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Running head: Ethical Aspects of Health Insurance Differentials for Health
Ethical Aspects of Health Insurance Differentials for Health
By: Julie Schrader
Ethical Analysis
Dr. Rebecca Toland
Public Health Ethics
MPH 560
June 2014
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Abstract
This paper is an ethical analysis of Employer-sponsored benefits and the ethical
implications that come from a higher premium differential to tobacco users. It began as a
benefit that employers offered to get the best workers and now being reformed to keep up
with demands of rising health care costs. This analysis also addresses the history along
with the future of employer-sponsored benefits. The analysis will conclude with
recommendations from the writer.
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Introduction
Debate over benefits that employers should offer is not a new discussion. In fact,
employer sponsored insurance dates back to World War II in 1939. Business could not
raise their wages to attract workers because of the federally imposed wages, they had to
separate themselves by offering fringe benefits such as sick leave and health insurance
(Buchmueller et al, 2009). It was then when employer sponsored benefits really took off
with the public and private sectors had no choice to offer these benefits to keep up with
attracting talent to their companies. The following ethical analysis of employer sponsored
benefits will give an unbiased discussion of ethical issues regarding the higher cost for
tobacco users. Finally, this paper will address the question, “Is it ethical to higher costs
for groups of individual?”
History of Employer Sponsored Benefits from 1939 to the Present
Employer benefits are going through a reform because of the rising cost of health
care in the United States; however, it all started out as a benefit that employers were
offering and the government had very little involvement. Between 1940 and 1950
individuals enrolled in these programs grew from 20.6 million to 142.3 million.
Employer sponsored benefits peaked in 2000 with 66.8 percent of Americans covered.
This system is based of work-place risk pools, where low risk employees subsidize the
high risk employees. This pool allowed these benefits to be very affordable to Americans
(Blumenthal, 2006).
In recent years the health care system has been very controversial and is evolving
to stay efficient. With the cost of rising health care costs the employers are feeling the
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burden to keep up with them. The employer has been passing the increase in costs to the
employee and raising health benefits costs. Recently these costs have become
unmanageable for some Americans and that is the reason for the declining trend in
participation of employer sponsored benefits.
In 2007, the United States Department of Labor put together some criteria for
employers to be able to have a premium differential of 30% (in 2013) to the total cost of
employee only coverage. They do have some rules that the employer must have in place:

The program is reasonably designed to promote health and prevent
disease.

Individuals eligible for the program are given an opportunity to qualify for
the discount at least once per year.

The program accommodates individuals for whom it is unreasonably
difficult to quit using tobacco products due to addiction by providing a
reasonable alternative standard (Differential Wellness Programs, N.D.).
The Reasons for US Department of Labor to Implement Premium Differentials
The new premium differential is not specific on what heath numbers you can base
the differential on but many workplaces are using tobacco users the first differential.
They are focusing on tobacco users because tobacco is the most preventable cause of
disease disability, and death in the United States (Tobacco Use, 2012). Below is a graph
of Deaths Attributable to Cigarette smoking.
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On average the CDC states that smokers cost a company $3,391 from direct and indirect
costs (Cost of a Smoker Employee vs Non Smoker Employee, N.D.).
Ethical Concerns
There are three ethical concerns from this law that are of concern. The ethical
concerns are autonomy, confidentiality, and access to healthcare. These ethical concerns
are described in greater detail further down.
Autonomy is in question in this circumstance because is it good for the population
to raise the premium differential? It can be very difficult for individuals whom use
tobacco to opt out of paying a higher premium differential. Tobacco has a substance
called nicotine in it which is an addictive and can be very hard to quit. Individuals whom
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want to quit will have to deal with the physical and mental dependence in order to make a
behavioral change (Why is it so Hard to Quit, N.D.). This addictive substance doesn’t
allow tobacco users to just opt out of doing it. Along these lines an ethical concern for
employers is offering assistance before increasing their premium. Although 66% of
Americans under the age of 65 are insured through an employer, only 24% of employers
offer any coverage for tobacco-u se treatment (What is the role of Health Insurance,
2009).
The second ethical concern is confidentially for the employee. “Public health
institutions should protect the confidentiality of information that can bring harm to an
individual or community if made public. Exceptions must be justified on the basis of the
high likelihood of significant harm to the individual or others.”(Thomas, N.D.). In order
for people to receive the lower benefit many workplaces are using and affidavit for
employees to state if they are a tobacco user or not. In order for the benefit to take place
someone in the organization will know who is a tobacco user and who is not which could
lead to further complications. Some of those would be unfair treatment by giving more
job duties or different expectations than non-tobacco users. The confidentiality of tobacco
users will need to be kept private in order to keep ethical values and prevent a segregation
between tobacco users and non-tobacco users.
The third ethical concern would be that with the allowance of 30% premium
differential some tobacco users could be paying a cost of $500 more than non-tobacco
users and they may find this unaffordable or don’t see the value in it. Every American has
the right to quality affordable health care (Senator Tom Harkin, N.D.). Those who are not
insured are forced to pay out of pocket expenses and many are using the cheapest care for
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that reason. In healthy people 2020 one of the goals is to focus on improved access to
comprehensive, quality health care services they state the disparities in access to health
services affect individuals and society. Limited access to health care impacts people's
ability to reach their full potential, negatively affecting their quality of life (Access to
Health Service, N.D.). Creating higher cost of insurance for tobacco users would unfairly
push them towards no coverage and lower quality healthcare.
Conclusion
World War II had more of an impact on health care than many people may
realize, it was because of the demand for quality workers that employee-sponsored
benefits began. They took off in the public sectors and overrode President Harry
Truman’s bill for a federal healthcare system (Buchmueller et al, 2009). Employers are
needing to be creative to create cost control solutions because of the higher cost of
healthcare. Employers are seeing a hit in their bottom line because the cost of health
benefits. One solution that was put in place in 2013 was a policy to allow premium
differentials up to 30% of the population health care cost to be legal for employer
sponsored benefit providers. This is helping empower individuals to make healthier
choices to lower the cost for the employers; however, as I uncovered some ethical
concerns such as confidentiality, autonomy and the right to quality, affordable health care
the policy may want to be rethought.
In my conclusion I would like to propose a research study to find if the behavior
is changing for tobacco users because of the higher cost or if the money could be better
used for supportive purposes. As a health practitioner I believe there could be a more
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ethical way to help individuals make healthier choices rather than strict policy changes
that put a burden on the employee. I agree that they need to be creative and come up with
some cost containing measures because as you can see from the below chart the cost has
risen 15% from 2000 to 2010.
The future of employer sponsored benefits may be up for discussion if a solution
to lower costs to keep them affordable is no agreed upon. The Affordable Care Act may
play an important role in employer sponsored benefits as well. Private sectors are
continuing to grow with more than 7,000,000 Americans signing up for coverage when
the Affordable Care Act was implemented (Health Care that Works for Americans,
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N.D.). For tobacco users especially this may be the more affordable way to get benefits
rather than employer sponsored benefits.
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References
Access to Health Services. (n.d.). - Healthy People. Retrieved June 22, 2014, from
http://www.healthypeople.gov/2020/topicsobjectives2020/overview.aspx?topicid
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Blumenthal, D. (2006). Health Policy Report. The New England Journal of Medicine,
355, 83-88.
Buchmueller, Thomas C.; Monheit, Alan C. (April 2009). "Employer-sponsored health
insurance and the promise of health insurance reform. NBER Working Paper
Number 14839". Cambridge, Mass.: National Bureau of Economic Research.
Retrieved June 22, 2014.
Cost of Smoker Employees vs Non Smoker Employees. (n.d.). Cost of Smoker Employees
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http://www.biocaretherapy.com/Business_cost_of_smoker_employees.htm
Differential Wellness Programs Can Nip Smoking in the Butt. (n.d.).
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Senator Tom Harkin. (n.d.). Senator Tom Harkin. Retrieved June 21, 2014, from
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Thomas, J. C. (n.d.). The public health code of ethics: Module #3. Retrieved from
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Tobacco Use. (2012, November 16). Centers for Disease Control and Prevention.
Retrieved June 22, 2014, from
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What Is the Role of Health Insurance Coverage in Tobacco Use Cessation?. (2009, May
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