Some companies try to engineer a healthier workforce up front by refusing to hire smokers (see "Right to Smoke?" at the end of this article) or, as Wal-Mart suggested in its leaked memo, changing job descriptions to include physical tasks. This new willingness to take a harder line — rewarding those who participate at the expense of those who don't or refusing to hire smokers — strikes some as problematic. "We know that smoking is a costly practice," says Brian Rosman, policy director of the Massachusetts-based advocacy group Health Care For All. "But people don't shed their rights just because they smoke."

Critics say that stricter health policies could be a slippery slope, with employers refusing to hire obese workers not far behind, though such actions could run afoul of the Americans with Disabilities Act. Then there are privacy concerns. "Employers don't necessarily have the right to control what employees do outside of work," argues Rosman. While he supports health-improvement initiatives, he's also concerned that companies could use the plans to force those who are less healthy to pay more, when they are already shifting costs to them through higher co-payments and deductibles. "It's entering into scary territory," he says.

Often the programs are self-funding. In fact, many companies simply raise the contribution levels of nonparticipants to achieve a break-even point based on how much they discount rates to participants. It's the health-care equivalent of raising prices before putting items on sale.

However, Uwe Reinhardt, professor of economics and public affairs at Princeton University, argues that getting tough on employees who exhibit unhealthy behaviors is exactly what companies need to do. "Management is facing tough decisions with regard to controlling [health] costs. You really have two choices: make everyone share more of the cost burden, or use your legal right to go after those who are demonstrably reckless with their health." Since a small minority uses the majority of health-care resources, Reinhardt contends, "they need to be held accountable for their actions."

Helen Darling, president of the Washington, D.C.-based National Business Group on Health, agrees that promoting health by offering incentives makes sense. "When employers looked at their data, it was clear that many of the medical conditions driving up costs are caused by lifestyle choices. Many risk factors — smoking, seat-belt usage, overeating — are entirely within our control," she says. Darling estimates that 80 percent of the National Business Group's 240 members have some kind of health and wellness program in place, and half either do or will offer monetary incentives to employees who choose healthier lifestyles.

To date, there is little evidence that such programs ultimately affect how much companies pay in premiums, although plenty of health experts predict that health-improvement initiatives will begin to pay off in the near future. One Mercer study suggests that a comprehensive program to promote a healthy lifestyle could reduce health-care costs by as much as 3 to 5 percent. And, says Darling, a healthier workforce pays off in other ways, such as increased productivity from lower absenteeism.

Given the benefits, why don't such programs achieve universal participation? Privacy concerns may prompt some to opt out, according to experts. To assuage these fears, companies often contract with an external vendor to gather and store employee health-risk information. Kelley of Watson Wyatt also says that participation rates can suffer if the incentive is not a cash equivalent or the program isn't promoted or explained properly and isn't easily accessible.

Expect more companies to be involved in their workers' health decisions, on everything from how much they exercise to what they eat. And while experts anticipate such programs to remain voluntary, they say employers will continue to raise the price of not participating. As Princeton's Reinhardt says, "You can have your cake, but you have to pay for it."

Melissa Hennessy is a freelance writer in Grafton, Massachusetts.

Right to Smoke?

When Weyco Inc. announced a few years ago that it would no longer hire tobacco users, it triggered the resignation of a handful of smokers — and plenty of controversy. "We're not saying they can't smoke," says Weyco CFO Gary Climes. "We're just saying they can't smoke and work here. As an employee-benefits company, we need to take a leadership role in helping people understand the cost impact of smoking." Weyco takes its policy seriously, going so far as to administer nicotine breathalyzer tests to employees, much like random drug testing. Union Pacific Corp. and Alaska Airlines recently followed suit with smoke-free policies of their own, and other companies are expected to jump on the bandwagon.

But the hard-line option isn't available to all employers. That's because more than 20 states have passed so-called right-to-smoke laws (among them New York, New Jersey, and North Carolina), making it illegal for employers to discriminate against smokers in employment or hiring decisions. Although requiring a smoke-free workforce is still legal in plenty of states, caution is the watchword. "Legislation is not uniform, so employers must be familiar with the laws in every state in which they operate," says Linda Doyle, an attorney at McDermott Will & Emery in Chicago.

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