Should the Healthy Employee Pay Less Insurance Premium essay

Download this essay in word format (.doc)

Note: Sample below may appear distorted but all corresponding word document files contain proper formatting

Excerpt from essay:

Healthy Employee Pay Less for Insurance Premiums?

Statement of the Issue

The objective of this work is to examine whether the healthy employee should contribute less towards their health insurance premium than employees who are less healthy. Employers are more often offering wellness and health promotion programs focused on promoting good health among their employees and employee's families. Driving this movement is the rising cost of health insurance, as well as disability leave and sick leave benefits. Added to these cots are those associated with lost productivity due to employees being off from work. The position of this writer prior to examining this issue is that employers would benefit from reducing health insurance costs for employees who are healthy and who follow a good health program.

Background of the Issue

The position taken and supported in this work in writing is that immediate actions should be taken by expanding public health and non-health policy for the purpose of creating an environment that serves to support and motivate positive changes in lifestyle. When regular physical activity is engaged and excess weight is lost along with cutting and eliminating the use of smoke and tobacco as well as problem drinking, there are subsequent results of more closely adhering to good health practices and healthy intake of foods such as fruits, vegetables and whole grains all which result in lower the risk associated with cancer, diabetes, heart disease and stroke. Factors that affect insurance trends are such as: (1) offer rate, or the percentage of employees who work where insurance is offered; (2) eligibility rate (percent of employees eligible to enroll where insurance offered); (3) enrollment rate or percentage of all who work where insurance is offered who enroll. Offer rates have risen while simultaneously eligibility and enrollment rates have fallen, whether measured in relation to all private-sector employee, private-sector full time employee, or private sector part time employee. The offer rate has experienced an increase from 86.5 to 88.3% and the eligibility rate decreased from 81.3 to 77.1%. The enrollment rate experienced a decline from 69.6 to 62.4%. The National Average for Employer-provided insurance is shown as follows:

Figure 1

National Average for Employer-provided Insurance

Single Coverage $4,024 per year

Family Coverage $10,880 per year

Note: Annual income at minimum wage = $10,300 & Annual income of average Wal-Mart worker = $17,114

Source: Kaiser Family Foundation/HRET Survey, 2005

The work of Dowd and Feldman (1987) entitled "Voluntary Reduction in Health Insurance Coverage A Theoretical Analysis" states that health insurance "lowers the price of health care faced by consumers who, as a consequence, demand more health services. This behavior may manifest itself in many ways: consumers may not take as active a role in maintaining their health; they may visit a doctor more often or at lower levels of discomfort; and they may not shop carefully for low-cost providers of care." (Dowd and Feldman, 1987) The reason for this type behavior according to Pauly (1968, 1983) "is that the insured consumer is behavior rationally, choosing consumption levels which equate marginal benefits to the personal marginal costs of services, but the presence of insurance results I a personal marginal cost which is less than the price charged by the provider." (Dowd and Feldman, 1987) Because of this disparity insured individuals "over-consume, resulting in efficiency losses in the market for health care." (Dowd and Feldman, 1987) Although increases consumption tends to increase insurance premiums, each individual ignores this effect, since the effect of his/her behavior is spread over all policymakers." (Dowd and Feldman, 1987) Dowd and Feldman states that the simple solution to this problem is "to reduce the level of health insurance coverage, possibly by legislative action." (1987 ) It is reported that most private health insurance is provided to employees by employers "as a fringe benefit" and the "favorable tax treatment of health insurance vs. wages, due to economies of group purchasing…approximately two-thirds of all non-elderly individuals in the U.S. obtain health insurance through the employment of a family member." (Dowd and Feldman, 1987) Health insurance benefits for these individuals "are part of a compensation package that includes other fringe benefits and wages." (Dowd and Feldman, 1987 ) Therefore, health insurance benefits, "cannot be viewed in isolation from other forms of compensation and proposals to reduce health insurance benefits must recognize that other forms of compensation will have to increase to maintain the viability of the total compensation package." (Dowd and Feldman, 1987)

The work of Casey (2009) states that trends show that 57% of individuals have due to the economic downturn "have altered health behavior by dropping gym memberships, eating fewer fruits and vegetables…" as well as "skipping doctor appointments and foregoing medications." (2009 ) However, the employers get big paybacks from targeting chronic conditions "ensuring employees are monitored properly to avoid complications from heart disease and diabetes." (Casey, 2009) Casey states that approximately 30% of workers have "undiagnosed chronic condition, and another 25% are considered at risk of developing one." (2009) Furthermore, comprising 90% of hospital and physician payments for a typical company are those with heart disease and diabetes. It is related that the federal government is "finally catching on that the private sector is taking the initiative to attack health costs and that it needs to get out of the way." (Casey, 2009) It is reported that there is a limitation placed by federal law on the amount of financial incentives that companies can offer employees for stopping smoking or losing weight. Furthermore, subsidized gym memberships are treated as taxable income. (Casey, 2009, paraphrased)

Companies are stated to be making employees 'financially responsible for unhealthy behavior…" charging more for health insurance for individuals who do not take corrective action following having been counseled and advised of a specific course of action for their individual condition. In other words, employees who have high cholesterol ethically cannot be penalized for the condition because it may be genetically influenced. But they can be penalized for not taking cholesterol-lowering medicine or attending a pertinent class." (Casey, 2009) It is argued by some companies and many of the health co-workers that the workers who are not healthy due to their own fault are bringing negative consequences, and specifically influencing the rise of the costs of health insurance. The belief of such companies and healthy workers is that "there should be a price." (Casey, 2009) The National Institutes of Health (NIH) is reported to have established guidelines for ethically administering workplace wellness programs.

The work of Iskra and Foster (2009) entitled "Healthy Employees: Wellness in the Workplace" reports that employers are seeking to "combat the costs associated with their chronically ill employees by offering various programs that promote the mental and physical health and overall well-being of their employees." Wellness programs may be as simple as "offering smoking cessation programs to employees or sponsoring periodic classes/seminars for employees on health-related topics, and offering employees on site fitness facilities." (Iskra and Foster, 2009) These types of programs are focused on preventing chronic illnesses through the promotion of healthy and active lifestyles and are stated to often be inclusive of "promoting and encouraging employee involvement in fitness-related activities in the community and voluntary health screenings including cholesterol screenings, blood pressure and blood sugar screenings and breast cancer of skin cancer screenings." (Iskra and Foster, 2009) Financial incentives are used by many employers for encourage employee participation in their wellness programs. Included are "…rebates on health insurance premiums, modified insurance deductibles or copayments for employees adhereing to wellness programs and disease prevention programs. " (Iskra and Foster, 2009) These incentives are stated to even be inclusive of cash bonuses. Employers are required to design such programs for the purpose of rewarding positive health habits while simultaneously ensuring that they do not discriminate on the basis of health conditions. It is reported that HIPAA's nondiscrimination provisions "generally prohibit a group health plan or group health insurance provider from denying an individual eligibility for benefits based on a health factors and from charging an individual a higher premium that a 'similarly situated' individual based on a health factor." (Iskra and Foster, 2009)

Health factors under the Department of Labor regulations include such as "health status, medical condition (mental and physical), claims experience, receipt of health care, medical history, genetic information, evidence of insurability (including conditions arising out of acts of domestic violence) and disability." (Iskra and Foster, 2009) However, a critical exception makes the provision that plans may vary in their benefits and this includes in their cost-sharing mechanisms and premiums or contributions on the basis of whether the individual has "met the standards of a wellness program as defined by the DOL's regulations. In order to qualify for the exception, am employer's wellness program must fit the DOL's definition." (Iskra and Foster, 2009)

III. Identification and Evaluation of Alternatives (pros & Cons)

One alternative to health insurance premiums being charged equally for all employees regardless of their healthy living adherence is that known as 'Bravo Wellness'. The…[continue]

Cite This Essay:

"Should The Healthy Employee Pay Less Insurance Premium " (2010, October 22) Retrieved December 8, 2016, from

"Should The Healthy Employee Pay Less Insurance Premium " 22 October 2010. Web.8 December. 2016. <>

"Should The Healthy Employee Pay Less Insurance Premium ", 22 October 2010, Accessed.8 December. 2016,

Other Documents Pertaining To This Topic

  • Insurance Fraud

    Insurance Fraud After tax evasion, insurance fraud is considered the highest-ranked among white-collar crimes. The original concept of insurance, as a for-profit endeavor, was to collect funds from a large number of people to pay for damages and accidents that involved a small percentage of the population that paid premiums. Insurance fraud is an ever-growing problem. Solving or eliminating this problem requires the resources and knowledge of individuals or associations with

  • Employee Retention the Hospitality Industry

    The answers offered by the high profit seekers as stakeholders is to take advantage of the immigrant, by demanding high work hours, and even in some cases taking advantage of the individual's low level of knowledge about the rights and responsibilities of the employee and the employer, denying overtime pay, when earned, unauthorized deductions from pay, even things as simple as demanding less "ethnic" hairstyles from employees to the

  • Property and Life Insurance Are Complex Issues

    Property and life insurance are complex issues with details that are relevant to any policy holder and invaluable for all policy holders to look into. There comes a point in time when it is important for a person to buy life, or property insurance. This is particularly so for a single parent who wants to care for her children in the eventuality of her death or for a business owner

  • Health Care Free Should Health Care Be

    Health Care Free SHOULD HEALTH CARE BE FREE? The following debate takes place between four individuals as follows: Dr. Barker, a public health sector physician with an experience of fifteen years; Ms. Gomez, a social activist working for improving opportunities and living conditions for immigrants to the United States; Mr. Walters, a journalist who writes on social and political issues in several newspapers and self-professed atheist; and Mr. Bucelli, a modern

  • Northwestern Mutual Life Insurance Company

    Northwestern Mutual Life Insurance Co Insurance business in modern day has adopted a differential approach to dealing with policy issues and consumer behavior yet some companies like Northwestern Mutual Life retain their original course of actions with clear mission and core values to provide exceptional service to their consumers. The following report is an analysis of such exceptional quality and distinguishable positioning of the company. Whether one is a business entity, a

  • Children s Health Insurance Plans Regardless

    " (National Conference of State Legislatures Forum for State Health Policy Leadership, 2007). However, regardless of state, the applicants have to meet certain qualifications. First, applicants have to be both uninsured and not eligible for Medicaid for other forms of state sponsored insurance. In addition, not all S-CHIP recipients have to be children; states can get waivers to use S-CHIP funds to cover adults. These other recipients are generally adults

  • Insurance Dealing With Personal Finance

    In addition, liability insurance covers damage done to other's property, should the insured become legally liable for the damages. Boiler insurance was originally created to cover loss due to insureds owning a pressure boiler. However, today, boiler insurance is often more aptly renamed equipment insurance. Equipment insurance will provide coverage for mechanical breakdowns of equipment, including the cost of repairing or replacing the equipment. The equipment can include: air conditioners, hot

Read Full Essay
Copyright 2016 . All Rights Reserved