Focus On: Kevin Volpp

For Many Smokers, It’s Quitting Time

smokingCompanies that have instituted policies to hire only non-smokers are nothing new. Indeed, the trend started several decades ago. But recently, the stop-smoking movement seems to have picked up steam – emerging in places as diverse as the University of Pennsylvania Health System and the Russian Parliament.

Penn Medicine joined a number of other health systems when it announced last week that it would no longer hire smokers because it wants to provide a healthier environment for both patients and staff as well as save on employee health insurance. In an earlier blog post on this topic, Wharton health care management professor Kevin Volpp agreed that such measures will most likely lower insurance premiums for health care systems.

Along those lines, a Penn Medicine website titled, “Toward a Tobacco Free Future,” notes that current employees who are tobacco users “can expect to pay a high premium on their health care benefit if they are not actively enrolled in a smoking cessation program or nicotine replacement therapy.” According to a report in The Philadelphia Inquirer, the 11% of health system employees who acknowledged using tobacco products are required to pay an extra $15 every two weeks for their health coverage.

The website also points to research showing that “tobacco use is the leading preventable cause of death and disease in the U.S., imposing a huge health and financial burden on families and businesses. Employees who smoke cost, on average, $3,391 more a year for health care. In addition, smoke breaks during work may be disruptive and subject patients/colleagues to the unpleasant smell of smoke on employees’ scrubs and clothing.”

Penn Medicine currently offers a number of smoking cessation programs and classes for its approximately 17,500 employees.

Meanwhile, an article in today’s Wall Street Journal reports that Russian President Vladimir Putin yesterday signed into law an anti-tobacco bill which bans smoking in public places like government buildings, schools, hospitals and restaurants. The bill, passed by both houses of Parliament — “despite fierce resistance from the world’s four largest international tobacco companies, which control 90% of the Russian market”– also bans cigarette advertising. According to the Journal, about 40% of Russians smoke.

Back in the U.S., some smokers and non-smokers alike question whether a policy of hiring only non-smokers is discriminatory. Not according to the Penn Medicine website, which states: “Users of tobacco are not in a legally protected class. Non-tobacco hiring policies are legal in 21 states including Pennsylvania. In 1987 a federal [appeals court] ruled that smokers are not a ‘protected class’ entitled to special legal protections and that courts need no further rationale than the Surgeon General’s warning on cigarette cartons: Cigarette smoking is hazardous to your health.”

The statement goes on to note that the policy does not apply to current or future employees working for practices in New Jersey. Currently, 29 states – including New Jersey — and Washington, D.C., have laws that protect smokers’ rights.

David Grande, a professor of medicine at Penn’s Perelman School of Medicine and a fellow at the Leonard Davis Institute of Health Economics, applauds Penn Medicine for “sending a positive public health message and working to create a healthier work place.” His only concern, he adds, comes from the fact that Penn employs a large number of local residents “from neighboring low-income communities, where smoking rates tend to be higher than in other neighborhoods. I would hope that the new policy does not prevent Penn from hiring these people, and that it remains a strong employer of the local community.”

As for whether the University of Pennsylvania as a whole is considering implementing a program of hiring only non-smokers, Terry Ryan, a manager in Penn’s Human Resources Division, notes that while the university supports Penn Medicine’s efforts, it is not considering a similar policy at this time. She adds that Penn currently offers a number of smoking cessation programs for employees throughout the university.

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Smoking: A Drag for Job Applicants?

Smokers need not apply — or need to quit — if they want to be hired at a southern Delaware hospital, one of a growing number of employers to ban the practice among prospective staff members. Overwhelming evidence about the health risks of smoking have turned laws and public sentiment against the habit, but Wharton experts note that such policies raise questions about how far employers should be able to go in regulating employees’ behavior in and out of the office.

Lewes, Del.-based Beebe Medical Center recently announced that beginning January 1, it will no longer hire people who smoke cigarettes or use other forms of tobacco, telling local newspaper the Cape Gazette that the initiative is part of an effort to make the local community the healthiest in the country. It would also likely lower the hospital’s insurance premiums, Wharton health care management professor Kevin Volpp says, which is one reason health systems across the country have taken similar measures.

“There is no question that, over time, this will lead to a significant reduction in the number of employees who smoke,” Volpp notes. “There are serious concerns among employers about high and rising health costs. Not hiring smokers is one way for employers to lower their future health costs. It won’t directly improve societal health — unless so many employers start doing this that people quit smoking because of employment concerns –but it will improve the bottom line for employers who” take this step.

The policy at Beebe won’t affect those who currently work there (although the hospital does offer smoking cessation programs to employees.) But job candidates will be tested for nicotine as part of the hospital’s routine pre-employment screening. “If someone reaches the level on the nicotine test that is considered nicotine use by the drug testing company, then we would not be hiring that individual,” Katherine Halen, Beebe’s vice president of human resources, told the Cape Gazette. Prospective employees who are ruled out due to the no-tobacco policy would be given information about smoking cessation programs and would be eligible to reapply in six months.

Although 29 states and Washington, D.C. have laws that protect smokers’ rights, an increasing number of employers — including health systems such as the Cleveland Clinic, but also two Ohio casinos –  have implemented policies to keep tobacco users out of the workplace. (Delaware, where Beebe is located, has no such law.)

“Some health care employers have argued that they are not hiring smokers because their patients complain about the smell of smoke on the clothes of employees, which, if you are admitted with asthma or are lying on a gurney, might not be appealing,” Volpp points out. “Those concerns would not apply to other bad habits, and it is not clear how far employers will go in adopting such measures to reduce future benefit costs.”

Laws have been passed across the country to ban smoking in public places and within the halls of private employers, and many smokers “have gotten kind of used to feeling like they’re a little bit on the outside,” says Wharton management professor Adam Cobb. “Going to Europe and imposing a ban like this would probably be a nightmare, but in this country, you probably could do it because the norms are established that smoking isn’t particularly cool.”

But Cobb wonders how far hospitals and other employers will push the line. “Irrespective of smoking, is this something that firms should be dictating or legislating?” he asks. “I’m assuming part of the goal is to lower insurance costs, but what about people who engage in risky hobbies, such as mountain climbing or hang-gliding? They’re not doing anything to penalize those people.”

Many employers have also imposed higher insurance premiums on employees who use tobacco or who are overweight. That expense “could be potential motivation to quit smoking or to join a gym,” Cobb says. “But when you’re not hiring people based on something like that, at what point does the line end?”

And then there is the question about how to enforce such a policy. Beebe officials told the newspaper that they have no plan for nicotine testing of employees beyond the initial screening. “If you have a group of people standing outside smoking, is someone really going to walk out and say, ‘You were hired after January 20102, so you can’t smoke but these other people are fine?’” Cobb asks. “And do they make examples out of people [who violate the rule?] Do they fire them or do they allow the person to go into a cessation program? If the company policy on violators is that you get fired, then it’s a big deal. If it’s just a little slap on the wrist and you get a second chance, then maybe it’s not as big of a deal.”

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When Fat Is No Longer Free

When Arizona governor Jan Brewer proposed that certain participants in the state’s Medicaid program — specifically obese people and smokers who don’t take steps to change their unhealthy behaviors — should pay a fine of $50 a year, it didn’t take long for the reactions to come rolling in.

Those in favor state that people who eat to the point of obesity or who smoke should have to contribute to covering the costs of that behavior. In addition, they note that any money collected through these fees will help the state’s financially strapped Medicaid program and allow it to expand current coverage. Opponents of the proposal say that for some individuals, obesity is the result of occurrences beyond their control, such as accident or illness.

An article in The Wall Street Journal notes that 25.5% of Arizona residents were considered obese as of 2009, and about 46% of the state’s Medicaid participants smoke daily, according to a 2006 survey. Moreover, the Journal added, “Unlike private insurers, which often charge different premiums based on customers’ health status, Medicaid must enroll all those who meet its eligibility requirements.”

Knowledge@Wharton asked two Wharton professors — Katherine Milkman, professor of operations and information management, and Kevin Volpp, professor of health care management — for their thoughts on three issues raised by the Republican governor’s proposal.

First: Is this proposal fair?

Volpp: Many of the people in question likely have a BMI (body mass index) far above 30, the cutoff for being considered obese. It is unlikely that people with BMIs much above 30 would be able to successfully lose enough weight to avoid this penalty.

Differential premiums based on weight are tricky from an ethical standpoint; to the extent that weight is based on genetic factors or larger social/environmental factors that individuals can’t control, adjusting premiums based on weight undermines the concept of risk pooling that is the basis for insurance. To the extent that weight is based on behaviors that an individual can control, it is arguably fairer to adjust premiums than not to do so, since otherwise, people with healthy lifestyles subsidize unhealthy behaviors of others. We don’t really know, for a given individual, how much of their obesity is due to their behaviors vs. genetics/environmental factors.

Another important factor is that reasonable accommodation should be made to those who can’t meet a particular incentive; for example, those who are in wheelchairs.

Milkman: It is no surprise to me that people are concerned about the fairness of this proposal. Classic judgment and decision making research about what people perceive as fair shows that any loss relative to our current reference point is viewed as extremely unfair. In this case, the reference point is no surcharge (in spite of higher medical costs) for obesity and smoking, and the change relative to that reference point (a $50 fee) is experienced as a loss. 

We know from prospect theory (a Nobel-prize winning theory describing human behavior) that losses loom larger than gains, so in spite of the gains associated with this new program (coverage of more people, etc.), it is no surprise that the losses are getting more attention. I do think it’s wise that those who are obese or who  smoke will be offered actionable steps (and hopefully realistically achievable ones) to avoid the fee. 

2. Would this proposal be effective? Is $50 enough of an incentive?

Volpp: It is unlikely that this will be effective in making people lose weight. Losing weight and maintaining weight loss is extremely difficult for most people, and a one-time $50 penalty, once paid, will not provide sufficient motivation throughout the year. Most people are very focused on the present; a once-a-year incentive will not likely be effective in sustaining weight loss.

Milkman: $50 may not be enough to make a significant dent in the problem, but it should affect some people meaningfully. The question is, how many? It would be very interesting to calculate that percentage if the program is implemented.

3. Do you think this proposal will be passed, given its controversial nature?

Volpp: A similar provision is part of the Affordable Care Act (Section 2705), which stipulates that starting in 2014 employers can adjust health insurance premiums based on outcome-based wellness incentives using measures such as BMI by up to 30% of the total employer/employee premium. Employers currently are allowed to adjust premiums by up to 20% using outcome-based wellness incentives. Few use this full amount but clearly there is precedent for these types of approaches to be used more widely.

Milkman: I think it is likely that proposals like this will become increasingly common. I think that could be a good thing to the extent that these incentives help educate people about the risks associated with obesity and smoking and help motivate them to take steps to lose weight or quit smoking. However, there is also the risk that these types of programs will simply function as regressive taxes.

 From Incentives to Penalties: How Far Should Employers Go to Reduce Workplace Obesity? Knowledge@Wharton

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