NCPA - National Center for Policy Analysis

More U.S. Employers Tie Health Insurance to Medical Tests

April 5, 2012

U.S. employers are increasingly tying the medical premiums paid by employees to their performance on certain tests of health.  The overall goal, according to plan participants, is to lower costs by encouraging employees to take charge of their own health decisions, says USA Today.

An extremely advanced example of such a model is provided by the Swiss Village Retirement Community in Berne, Indiana.  At Swiss Village, workers get $500 off their deductible for each of these measures:

  • Not smoking.
  • Having a body mass index of 27.5 or less.
  • Maintaining a low-density lipoprotein cholesterol level (LDL) of 130 milligrams per deciliter or less.
  • Having a blood pressure of 130/85 or less.

Along with a host of second-tier awards, these financial incentives allow employees to save as much as $2,000 annually on their premiums.  And the broad results are also encouraging: workers saw no increase in premiums from 2005 to 2011.

Though few American employers have advanced as far as the Swiss Village, more and more are attempting to cut costs by incentivizing healthy decisions on the part of their employees and employees' families.

  • Faced with crippling health care costs, the number of employers embracing such programs inched up from 49 percent in 2010 to 54 percent last year.
  • More employers are expected to adopt them starting in 2014, when the health law -- if the Supreme Court upholds it -- would allow them to offer larger incentives or penalties.
  • Of the employers who offer such programs, about one-third offer financial incentives to those who undergo specific medical tests, according to the Aon Hewitt survey.
  • Twenty-nine percent offered incentives for spouses, with 57 percent of employers saying they planned to add incentives for spouses and dependents in the next three to five years.

A number of employees' rights groups have argued that such systems will inevitably lead to discrimination against those who have more severe medical issues that limit their ability to achieve medical outcomes.  Nevertheless, some employers respond simply that if they have to foot the bills for medical care, they should have significant leeway in attempting to minimize that burden.

Source: Julie Appleby, "More U.S. Employers Tie Health Insurance to Medical Tests," USA Today, April 2, 2012.

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