Is it fair to ask employees who smoke to pay more for health insurance?
That's a question more and more business leaders are wrestling with as two-tier health premiums gain traction in corporate boardrooms. Increasingly, companies are answering yes, and asking smokers to pay higher health insurance premiums than their nonsmoking colleagues -- or even not hiring them altogether.
On July 1, according to Bloomberg Businessweek, Macy's began charging smokers $420 more a year in health coverage, something PepsiCo and Gannett already do (at even steeper premiums). Last year, Whole Foods started giving nonsmoking employees bigger discounts in their stores. And a range of employers, including Scotts Miracle-Gro, the Cleveland Clinic and, now, Humana, are not hiring smokers, either companywide or in certain states.
As health care costs skyrocket and corporate earnings remain under pressure as the recovery drags on, it's no wonder companies are taking a hard look at ways to control health insurance costs. No one can claim that smoking isn't bad for employees' health. And finding ways to encourage people to stop the habit is a good thing, of course.
Smokers pay more for life insurance -- why shouldn't they pay more for health insurance, too? Smokers are not a protected "class" or people who could be discriminated against, though legal risks should be considered.
But what about the leadership risks? No matter how much money such a program might save, there are issues business leaders should take into account before butting smokers out from jobs or benefits. Motivation through dangling carrots -- such as smoking-cessation programs that offer rewards for those who quit or at least just a bigger benefit for nonsmokers, like Whole Foods does with its employee discounts -- tends to get a better response than wielding sticks. People usually prefer rewards for good behavior rather than punishment for bad.
In addition, a complete ban on hiring smokers could force employers to lose out on some qualified and talented people who just haven't managed to kick the habit. Those who are hired could begin to wonder why colleagues who practice other harmful-to-your-health activities, such as overeating, drinking too much or not exercising, aren't penalized as well. As Lewis Maltby, the president of the National Workrights Institute, told the New York Times in February: "The number of things that we all do privately that have negative impact on our health is endless. If it's not smoking, it's beer. If it's not beer, it's cheeseburgers. And what about your sex life?"
Most of all, employers asking employees to take a urine test to prove they're not smokers should contemplate what that says about the level of trust they have in the people who work for them. Yes, I realize companies do this all the time with drug tests, but smoking cigarettes is legal.
Asking people -- and believing them -- helps companies. Before its recent ban on hiring smokers in Arizona, Humana started a tobacco ban for new employees in Ohio two years ago, USA Today reports. "The Ohio program did not test for nicotine use among new hires like the Arizona program will, but the company said the effort has worked," the story states.
Everyone benefits when companies encourage wellness programs for employees and offer rewards -- even monetary ones for those who don't smoke. But how the more hard-line variety of these programs are carried out might have cost consequences on the culture and talent side that don't show up on the benefits bottom line. Business leaders will need to weigh those, too.