Charging smokers more a new health care tactic
With the holiday season upon us, many people think about hopping on a plane to visit friends and relatives. But travelers who follow the news might have some concerns about the financial viability of the airline theyâ€™ve chosen for their travel, as troubled carriers seem to be a regular feature in the headlines. With that in mind, airlines are getting creative in cost-cutting measures.
Beginning the first of the year, Northwest Airlines is making an attempt to spread its health care costs more equitably among its work force. In a memo sent to salaried employees, the company said that beginning Jan. 1, the smokers in the group would pay a tobacco fee to help offset the increased costs smokers cause the company. Although the program applies only to salaried employees, preliminary proposals for the next round of contract talks with unions indicate the program would eventually apply to all employees.
Singling out smokers for additional charges might seem unfair, but it reflects the market. Studies have shown that smokers, as a group, are less healthy than nonsmokers and use their health care benefits at a higher rate. Thus, it makes sense to charge a higher rate for those who engage in behavior that results in higher costs to the company.
The plan is unusual in corporate America, although many companies offer financial incentives and help for smokers who decide to quit. This idea is really nothing more than a financial incentive; it just works in reverse. Instead of getting paid to quit, smokers are encouraged to do so by charging them higher health care premiums. If they quit, the additional charge goes away and they end up with more money in their pockets.
Some will worry that this is only the tip of the iceberg, that all employees who use their health care benefits more than their colleagues will eventually be charged additional fees. Thatâ€™s a legitimate concern, but this particular fee applies to a behavior the employee willingly engages in. If a worker is genetically predisposed to heart disease or arthritis, for example, such behavior-related fees shouldnâ€™t apply. Northwestâ€™s program is intended to charge employees for behavior they have control over.
Employment attorney Kevin Coan noted in a recent wire service report that Northwestâ€™s plan is unusual and that it seems to be "just a plain old cost-cutting measure." That is likely true; the airline is in bankruptcy court and needs to cut costs. Airlines are businesses and have an obligation to their owners â€” stockholders â€” to hold down costs while trying to turn a profit. A healthy business (and weâ€™ll agree that few airlines fit this description at the moment) best serves its owners, customers and employees by staying competitive and turning a profit. That way it can benefit everyone.
In our changing economy, employers and employees will have to continually monitor their business relationships to ensure costs and benefits are borne by the proper parties. Excessive obligations of one side or the other will end up hurting everyone.