Tuesday, September 04, 2007

Incentives to be healthy > penalties for being unhealthy

Ian Mount for Fortune Small Business

(FSB Magazine) -- Midwestern hospital operator Clarian Health caused a stir when it announced that next year employees who smoke will be assessed $5 per paycheck in extra insurance copayments, and that in 2009 it will extend the penalty to workers with high cholesterol, blood pressure, and blood glucose; obese employees will be charged $10 extra.

Final federal rules for such programs went into effect in July, giving employers firm legal footing to push workers into healthier lifestyles. Rex Materials, a $20-million-a-year maker of insulation in Fowlerville, Mich., has proved the programs work. In 2005 president David Rex offered to cut premium copays $10 a week, or about 20%, for workers on the PPO plan who undergo a health-risk assessment.Those who maintained a minimum rating or raised their scores closer to the cutoff by taking steps such as quitting smoking or lowering blood pressure kept the discount.

In 2006, when the average small firm saw health premiums rise 8.8%, Rex had no increase. Sharon Cohen, health-care benefits counsel at Watson Wyatt Worldwide, says Rex's carrot beats Clarian's stick. "Positive reinforcement always works better," she says.

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