Dieting for Dollars

Stevens's goal is to trim the company's overall $5 million health-care bill by 10 percent in the next three years-in part by reducing the number of smokers by one-third in that period. He'd also like to help employees lower their cholesterol through diet and exercise so fewer are dependent on Lipitor. The company spends about $250,000 a year on the popular prescription drug.

Those potential savings will cost Ridgeview upfront-both in incentive payments to employees and payments to RedBrick, which charges a base fee of $10 to $12 per employee per month. And there are additional fees for fitness programs RedBrick recommends to some employees based on their health assessments. Those range from $40 (for online programs that employees access themselves) to approximately $750 for high-intensity disease management coaching programs.

If health-care costs go down as a result of this investment, as the company hopes, Ridgeview will pass the savings on to employees by cutting the price of their premiums. (Under a law that went into effect last summer, employers are actually allowed to charge participants in wellness programs up to 20 percent less for premiums than employees who decline to participate, though Stevens says he'd likely pass the savings onto all employees.) So far the CEO says the results have been encouraging. "But the question we still have is, are we providing enough incentive?" he asks. "We hope so, but we'll find out."

If financial rewards aren't enough to convince employees to change their behavior, employers could find themselves in an awkward position. Can they require participation in health improvement programs? Should employees be punished if they join a program but don't achieve optimal results? Can employees who refuse to stop smoking or to lose weight be fired? "It's a really slippery slope," says Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania's Wharton School of Business. "There are big legal and ethical issues with pushing employees to change their behavior."

Only one case has garnered headlines so far: a smoker who filed a lawsuit last year challenging Scotts Miracle-Gro's policy that the presence of nicotine on employees can be grounds for dismissal. But Mathiason expects others, as more companies implement incentive-driven or mandatory wellness programs-a shift he calls "inevitable." "From a societal standpoint, it's a classic conflict between the overwhelming good for the population versus the degree of individual choice," he says. "We're still in the early phases."

So far, most employers have built in clauses to avoid lawsuits, offering exemptions for disabilities or medical conditions (a thyroid problem that causes weight problems, for example) and penalizing employees for declining to participate in programs-not for failing to meet certain biometric goals, like a specific BMI or blood pressure level. But that could change if the softer approach doesn't result in decreases in actual health-care costs.

Initial results have been promising: a 2005 analysis of 42 studies, published in the American Journal of Health Promotion, found that work site health promotion programs could achieve a 25 to 30 percent reduction in medical and absenteeism costs within 3.6 years, on average. Thaler, an economist and coauthor of "Nudge," is optimistic. In many cases, he says, employers "are just nudging people to do something they already want to do but just don't have the self-control or discipline to do on their own."

That seems a noble enough goal. The trouble may come, though, if those who don't comply find themselves nudged right out the door.

© 2008