October 22, 2009
PEIA looking at charging obese state workers more
By Phil Kabler
Staff writer
CHARLESTON, W.Va. -- Gov. Joe Manchin is asking the Public Employees Insurance Agency to consider following North Carolina's lead to impose higher health insurance premiums on overweight public employees.
"He asked me, "Why aren't we doing something like that?" PEIA director Ted Cheatham told the PEIA Finance Board Thursday. "I told him, we had talked about that as a board, but there was no political will in the past to go down that road."
Last week, North Carolina's public employee health insurance program announced that it will start charging higher premiums for overweight insurees, beginning in July 2011.
On Thursday, the West Virginia PEIA Finance Board voted to put a similar option out for public comment during PEIA hearings around the state next month.
Cheatham said the proposal raises a fundamental issue of whether persons who are at higher risk because of unhealthy lifestyles should pay more for their health insurance.
"We're saying, 'look, if you've got a BMI (body mass index) over 40, we know you're going to cost us $26,000 more over your lifetime, so you've either got to pay more into the plan, or get into shape,'" Cheatham said of the North Carolina program.
He was citing national figures showing that an obese woman will have lifetime health care costs that are an average of $26,000 higher than a woman of normal weight.
Cheatham said PEIA offers a number of voluntary wellness programs, including weight loss programs, but said higher premiums provide a greater incentive.
"The stick works better than the carrot," he said.
"It's going to be extremely difficult. It's going to be, Big Brother's watching you over the long-term," he said of imposing premiums based on weight.
As proposed, under the first year of the West Virginia plan, PEIA insurees would have to undergo a checkup to measure blood pressure, blood glucose and body fat. After that, insurees who either failed to undergo the checkup or who were determined to be overweight would be charged a higher premium rate.
Currently, PEIA charges insurees who smoke $25 a month higher premiums than non-smokers.
Manchin spokesman Matt Turner said the governor wants PEIA to look at ways to promote healthier lifestyles and to control health-care costs.
"As we're looking at the rising cost of health care, anything we can do to improve the quality of health of public employees as a whole...that may be an option we're looking at," he said.
The so-called "fat tax" will be one of three possible plan changes the Finance Board will be putting out for public comment next month. The others are:
Providing a premium discount to non-smokers who verify that they have signed a living will that includes end-of-life directives.
PEIA actuary Dave Bond said living wills should produce cost savings to PEIA, since 30 to 40 percent of costs for retiree health care are spent on end-of-life care.
However, board member Joe Smith said he had concerns about linking living wills to premium discounts.
"Are we not forcing them for financial reasons to do a living will?" he asked.
Cheatham said that the intent is to encourage insurees to think about end-of-life care, not to require that they refuse extraordinary measures in a living will.
"It can say, "Do everything you can -- I want to live," he noted.
Imposing a $50-a-month premium penalty for insurees who have their spouse covered under PEIA -- when the spouse has health coverage available from his or her employer.
Bond said the surcharge could provide more than $5 million a year for PEIA.
He said it is not uncommon that spouses who work in the private sector have higher incomes, but choose to piggyback on their spouse's PEIA coverage to take advantage of its lower premiums and better benefits.
Public hearings on PEIA's proposed 2010-11 coverage plan begin Nov. 9 in Charleston, with additional hearings scheduled in Beckley, Martinsburg, Morgantown, Wheeling and Huntington.
The Finance Board will give its final approval to the plan in December.