ACA incentives may be undercut by coalition

"Political battles" warrant research knowledge

The Affordable Care Act (ACA) contains provisions for offering financial incentives for wellness participation in workplaces, which is good news for occupational health. However, the American Heart Association and the American Cancer Society have created a coalition to persuade federal regulators to prohibit financial incentives for Health Risk Assessments when family history items are involved.

"Most recently, this coalition is trying to get changes made to the provisions in the ACA related to incentives for healthy behavior," says Margie Weiss, PhD, CEO and community health advocate at the Weiss Health Group, a Neenah, WI-based consulting company that works with companies and communities on health and wellness. "If these changes are adopted, they will undermine the effectiveness of worksite wellness efforts."

With the added burden of required reporting, employers would presumably be less likely to offer premium discounts tied to health promotion programs.

"The political battles waged over worksite wellness will be interesting to watch," she says. "Stay current on research related to the effectiveness of worksite wellness incentives."

Participation-based incentives

The ACA allows out-of-pocket costs for premiums to be discounted by up to 20% for various healthy behaviors, and this percentage will increase to 30% as of 2013. These include quitting smoking, going to the gym, participating in nutrition classes, filling out a Health Risk Assessment, and getting regular checkups.

"Under the part of the rule that allows for incentives or penalties for meeting certain health targets, the rule does allow for employers to do penalties as well as rewards, and in fact, to use one to pay for the other," says JoAnn Volk, a research professor at Georgetown University Health Policy Institute in Washington, DC.

The reward or penalty can be for up to 20% of the total premium amount, including employee and employee share. "So if the employee premium is $5,000, including both the employer and employee contribution, the penalty or reward can total $1000 in out-of-pocket costs for premium surcharges or discounts," she says.

If an employee gets a penalty for being a smoker, however, there is a question as to how the penalty is likely to change this behavior. "You are basically taking their status and charging them more," says Volk. "It doesn't seem to fall under the category of using the reward or penalty to change behavior, if you don't first give them an opportunity to change their behavior."

Morale is one reason why more employers don't use sticks instead of carrots. However, "as employers struggle to get a handle on health care costs, this is one way you could pay for the rewards of some with the penalties of others," she adds. "At least in theory, it could be attractive."

Most wellness incentives are based on participation, as opposed to meeting a particular health standard. For example, employees might get a reduction in premiums if they stop smoking. Conversely, there may be a penalty if they are a smoker or, similarly, a penalty or reward based on body mass index.

"These seem to comprise a much smaller share of the programs that are out there," she says.

One reason is that employers need to meet different requirements if they give financial incentives for a specific health outcome. "Tying premium costs to achieving certain health goals can be potentially more problematic than participation-based incentive programs," says Volk.

Beat the $2k buyout

Under the ACA, employers must pay a $2000 fee if they choose not to provide employer-sponsored health care.

"The question is going to be, if they do provide health care and do implement wellness programs, which may cost more than $2000, will the productivity gain make up for the difference in price?" asks Papanek.

Several recent studies suggest that in fact, it would.

"If you do this right, you may find your productivity gains are well worth the cost of providing a very generous benefits package for your employees," he says.

When researchers offered 436 employees financial incentives to quit smoking, 20.9% quit for six months after being given a total of $500, compared with only 11.8% of a control group given only information and no incentives.1 "So, we do know that money changes smoking habits. You can incentivize positive behaviors, " Papanek says.

Employers often see a significant return on investment when employees get diabetes or hypertension under control.

"If someone has one of the cardiovascular risk factors of a sedentary lifestyle, being overweight or being a smoker, we know that the incremental cost to the insurer is in the ballpark of $2000 a year, per risk factor. It's big," he says.

Employers who pay attention to this data, and identify these risk factors in their workforce, can end up saving a great deal of money. However, certain health risks are tougher to show a return on investment on than others.

While it's difficult to link improved productivity to better compliance with diabetes measures, for instance, it's easier to show this for smoking, fitness, depression, seasonal allergies, better compliance with migraine medications, and weight control.

"If you intervene, you really can change the risk factors," Papanek says. "If you measure the cost to put the whole machine in place, it's much less than the payback you get."

While a wide variety of incentives are allowed under the ACA if employees change to healthier behaviors, there are some caveats built in to avoid discriminating against one group of people.

"My sense is that people will test that," he says. "There will be lawsuits claiming discrimination. People will say, 'This is a risk factor I can't do anything about, and I should get the discount anyway.'"

Since incentives are based on data that is personal health information, occupational health professionals will be getting more involved in benefits administration.

"Some of these behaviors are part of confidential health records. We think that means that occupational health folks will become much more involved in this process," he says. "You will need medical people working to check that the criteria have been met."


1. Volpp KG, Troxel AB, Pauly MV, et al. A randomized, controlled trial of financial incentives for smoking cessation. N Engl J Med 2009; 360:699-709.


For more information on occupational health and the Affordable Care Act, contact:

Paul Papanek, MD, MPH, Chairman of the Board, Western Occupational Environmental Medical Association, San Francisco. E-mail:

For more information on allowable premium discounts for employees, contact:

JoAnn Volk, Research Professor, Georgetown University Health Policy Institute, Washington, DC. Phone: (202) 687-3944. Fax: (202) 784-1265. E-mail:

• Margie Weiss, PhD, Weiss Health Group, Neenah, WI. Phone: (920) 450-4166. E-mail: