Why Labor Should Be Wary About “Wellness”

When it comes to health-related “sin taxes,” don’t ask for consistency from Corporate America. Whenever there’s a public policy initiative, that would add a few cents to the cost of surgery drinks to discourage over-consumption and reduce the risk of obesity, PepsiCo spends millions of dollars making sure it’s defeated. But, like a growing number of other U.S. companies, this giant purveyor of junk food has no problem using far greater financial penalties, in its own health care plan, to encourage weight loss, lower cholesterol and blood pressure levels, or smoking cessation.

Despite protests by their union, hundreds of PepsiCo drivers and warehouse workers in upstate New York now face $50 a month payments if they use cigarettes or have weight-related medical conditions such as hypertension, high-blood pressure, and diabetes. As spokesperson Dave DeCecco explained to Businessweek last year, these penalties will “enable our associates and their families to have a healthier lifestyle.” PepsiCo’s new concern about the “wellness” of its workers is shared by thousands of other firms now busily engaged in remaking their medical plans so non-compliant employees end up paying more out-of-pocket for their coverage.

Companies, large and small, have long been shifting the burden of medical cost inflation to their workforce, across the board. Cost sharing negotiated with unions or, more commonly, imposed unilaterally by non-union firms has raised labor’s share of health insurance premiums to an average of 18% for individual coverage and nearly 30 % for families. Workers or their dependents, who utilize plan benefits, also face escalating deductibles, co-pays, and co-insurance which can add hundreds or thousands of dollars more to their annual health care spending.

Now, under the banner of health promotion, management is also making some workers pay more for their insurance based on individual differences in their medical condition or lack of adherence to “wellness” standards. This new, more individualized form of cost shifting threatens to stigmatize and penalize the chronic health conditions of millions of workers, expose some to job discrimination, and undermine labor solidarity in the process. In addition, workplace privacy advocates are warning about the invasiveness of the personal “health risk assessments”—now commonly required in corporate wellness programs–because these surveys probe off-duty behavior related to sex, drugs, and alcohol.

Under the federal Health Insurance Portability and Accountability Act (HIPAA), management can already compel some workers to pay up to 20% more than others covered by the same medical plan. According to Lewis Maltby of the National Workrights Institute, “all that is required is that the penalty be ‘designed to promote good health.’ The employer is not required to demonstrate that the amount approximates the increase in cost due to an employee who engages in any unhealthy behavior.” Under President Obama’s Affordable Care Act, “this abuse will continue to grow,” Maltby predicts, “when the penalty employers can charge without justification increases to 30%” next year.

Among the other groups sounding the alarm this trend are Families USA, Georgetown University’s Health Policy Institute, the American Cancer Society, and the American Heart and Diabetes Associations. A report by the HPI at Georgetown called last February for new federal and state standards that will protect consumers from “programs that inappropriately punish workers in poor health, are overly coercive, or create perverse financial incentives that result in poorer health outcomes.” As Cancer Society lobbyist Dick Woodruff told National Public Radio, “the whole point of health care reform is to make sure that everyone gets insurance. And if people have to pay more because they’re unhealthy, that’s a barrier. It defeats the whole purpose.”

California Nurses Association Co-President DeAnn McEwan, a nurse for nearly forty years, sees great risk of “discrimination through backdoor redlining for individuals with pre-existing conditions and disabilities.” She points out that the workers “more likely to have the health conditions that wellness programs target are low-income individuals and racial/ethnic minorities.” By no coincidence, she says, they also “face barriers to health such as unsafe neighborhood, poor air quality, substandard, decaying housing, and lack of access to affordable, healthy food.”

Despite these warnings, many other unions are buying into wellness schemes under management pressure for more costly contract concessions. Employers and their consultants pitch these programs, initially, as a way to provide “discounts” for workers who sign up for annual health evaluations, subsidized gym membership, smoking cessation classes, or other forms of health counseling. In Chicago, for example, the Chicago Teachers Union (CTU) returned from their inspiring 7-day strike last September with a freeze on insurance rates but a new wellness plan similar to that covering 38,000 other city employees. According to one top CTU official, it “was definitely one of the least popular parts of the contract settlement” because of  “concerns that what we’re seeing is just the thin edge of the wedge.”

The teachers’ program begins early this year with biometric testing for cholesterol, diabetes, blood pressure, weight, and body mass index (BMI). Teachers with an identified problem may be assigned a health coach who works for a third party vendor. All must log into a wellness website, every month, earning points for reading articles or watching videos; the penalty for failing to do so will be $50 monthly fine. A family with two adult members that opts out of the program entirely will pay $1,200 more annually for their insurance. In the union’s next round of bargaining, this CTU leader worries that management  “may try to attach penalties for being overweight or a smoker” in a profession where “many negative health outcomes have a lot to do with job stress.”

Efforts to promote better eating, more walking, bike-riding, or working out at the gym would be quite positive—and far more effective– if they were part of a broader campaign that addressed the societal roots of bad nutrition, obesity, and diabetes. Companies like to blame bad choices by individual workers or their families, when some (like PepsiCo employees) may just be showing the side-effects of consuming their own employer’s heavily marketed sugary drinks or salty, high-fat snacks. In addition, as CNA’s McEwan points out, many chronic health conditions have socio-economic causes, including exposure to hazardous workplace environments.  

In California, some of the same hospital chains now pushing for “wellness” penalties don’t want to make changes in working conditions that would reduce job stress, fatigue, unsafe workloads, and other causes of occupational illness and injury.  Better nurse patient staffing ratios, limits on forced overtime, guaranteed lunch and break time, and more lift equipment to reduce back injuries would all contribute to employee “wellness” (and lower health care costs, by increasing patient safety). But Kaiser Permanente, Sutter Health, Dignity Healthcare, and Daughters of Charity Health Systems all want to shift the focus, in bargaining, from their own unhealthy practices to the off-duty behavior of individual employees, reports John Borsos, a contract negotiator for the National Union of Healthcare Workers (NUHW), which recently affiliated with the CNA.


Borsos is particularly critical of the “Total Health Program” created at Kaiser Permanente (KP), with the backing of unions involved in Kaiser’s Labor-Management Partnership (LMP), led by the Service Employees International Union (SEIU). “Total Health” is being touted by SEIU as “a long-term business strategy for KP” that will give it a “competitive advantage” over other health maintenance organizations. If cost savings are achieved, Kaiser promises a monetary bonus for work groups that complete an annual health assessment, update their “biometric risk screenings,” and “maintain or make steady improvements on key biometric risks (weight, smoking, blood pressure and cholesterol).”

Individual compliance will be “encouraged” by a network of “Wellness Ambassadors”—derided as “wellness cops” by the NUHW– who will get paid time off from Kaiser for their activities. Borsos predicts that Kaiser personnel who decline to participate “will be subject to enormous pressure from co-workers when a portion of their future pay is tied to everyone’s participation.” (The NUHW-CNA critique of “Total Health” and Kaiser and similar programs is the subject of a recent union reported entitled, “Which Way to Wellness: A Workers Guide to Labor and Workplace Strategies for Better Healthcare” which can be accessed at: http://www.stopseiucuts.com/wp-content/files_mf/whichwaytowellnesswinslow.pdf Some  good practical advice for unions engaged in bargaining about wellness issues can also be found at http://labornotes.org/2013/01/what-do-when-boss-catches-wellness-fever)


The danger of a membership backlash to the wrong kind of wellness plan is very real. In 2011, labor organizations represented on Oregon’s Public Employee Benefits Board (PEBB), agreed to a new “Health Engagement Model” (HEM), that required mandatory “risk assessments” (including waist measuring), plus penalties for non-compliance. According to one labor educator in the state, the HEM “riled up many workers, who turned their fury and frustration on the unions.” SEIU was among those soon apologizing for “a poorly communicated change to our health plans that included a punitive surcharge” and “got us started on the wrong foot.” Labor officials later persuaded the PEBB that non-participants “in health engagement” should no longer be subject to the surcharge; instead, participants should be rewarded with an additional $17.50 per pay period. However, the health plan now forces non-participating workers and their families to pay $100 to $300 more in deductibles, a “punitive aspect” still opposed by their unions.

             A survey of 355 private companies by Towers Watson, a leading HR consultant, showed a fifty percent increase in their use of such financial incentives and penalties between 2009 and 2011 Thirty-eight percent of these firms reported further plans to penalize workers who fail to meet health improvement goals tied to their cholesterol levels or body mass index. Clearly, if unions don’t get their act together on “wellness”  (and, in some cases, remember which side they’re on), their members are going to get rolled, one way or another.

 A better labor response than just acceding to these schemes would be to shift the terms of the wellness debate, at the bargaining table and in public policy arenas. Unions need to take a more holistic approach to their members health problems that doesn’t let Corporate America off the hook for its role in producing the social determinants of poor health, including poverty, inequality, and unhealthy jobs.

Labor should also make wellness controversies a teachable moment for workers upset by punitive medical plan changes but not previously supportive of or well-informed about single payer health care. “Medicare for all” would eliminate job-based benefit coverage and the new forms of cost-shifting and differential treatment now being introduced under the guise of “getting healthy.” In nations with social insurance systems, health outcomes are better, in part, because achieving public health goals, like reduced obesity, isn’t left to companies more concerned about their bottom line than workers’ waistlines. American workers who don’t want their boss playing “wellness cop” need both short-term legal protection and a longer-term political solution.

Steve Early spent many years helping members of the  Communications Workers of America bargain about health insurance issues. He is the author, most recently, of The Civil Wars in U.S. Labor from Haymarket Books. A version of this article appeared in the Feb. 25, 2013 web edition of The Nation. 

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