially couples employment with health insurance. In contrast, we don’t receive automobile insurance or homeowner’s insurance through our jobs. Hence, most employers don’t care about employees’ driving records or the number of smoke detectors in their houses. There are no “safe driver” workplace programs along the lines of “employee wellness programs.”
This is the flip side of coupling health insurance to employment. Some employers (like Regal Cinema) are cutting back on worker hours to reduce those insurance costs. Others will still cover their employees — but will want to monitor those employees’ health and activities.
Instead of reinforcing the current system linking health insurance to employment, we should uncouple the two. We should equalize the tax status of employer-provided health insurance with insurance purchased by individuals outside of work. This is a key element of many free-market health reform plans (such as Docs4PatientCare.org “Prescription for Health Care Reform”). This would also help create a robust market for truly portable insurance that stayed with the customer when he changed jobs (just as one’s auto or homeowners insurance is unaffected by job changes).
As a physician, I encourage everyone to adopt a healthy lifestyle, including proper diet and exercise. It’s also entirely appropriate for insurance companies to charge higher rates for customers who smoke or engage in other unhealthy activities. Likewise, employers and workers should be free to voluntarily agree to contract terms that include incentives for healthy behavior, provided it’s without government nudging.
But it’s wrong for the government to use economic carrots and sticks to induce private employers to become enforcers of healthy behavior. This is just a subtler form of “nanny state” controls, such as NYC mayor Michael Bloomberg outlawing soft drinks he considers unhealthy. And once employers start monitoring employee behavior on the grounds of “health costs,” there’s no end to the potential meddling. Who will be the next politically disfavored group after smokers or the obese? Do we want bosses discouraging their employees from owning guns or enjoying mountain biking on the weekends? This is a dangerous road.
The nanny state is bad enough. We don’t need nanny bosses. LINK
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