How the Media Portrayed the CVS Wellness Program-and Got It Wrong

On March 20, 2013, the media picked up a story about CVS Caremark’s latest wellness program. In summary, CVS will be requiring all of its employees to complete a health screening in order to qualify for a reduction in their health insurance premium. For those employees who participate, the employee’s screening data goes to a third party, and CVS never sees it.

Such wellness financial incentives are commonplace and have been around a long time. And if that is how the media had described the CVS program, it’s doubtful anyone would have even paid any attention to it. Unfortunately, that’s not how the media ran with the story. Let’s look at how the media sent the wrong message – using ABC News as an example – and why it matters to get the message right.

Sending the Wrong Message

ABC’s Good Morning America segment was emblazoned with the headline, “Who’s Watching Your Weight – CVS Employees Required to Disclose Weight.” Their website ran a similar headline, “CVS Pharmacy Wants Workers’ Health Information, or They’ll Pay a Fine.”

Those headlines are provocative – but they’re completely misleading. Employers do NOT look at their employees’ weights, and they’re not about to start doing so. Under the Health Insurance Portability and Accountability Act (HIPAA), it is illegal for an employer to know an employee’s weight or any other personal health information. While ABC did mention that the data goes to a third-party wellness vendor, this fact is glossed over so quickly that it does little to change the overwhelmingly negative nature of the headline.

ABC posted the following statement below the segment’s online video: “New policy makes it mandatory for employees to report personal information to keep health insurance.” The word “mandatory” is misleading here, and the employer is NOT getting the employee’s health information. In short, ABC has thoroughly confused the matter. No viewer or reader could be reasonably expected to know what to take away from this story.

You can guess where it went from there. More media outlets picked up the CVS story, and Twitter caught fire with people mad at CVS. So what’s the big deal? Isn’t this just the way the media always acts, and shouldn’t we ignore it? No, because wellness is important in the context of a nation that wants to get healthier, and contrary to the tone of the media coverage, both employers and employees have a similar stake in the matter.

Wellness Matters

We can’t lose sight of the following critical point: employers that are making substantial contributions to their employees’ healthcare premiums have a vested interest in trying to foster a healthier workforce. It’s not just the employee who feels the pain of escalating premium costs; when the employer is making a significant contribution, the employer is feeling it too. Within the next decade, the obesity rate could pass 50% or higher. Future insurance costs could get much worse unless we find ways to make wellness work.

Many companies, and CVS is just one of countless examples, are trying to build effective wellness programs and reward employers who participate. The incentives are important for encouraging participation. For now, employers and employees are in this together. What’s the alternative? Unfortunately, some employers will wash their hands of the insurance business entirely, and leave employees to fend for themselves. And for many Americans, that will be much worse than being asked to participate in a wellness program in exchange for better insurance contributions.

A Healthy Debate is Progress

That doesn’t mean that all wellness programs or wellness incentives are created equal. And without a doubt, there is a debate worth having here. The issues of healthcare payment, responsibility, privacy, and rights are complex and the stakes are important. But the media’s portrayal did everyone a disservice by spreading misconceptions and portraying corporate wellness as something only Big Brother could dream up. Progress can’t be made if people don’t even understand the issues.

To ABC News and the other media outlets that portrayed wellness strategies in such a negative light, we hope that you will reconsider your approach to wellness and produce a piece that has real value. One that acknowledges the complex relationship between the cost of insurance, the rights of those who pay for that insurance, and the impact of unhealthy lifestyles on driving those costs up. What are the rights of the employer versus the rights of the employee? Where do the lines get drawn? We invite the media to join the conversation, rather than crank out hasty tabloid headlines.

And to CVS, we congratulate you on promoting and rewarding wellness in your organization. We congratulate the growing number of companies that are taking wellness seriously, exploring the shared role of the employer and the employee in health and insurance costs, and whose efforts will continue to uncover the strategies that work best.

Note: beBetter is NOT the provider of the CVS wellness program. We have no affiliation with CVS or the vendor that provides its wellness services.

Greg Juhn is the Senior Vice President of Product Strategy and Marketing at beBetter Health, Inc. You can reach him at greg.juhn@bebetter.net.

72 replies »

  1. As everyone else pointed out penalizing an employee $600 a year for not allowing the corporate masters to invade our privacy and dictate our lifestyles does not make for an incentive, much less make it voluntary. Sorry but how i live my life is my business. The only time and employer has a right to dictate anything to anyone… Is while the employees are on the clock. Once an employee clocks out, the employer should just mind their own friggin business. My personal life is just that… PERSONAL!!! Ill be damned if i let any employer dictate how i live my life, much less the corporate masters who have republicans humming on nuts

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  4. Ethics and morals are seen as a quaint relic in the American corporation and executives have all the incentive (bonuses for saving money) and none of the risk for misusing this information to get rid of workers with costly health problems.
    Sure, there is a law against it but the only people ever prosecuted are low-level clerks.

    We live in an age in which business schools teach that the only responsibility of a corporate officer is to make profits. This kind of program is the logical outcome.

  5. This article is well-written and informative. However, there is one major error. CVS will NOT be lowering any insurance premiums for employees who submit their health information. Instead, employees will have their insurance premiums increased by $600 per year if they do not submit this information. I should know. I am a CVS employee.

  6. Greg,

    Very nicely put. This is a topic that seriously needs attention. ABC is doing what media loves to do – create a story. I wish they had enticed people to click on the article and then actually spoke the truth.

    As far as wellness programs that promote an employee to manage their healthcare is the way to go. I mean I do not understand why more employers are not doing this! I mean is it not obvious to them that healthier employees would promote lower healthcare costs? I know organizations like Whole Foods do great work around this.

    Great article – and keep fighting the fight – I am right their with you. I think the root of a lot of this and more focus also needs to be on childhood obesity and the fact that our schools do a really poor job of educating and informing our kids on two main aspects of life – their health, and value of money or personal finance. Kids become young adults and have no clue about how to eat and exercise right, and have no concept of personal finance! Thanks for getting me charged up!!

  7. Two things: First, I am guessing that, given your bio, you work for a company that provides said “third-party” services. That makes you a little biased in this debate, don’t you think? Second, employers put more and more of the financial responsibility on employees with each passing year. So, although you claim that their investment is substantial, I would beg to differ. Again, I think your employment most likely shades your opinion on this matter. Let’s face it, Americans pay through the nose for health insurance. We do not want to be further penalized because we have privacy concerns and concerns about our PHI getting out to people who have no right to it. And isn’t this a free country? If it’s OK for CVS to jam this down employees’ throats, I have absolutely no idea why it isn’t OK to regulate the size of soft drinks. Yes, CVS is private and NYC isn’t. So what? Using your line of logic, we should fine everyone for each poor decision they make. No offense, but in my mind, your probable bias removes any credibility your argument might have had with me otherwise.

    • Certainly, I have a bias. Everyone has a bias – or more accurately, a collection of biases. My main bias is in helping employers construct wellness programs. I don’t have a strong bias toward the incentive structure the employer comes up with, as every company is different.

      I’ve noticed a lot of people equating these corporate actions with governmental “nanny state” regulations. Well, if you don’t want companies doing this sort of thing, guess what you will need – more government regulations.

  8. Well lets be honest about things. First of all, a $50 increase in healthcare cost for not participating is NOT an “incentive” its a penalty. An “incentive” would be a decrease in exisisting premiums in exchange for participating. In all reality there is no incentive, your healthcare cost will stay the same, it will only go up if you choose to exercise your right to privacy. And also, its not “voluntary” when you force a $600 penalty per year for not participating. People in todays world can not afford $600 per year, so its basically forced and not voluntary. And lastly, the one thing that I still do not understand is the claim of the employer never receiving any of the healthcare screening information. When attending the CVS healthcare enrollment meeting I was given a document that had information about these healthcare screenings. In that document, which I still have, it clearly says there will be “Healthcare Rewards” and also penalties associated with these healthcare screenings. How can CVS give rewards and/or penalties based on these healthcare screenings if they never get any results? And its not confidential because CVS does receive aggregated data from screenings by the 3rd party involved. But I would still like to know how there are rewards/penalties when they never see the results?

  9. I work for CVS. There is so much mis-info in this article and others like it, I do not know where to begin. Let’s dissect this article. “79% of large employers incorp health assessments in their health care plans”. Define “large company”. Give some examples. Name your source for “the study” of large companies. I have no problem with using health assessments to anylize costs. What I have a problem with is fining me a surcharge for not handing over my personal/private/confidential health info to ANY 3rd party. Whose business is it? I have a constitutional right to privacy. I DO have a right to privacy as stated in the 4th, the 5th,and the 14th amendments of our Bill of Rights. I do not agree with Rodriguez in his challenge that his privacy to smoke was intruded upon. He was a known smoker, and did not attempt to keep it private. I am glad he lost his case. With the Seff case, he simply refused to give a voluntary healh assessment to THE COUNTY he work for…government job…and was NOT subjected to a fine if he did not comply. He also filed his case based on the ADA (American’s With Disabilities Act). He did not want his employer (The State of Florida)to know he was disabled. He had a case, but filed it incorrectly. He should have retained a better labor law attorney.
    Also, a misleading fallacy with CVS, they claim they gave incentives in the prior 3 years. This is a false statement. 3 years ago, they took away our $250/annual incentive by subsidizing the cost of a local gym membership. Last year CVS offered a $180 discount on our health plan premiums if we got a physical exam by our personal physician, and had him/her fax in the results directly to United Health Care(I refused this offer as well). One story read, “CVS charged their employees a $180 fine if they refused a health screening”. This is a false statement. In a memo to all employees, CVS is claiming that the NEW $600 fine is “an incentive”…wait one minute mister! How is fining me and 220,000 other employees $600, an “incentive”? Crazy talk. And lastly, all of this health screening malarky began the day Obama was elected president for his 1st term. Wait, how many times did we hear this “If you like your current health plan, you can keep it!” “If you like your doctor, you can keep him/her.” “My Affordable Care Act will decrease health care premiums by $2,500 per average family”… Doesn’t anyone want to hold this man’s feet to the fire? Let me finishe by saying this: CVS is attempting to fine me and others for one reason, and one reason only. The “fine” is to simply defray the $2,000 cost per employee CVS will be incurred when it dumps it’s employees into the Obamacare exchanges. Plain and simple. How do I know this? Today, I have 36 health plan options within CVS. It has been announced (3 weeks ago) CVS will offer it’s employees ONE PLAN for 2014…yes, an HSA (health savings account), and NO OTHER ALTERNATIVE. Wake up folks. WE ARE ALL ALL ABOUT TO BE DUMPED BY OUR EMPLOYERS INTO OBAMA’S Health Exchanges !! We lose, employers save BILLIONS.

    • So, all of your larger angry anti-Obama rant aside, you are saying the asserted facts of the CVS $50 / month charge are wrong?

      And, how does the large amount of CVS floor space devoted to selling alcohol and junk food square with their purported concern for health?

      • I am CVS Caremark employee also. I would like to clear up a few things. First off the $180 incentive was not dependent on you getting a Health Screening last year. It was dependent on you completing one of the Wellness Programs offered by the Well Rewards program. There were a number of different programs you could have completed. I did one on stress relief and another on eating well. Some of the Programs would also give you a reward if you completed it during that quarter. It was $50 in which you could get an american express gift card for. I did receive one of those. However I believe alot of this is in perspective. I can understand a HEALT Insurance company like CVS which is a Pharmacy Benefit Management company wanting to work with the employees to have better health. However Like many others i find it a little invasive in some of the information we have to provide to be able to be able to receive these “INCENTIVES”. Also I have been in the Health Insurance industry for about 25 years. I have seen the slow increased in Medical cost from the beginning. It seems each year it goes up. But I have to agree with my CVS Colleage Bon Scotch that ever since the OBAMACARE bill was passed I have seen the large insurance companies increase the Premiums of the companies they insure at very high increases. That includes just about any Large Healtcare company that you can think of right now. In a period of 2 years I saw my Deduction go from $350 to $1250. This year my Deductible went up to $2000. Also my premium increated by 35%. I will admit there are some things in the OBAMACARE Bill that are helpful. But overall it just caused Healthcare companys to increated their premiums and force everyone to “OBTAIN” insurance otherwise they will be “FINE”. Oh wait did the sepreme court say it cannot be a “FINE” but it would have to be considered a “TAX”. As with many of the laws today the OBAMACARE Bill only hurts the law abiding people of this country. Just like with every other Federl Program those who don’t want to be bound by it will find a way around it. As my colleague stated where is my reduction in HealthCare Premiums of $2500 as per Barack Obama on his Affordable Care act. I expect that we will have to pay even higher premiums with the HealtCare exhanges.
        Healthcare reform should be how to lower cost not raise it as it has with OBAMACARE. Next time you go to the hospital look how much they are charging you for gauze. Then go to the local pharmacy, drugstore, or grocery store and see how much they charge you for the same gauze. Then tell me where OBAMACARE is reducing the cost of Healthcare.

  10. This is what a true and compassionate employer can do…assist, nurture and motivate their employees. It’s often a directive of change. Doing more, doing better…and yes, their health and well being is part of that.
    I think CVS can fly a banner of bold and constructive leadership.
    They happen to be my choice of pharmacy/retailers.

    • Compassionate? Constructive leadership? Thats being very extreme. CVS tells their employees not to smoke on their property because CVS is “compassionate” and cares about their health. So how come CVS sells those same cigarettes in their stores? Because when the price is right they will take the profit, but when the price is wrong for them they tell you not to do it. Its hypocritical at best. If they really cared they would not sell cigarettes at all. But like I said, they have no problem with the profits at the other end. Just as long as those sick smokers are not their employees that have their healthcare plan. Any company that big only cares about money. Everythng they do is based around money and profits. You have to be a fool to think anything else.

  11. What also was projected inaccurately is that HIPAA does not “allow” penalties, only incentives What CVS would have done is have the base premium price for their healthcare benefits. Those that participated would then get a discount, and the ones that did not participate would pay the higher premiums (which were the base ones.) It is not correct to say that you get a penalty, as everyone has the same base premium cost.

  12. Let’s make one thing very clear: employers are *not* paying for health insurance for their employees.

    Whatever they pay insurers on behalf of their employees is in lieu of wages. The money belongs to the employee, and the employer is just aggregating the purchase to obtain better terms. They are more than welcome to stop doing that.

    Sure, employers would love to cut health insurance costs without increasing wages, but the need for better margins does not give employers the right to invade employees privacy through some HIPAA circumventing shady “third party” deal.

    It’s good for you is not a valid excuse either. If the government put a “third party” operated scale at the DMV and asked you to step on it, or pay a hefty fine, and join some “third party” run wellness program if you’re too fat, would ABC then be allowed to have its headlines?

    • Many employers are contributing significant amounts toward insurance, so whether it is in lieu of wages or not, they have a stake in the health of their workforce. I might have a different position if healthcare costs weren’t such a problem. Thanks for your comment and good points.

      • Thank you for the reply, Greg, and I do agree that employers have a stake in the health of their workforce (and/or equipment, real estate, etc.). However, we as a society decided that this stake does not give employers the right to discriminate based on health status, and I don’t see why now they are asserting the right to financially penalize based on the same.
        No, this unfortunately is not illegal, since HHS came out with specific guidelines on how employers should intrude into employee (and family) privacy. Where once, large group insurance could not rate and discriminate based on preexisting conditions, now it can.

        BTW, I would 100% support government regulation mandating that every office building and factory should have a decent workout facility, or that employer run cafeteria could enjoy some tax breaks if they served healthy food, or any other regulation aimed at making it easy for employers to provide the tools people need to stay healthy.

        • Im not so sure about the claim of this “not being illegal”. Here is a direct quote from the Americans with Disabilities Act:
          “Under Title I of the Americans with Disabilities Act (ADA), once employment begins, an employer may only make disability-related job inquiries and/or require medical examinations in the following circumstances: (1) if they are job-related and consistent with business necessity; (2) in order to follow up on a request for reasonable accommodation; or (3) as part of a voluntary wellness program.
          According to the EEOC, a wellness program is voluntary if an employee is neither required to participate nor penalized for non-participation. If a failure or refusal to participate means that the employee is ineligible to enroll in a group health plan or access funds in a health reimbursement arrangement (HRA), the program would not appear to be a voluntary wellness program. ”

          So this (A) is indeed a wellness program, (B) is not job-related, and (C) is NOT voluntary due to the $600 yearly penalty for not participating. This law was specifically made to protect people from exactly what CVS is doing. If it is indeed legal, its only because they found some kind of loophole. This is EXACTLY what this law was trying to protect people against.

  13. ” Takes team work to bend the cost curve on healthcare.”

    “Would that include banning super size soft drinks?”.

    You bring up an interesting point. CVS’ core business needs to thrive to cover payroll, taxes, expenses and overheads, including healthcare costs. Without this, there would be no CVS. And as I understand, CVS’ #1 expense according to SEC filings is their payroll. CVS#2 expense is health and welfare benefits for their employees.

    Do we want to put the cart before the horse or the other way around? CVS is simply positioning itself to engage patients and plan members in behaviors that will improve health outcomes and lower health care costs. Think about the value to an employee that is incentivized to get a free exam and identifies a silent killer such as Hypertension or High Cholesterol.

    Kudos to CVS for offering healthcare packages and employment of 200,000+! No CVS would result in job losses, more uninsured, foreclosures….etc…etc.

    • “CVS’ #1 expense according to SEC filings is their payroll. CVS#2 expense is health and welfare benefits for their employees.”

      Did you find their main profit drivers?

      “CVS is simply positioning itself to engage patients and plan members in behaviors that will improve health outcomes and lower health care costs.”

      Where does the “teamwork” start? Is society at large part of the team? CVS sells cigarettes and CVS sells junk food. Whose health are they interested in to deserve so many “kudos”?

      “engage patients and plan members in behaviors that will improve health outcomes and lower health care costs”

      How about their customers behaviors and health outcomes?

  14. “I hope they’ll come to appreciate their role in co-creating health and bending their own personal cost (and BMI) curves.”

    Jane, does that include Mississippi?

  15. Greg-I had exactly the same reaction as you did to the mass media response to this story. So many Americans don’t ‘get’ that health care is a cost borne by employers who choose to provide it, putting many at global competitive disadvantage (did somebody say “GM?”). As those who are covered by employers will pay increasing portions of their health bill, I hope they’ll come to appreciate their role in co-creating health and bending their own personal cost (and BMI) curves. JS

    • Yes, as long as employers are in the insurance game, then it should be viewed as a partnership. Maybe that is why I reacted to the coverage – it seemed to be going out of its way to drive employee anger, rather than actually look at the reasons these sorts of programs are done.

      Back in the day employers tried providing “total compensation statements” to help show how much was being spent on an employee’s insurance, but it’s time to step up the communication. Of course, an employer has to earn trust and engagement with the workforce in all areas first. Otherwise, anything they do will be viewed with cynicism.

  16. Beautifully said, Greg. Ironically, employers have been implementing such wellness programs for years. This is nothing new. Now the media gets a hold of this and it spirals out of control. Takes team work to bend the cost curve on healthcare. “Entitlement” is an ugly word!

    • ” Takes team work to bend the cost curve on healthcare.”

      Would that include banning super size soft drinks?

      • I think it is the employer’s right not to sell soft drinks in vending machines and the cafeteria. But it is not in an employer’s best interest to alienate their employees. All of these strategies have to be weighed, and if the company decides to move forward, introduced in a sensible fashion. An employer has a right to build and reinforce a culture of health at the worksite.

        • “An employer has a right to build and reinforce a culture of health at the worksite.”

          Does a government have the same right to build a culture of health in society? Is there a difference in what Mayor Bloomberg is trying to do and what CVS is doing?

          • “Is there a difference between government and private enterprise?”

            Greg, it’s always perplexing that right wingers argue that a loss of “freedom” is OK when dealing with private business and not OK when dealing with gov. Leftys will approve of government controls but baulk at private controls.

            I don’t really support the banning of large soft drinks, or much else, but I do support a tax on sugar, salt and fat – the big killers in our culture. With bar codes it’s technically possible. I also support single-pay where your job does not determine your health coverage or your health life style. Mississippi just banned local control over issues like Mayor Bloomberg’s, the fattest state in the country with the least amount of health care and the worst diet finds it better to not take any action against obesity.


        • If its all about “caring” then how come CVS sells cigarettes in their stores? They tell their employees not to smoke on their property, yet they sell the same cigarettes in their stores on a daily basis? Seems hypocritical to me. And where does employees healthcare interest end with the employer? Do you smoke? Do you eat red meat? Do you drink whole milk? Do you engage in dangerous activities outside of work? Do you drink soda?…Where does it end? The bottom line is a persons personal health is just that – PERSONAL! I dont tell CVS how to run their business, so why do they tell me how to run mine?

  17. Medical insurance coverage has turned into an expected benefit. Most employees have little understanding of the cost of their medical care, which is an average based on annuity tables and statistical estimation of medical events. When I took my father to the newly remodeled emergency room in our city, I noticed the chairs in the assessment rooms are double the width of the previous chairs. For that new size to be the norm, and not available as an alternate in the hallway, is concerning. You can’t pack on 50-100 pounds and expect not to have more medical events. How are companies to manage their employee health care premium costs?

    • “How are companies to manage their employee health care premium costs?”

      By getting out of what is not their core competency.

      • Totally agree and didn’t mean for my post to be directed to you BobbyG. CVS’ benefits consultant probably designed the suggested assessment or extra premium option. I’m not certain what the answer is, but just saying we can’t expect hospitals and doctors to fix every ailment, many of which are self inflicted, and be surprised that medical costs are going up.

        • Patty you bring up a good point. about “medical costs are going up” but I have to point out that this country needs true HEALTHCARE Refrom” to help bring that cost down. When the OBAMCARE bill passed there was alot said about how this was to help reduce Healthcare cost. In Fact many Major Health Care insurance companies immediately increased their premiums to companies in which trickled down to the participants in those Health plans. I know my Deductible whent from $500 to $1250. Then this year my company when from paying Copays to you now have to pay for the entire cost of your Vist to a doctor until you reach your $2000 deductible. Then you pay 20%. Previously I was paying a $15 copy for PCP visits and $25 for Specialist visits and only had a 10% coinsurance for any other services, Lab, x-rays, etc….. These higher cost took place quickly after the OBAMACARE Bill passed. So what happended to the Cost of Health Care not increasing. I have been in the Healthcare insurance industry for almost 20 years. I have never seen such a qucik increase in Health Care then I have seen since the OBAMACARE Bill passed. Don’t get me wrong. i have seen increases but not like this.

          • All the Obamacare rant aside, whats your point? This article is about a company making its own decision on their own healthcare policy. Obamacare did NOT make them do this. They chose to do this on their own. Whats your point Wolf? If anything CVS loves Obamacare. Think about it, CVS will be getting millions of new customers because there will be millions of new people joining the healthcare system that previously were not. CVS will be banking millions off of this. They love it! Look at their stocks from the past 6 months. Bottom line, this has nothing to do with Obamacare, it doesnt even take effect until 2014.

    • You hit the nail on the head – many employees don’t know how much their employer is kicking in for their healthcare, and they take it for granted. Expect it, even.

      This is not to blame the employees for that. But when I read a lot of the general reaction to the CVS story, many people seem to miss that key fact.

      • Interesting, I know my company actually puts on our paycheck how much they contribute for me and my families insurance. Plus the EOB we get shows how much the entire cost of a visit is and I would assume the cost I pay other then my Copay and Coinsurance is what my company covers. Plus each year during our open enrollemnt we have tools to help determine what we might have to pay out of pocket. These tools include the entire cost of both may Copy and Coinsurance and include what the company paid out for me and my families Healthcare services for that year. So you you basically stating that not all companies do this which I can see or that most employess are not payting attention to these statistics.

        • Correct. An employer can use any term for a payroll code and often it is something cryptic. It has long been known that many employees are not very aware of the total cost of their health insurance. That is one of the reasons some companies use “Total Compensation” statements. This year, as a result of PPACA, W2 forms now list total insurance cost.

  18. “We can’t lose sight of the following critical point: employers that are making substantial contributions to their employees’ healthcare premiums have a vested interest in trying to foster a healthier workforce. It’s not just the employee who feels the pain of escalating premium costs; when the employer is making a significant contribution, the employer is feeling it too. Within the next decade, the obesity rate could pass 50% or higher. Future insurance costs could get much worse unless we find ways to make wellness work.”

    Yeah. All of that is true.

    But I’m not sure that it should be. Wonder how things would be if we de-linked health coverage and employment across the board? None of THAT idea is exactly news. See Elhauge, ‘Allocating Heath Care Morally,” 1994

    “…To ground my analysis let me assert upfront a concrete proposal, one toward which I believe the national healthcare systems of the world are (from different directions) slowly converging. The analysis of the moral paradigm offered here supports, when coupled with the strengths and weaknesses of the other paradigms, and health-care system having the following elements.

    -A politically set annual health-care budget with an associated tax not linked to employment.

    -Free access for all individuals to a care allocating plan.

    -Individual choice about which plan they wish to join for some significant period. (I suggest three years).

    -Competition among care allocating plants that each receive a share of the government budget based on the number of individuals they enroll, adjusted for each person’s health risk, and that cannot retain profits from their budget (other than a possible bonus linked to total number of enrollees) but must instead spend it on those enrollees. Plans must accept all who wish to enroll.

    -Management of those care allocating plans by professionals who have a range of diagnostic expertise to evaluate the healthcare needs of plan enrollees, who have salaries unaffected by spending decisions…, and who have a duty to decide how to allocate each plans budget to purchase those health services that maximize health benefit for the unit’s enrollees. Their sole incentive should thus be to do a good enough job at ration Inc. to keep and attract enrollees.

    -Maintenance of the vast majority of healthcare providers as private suppliers of procedures, tests, and technologies that compete with each other to sell to the care allocating plans. This should create incentives for cost-effective innovation because suppliers will now face purchasers who have both the knowledge and incentives to trade off the costs and benefits of care.

    -A politically appointed agency, the members of which are insulated from removal, that has only two tasks: setting risk adjustments and licensing care allocating plans by verifying their diagnostic expertise and fiscal soundness. In particular, this agency would not dictate a uniform schedule of covered services because that would be up to each care allocating plan.

    -The individual right to purchase additional care outside these plans on the open market. [pg 1453]”

    The more time employers spend being the Fitness Police of USA Sparta, the less time they have to produce improved products and services.

    Is this ultra-leftie news site below wrong on the facts of the CVS story?


    None of which is to dismiss the severity of our “lifestyle” related chronic maladies.

    What if we made people pay retail actuarial based rates with their own post-tax dollars (again, see Elhauge)?

    Mr. Juhn, what is your BMI? Mine is 25, at age 67 (My cool digital scale tells me that every morning? Your BP? Pulse rate? Your lipids? your Pulse Ox?…

    OH, they’re “private.”

    I bet pretty soon we’ll have a 1.99 iPhone app that’ll take your picture unbeknownst to you and from it compute your height, weight, and BMI. Or, maybe it’ll be a staple functionality of Google Glass

    CVS CEO Larry J. Merlo, was paid $15 million last year (chump change rlative to UnitedHealthGroup’s Hemsley, at $40 million). 56 years old, dude looks a bit jowly to me. What’s his BMI?

    I’m sure he’s not given any shit about HIS health plan.

    • BobbyG, it’s it hilarious that Palin lampooned Mayor Bloomberg for trying to reduce one part of our obesity problem but I bet she supports CVS trying to tackle the same issue – although less effective.

      I wonder if CVS sells jumbo soft drinks?

      • I imagine that they sell all manner of unhealthy sugar, salt, and transfat-laden crapola (not to mention the booze they stock and sell). This weekend I’m gonna go to the one near my house and use my iPhone movie app to take a quick surreptitious stroll through their aisles to document it. Look for the ensuing YouTube upload to my REC blog (if I make it out.without having one or more of their Fifes confiscate and smash my iPhone).

          • Bobby,

            How about you just don’t eat that stuff – or is it their fault if you do?

    • “Wonder how things would be if we de-linked health coverage and employment across the board?”

      That’s a great question. I’m curious – if you were talking to a CEO, would you recommend that their company withdraw all contributions to their employee’s health plans?

      • Yes.

        Or, (preferably) make that part of employee comp taxable income (takes “first mover disadvantage” out of the picture).

      • “if you were talking to a CEO, would you recommend that their company withdraw all contributions to their employee’s health plans?”

        I bet the CEO would love to keep HIS (Cadillac) employee health plan AND shed his workers health plan and contributions. I bet if workers could gain mobility from having a non-company plan many would choose to do so. How many workers get trapped in companies because of retirement and health plans. How many loose those plans then they get laid off.

  19. Greg Juhn says:

    “The word “mandatory” is misleading here..”
    Is it?

    How “optional” is this:

    “CVS employees can reportedly opt out of the requirement, but will face a $600 annual charge.”

    Fox says that the info is to be reveled to the “companies insurance carrier” then Fox quotes that, “The drugstore operator also says it will pay for the health reviews and that no one within the company will be able to access health records and personal information because it will all go to a third-party administrator.”

    When I listened to CBS news on this story I got it pretty quick that the medical info was going to a third party, not the company.

    So how will the Third Party/Insurance Company handle the info? Will they rate CVS higher for too many fat people? Will they get the fat ones on a tread mill? Having an insurance company assess risk is pretty standard, even some life insurance comes with a mandatory health exam. But if the info goes to a “third party”, how will that info be kept secret?

    Loosing weight is not that easy for many people – especially when you see what CVS sells for food in it’s stores. What will CVS do if an employee can’t take off the weight? Who pays for the weight reduction program?

    Another part in the Fox story said this: “The downfall with asking employees for their body fat percentage and deciding on their wellness is that the two are not necessarily correlated, Piper says.”

    Henry Ford got into his employees private life, even sending “evaluators” into their homes. To what extent does a private employer get to tell it’s employees how to conduct their personal lives? If the government wanted to know your weight would we justify that for “better health”?

    • You touch on many of the points at the heart of the debate, and all of your questions are excellent. The way the media covered this story, they didn’t even begin to scratch the surface.

      • “The way the media covered this story, they didn’t even begin to scratch the surface.”

        Because if it goes over 15 seconds the viewer looses attention – unless he’s tesxting, then he’s not paying attention at all. If you want intelligent discussions that open up all issues listen to NPR.

        • The CVS Caremark incentive is not solely based on weight, It is based on several factors. you just have to meet two of those factors. Therefore you can be overweight but if your colestoral and blood pressure are good then as far as the criteria is concerned you are withing exceptable ranges. Also this does not determine if you will have to pay the additional premium. It is just encouragement to work on those areas that need work to bring two of the factors withing an exceptable range.

    • Peter 1: Regarding how an insurance company will use this to set the rates, please understand that companies the size of CVS are self insured. The amount they pay for stop loss coverage and administrative services from a health insurance company makes up a pretty small percentage of their health care spend. The overwhelming majority of the costs are the actual cost of claims. The only way to make meaningful progress on health care costs is to get people healthier. That includes helping employees prevent lifestyle illnesses and to encourage those who already have them to manage them effectively. As much as people love to hate the health insurers, the truth is that many people are covered by self insured plans and their costs are reflective of consumption. Regarding the “fine”, a company I worked for instituted the same type of plan. The offered an incentive to those who participated, not a fine for those who don’t. While the difference can be semantic, my fellow employees responded favorably to it. They like the idea of being able to positively affect their costs and could understand that those who don’t participate are driving up costs and should pay a larger share.

      • “That includes helping employees prevent lifestyle illnesses and to encourage those who already have them to manage them effectively.”

        You wouldn’t know it looking at the junk food they sell. What message does that send?

    • The third party does not set CVS’ rate. A company of CVS’ size is self insured. They pay an insurance company to handle the administrative services. They do pay for “stop loss” coverage to handle catastrophic claims, but that premium is relatively minor. In short, CVS’s (and any other large employer’s) health care spend is primarily the aggregate cost of the health care their employees and covered dependents consume. Therefore, their only shot at controlling these costs is to have healthier employees (which will lower the costs for their employees as well). Americans want to blame everyone around them rather than take responsibility for their own health. There is no boogie man here folks – just simple facts.

  20. Unbelievable. When I saw this first on ABC I was shocked that it was portrayed as Big Brother when the real story is the financial relationship between employee and employer for benefits. As a small business employer, I certainly understand the financial challenges – and they are only going to get worse in 2014 with ACA requirements coming into play.

    It’s a shame the media spends so much time “spinning” when they could be educating consumers on such an important topic. Whatever happened to Walter Cronkite?

    IMO every company should be making wellness a priority and connecting the dots for employees to understand the financial implications.

    • Great points about connecting the dots for employees. That is really one of the big gaps, and an area where a lot can be done through better collaboration between employers and employees. Mutual buy-in makes a world of difference.

      And Walter Cronkite wouldn’t have much of a role in today’s media space.

  21. Sounds like ABC did get the story wrong. What CVS got wrong (and most others too) is that wellness-sensitive medical events are a big portion of spending. They amount to about $200 PMPY, or about $420 PEPY.

    It’s a massive myth that chronic disease events are the driver of health expenses. It’s overscreening, overdiagnosis, overtreatment, medical errors, specialty pharma, and cancer that are driving trend up these days. I would know — I wrote the book on it (Why Nobody Believes the Numbers)

    • Al, thanks for your feedback. I have read your book and have been following your articles for several years now. I’m a fan of your work and there is a lot we would agree on. There are multiple scenarios that could play out over the next 5 to 10 years in this arena. Whatever happens, we can be sure progress won’t be made by retreating from the challenge. I saw that you have a new book coming out on recommendations and solutions, and I look forward to it.

      • Hi, Greg,

        Likewise I just visited your site and was very pleased to see that you weren’t making up ROI data, which shows a great deal of integrity. Keep up the good work!

  22. Did Gary and his team at U of M do something on this one?

    Too bad there isn’t much reporting done on the reporters.

    I like much of what ProPublica do.* It would be interesting to see what a ProPublica investigation into the influence of money on healthcare reporting turned up, wouldn’t it?

    Might do some real good.

    * With a really big asterisk.

    • Thanks John. I thought about creating a “Worst Health Journalism Award”, bestowing it on ABC News and sending it out as a press release. I understand the news agencies are driven by ratings and advertising money, and they crank these things out without a lot of time to research the issues, but it would be nice if supposedly responsible news agencies kept the tabloid tone out of it.

      • Greg, I don’t think ABC was being intentionally salacious. I think they did miss key parts of the story and, unfortunately, things took on a life of their own.

        Your piece is heavy on what journalists got wrong but somewhat light on what they got right. Is CVS’ policy regarding wellness information any different than other peer companies? Is this policy new or has it been active for one time?

        • I am not in any way affiliated with CVS and don’t have any insider information, but to the best of my knowledge they are not doing anything new. The program as it has been described in the media, and from what I could uncover, seems relatively old-school. I assume they plan to migrate toward a more aggressive approach down the road. That’s part of the irony of this story – there are other companies taking bolder steps than this.

          • Hi, I am a CVS Caremark employee and this is really not new. There are NEW incentives. CVS Caremark has had some type of wellness program since I have been an employee here. And for quite some time has offered some type of monatery incentive that you can earn by participating in the Wellness Program. However as I stated there are some NEW incentives in particular as Greg pointed out that you will pay more for health insurance by not participating. Personally I have no problem with that because in fact it did encourage me to get my Wellness screening. Turns Out I am in fairly good health and I can see this as a benefit to those who may have some medical issues they were not previously aware of without such screenings. We have health insurance not only to support us during our illnessess but to help us from anything medical issues we have from getting worse.
            Kudos Greg..

  23. Great article that sets the record straight about the positive effects of paying employees to stay well. In fact, two weeks ago a Mayo Clinic study reported that employees lost weight when offered cash incentives.


    Unfortunately, what passes for “journalism” in the 21st century amounts to grabbing eyeballs to sell ads (and perpetuate misconceptions).

  24. Hi, Greg. I’m amazed the media thinks this is even news. CVS is hardly the first with such incentives, nor do they have the most stringent requirements.

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