Notice & Comment

Preserving wellness programs by infringing on privacy

A bill is moving through Congress—the Preserving Employee Wellness Programs Act—that would effectively allow businesses to require their employees to disclose lots of sensitive medical data, including their genetic information.

It’s an ugly piece of legislation. Explaining why is tricky, but bear with me.

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The point of workplace wellness programs is to discriminate among employees. Those who adhere to the wellness program—whether by filling out a health assessment, taking a blood test, or attending smoking-cessation classes—pay less for their health coverage. Those who don’t, pay more.

At the same time, a bunch of federal laws aim to stop discrimination in the workplace. HIPAA is one such law: it prohibits employers from asking employees to pay more for their coverage based on their health status. Many wellness programs couldn’t exist in the face of that prohibition.

So, in HIPAA, Congress partly exempted wellness programs. They were allowed to discriminate a little bit based on health status. The ACA expanded HIPAA’s carve-out. Today, wellness programs can ask employees who don’t adhere to a wellness program to pay up to 30% more for their health coverage.

But Congress has never fully resolved the tension between federal antidiscrimination law and wellness programs. Take the Americans with Disabilities Act. It says that employers can’t ask their employees to take a medical exam, including a medical history, unless doing so is “voluntary.”

What if an employer imposes a 30% insurance surcharge on employees who refuse to do a health assessment? The surcharge would not be trivial. The cost of an average family plan in 2016 was $18,142; 30% of that is $5,443. With a penalty of that size, it’s nuts to say that a health assessment is still “voluntary.”

Nevertheless, the Equal Employment Opportunity Commission, which oversees wellness programs, has adopted a rule saying that ACA-compliant wellness programs are consistent with the ADA, voluntariness notwithstanding. A couple of courts have bought the argument. One of the courts reasoned that “even a strong incentive is still no more than an incentive; it is not compulsion.”

The mafia would happily endorse that sentiment, but it’s crazy to see it in a judicial decision. As I’ve explained before, the EEOC rule is unlawful and it’s vulnerable to legal challenge. An AARP lawsuit will soon work its way to the D.C. Circuit. The wellness industry is rightly worried that it could lose.

That’s where the new bill comes in. It says that wellness programs that comply with the ACA can never be involuntary. The AARP lawsuit would be deader than a doornail. Employers could effectively compel their employees to answer questions about their disabilities.

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A similar dynamic is in play with the Genetic Information Nondiscrimination Act, which prohibits businesses from asking employees for their genetic information. The term “genetic information” is defined to exclude an employee’s medical history—that’s not closely enough connected to her genes. But genetic information includes information about any “manifestation of a disease or disorder in family members.”

The reason is simple: a family member’s illness may suggest a genetic propensity in the employee herself. And so, under GINA, asking an employee whether she has ever had breast cancer is OK. Asking whether her sister or mother has ever had breast cancer isn’t.

Under the new bill, however, it’s open season on your family’s medical history. You can refuse to answer, but good luck with that 30% surcharge.

If you think that’s no big deal, imagine that your spouse is an alcoholic or that your 22-year-old son was just diagnosed with schizophrenia. Employers aren’t supposed to use that kind of information to discriminate against you. But they’ll be sorely tempted: through your employer-sponsored coverage, they’re on the hook for your family’s medical expenses.

The bill goes further still. Under GINA, employers can’t insist on their employees’ genetic data. GINA, however, supplies an exception for data that are compiled as part of a wellness program and given to the employer in de-identified, aggregate form. The new legislation says that wellness programs “shall be considered to be in compliance” with that exception.

This is a little confusing. Would the bill bless all requests for genetic information, or only those requests that otherwise meet some of the terms of the exception? Read literally, I think it’s the former: any wellness program’s inquiry into an employee’s genetic history is deemed to be in “compliance” with the exception.

If that’s right, then the bill would allow your employer to insist on the disclosure of any genetic data. If you don’t want to answer, you don’t have to. Just cough up your $5,443 penalty.

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Together with three co-authors, I have a paper coming out soon detailing the dubious empirical and legal foundations of workplace wellness programs. For the very curious, here’s an excerpt examining some of the legal questions that I’ve just discussed.

But the bottom line on the new legislation is simple. The Preserving Employee Wellness Program Act sweeps aside federal antidiscrimination law in order to give businesses more power to root about in their employees’ lives. If wellness programs worked, maybe that’d be OK. But the evidence is overwhelming that most don’t work. This bill is just a naked, unearned giveaway to the wellness industry.

Oh, and on top of all of this, the bill would strip the EEOC of its authority to regulate wellness programs. Instead, that power would go to HHS, Labor, and Treasury. The effect would be to shift power from an independent agency that cares a lot about discrimination to agencies under the firm control of the Trump administration.

As I said, it’s an ugly bill.


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