Does Obamacare really ban incentives for healthy living?

The health care overhaul known as "Obamacare" is as complex as it is far-reaching, so it’s hardly a surprise that arguments over what the law requires or prohibits are lingering years after it took effect.

U.S. House Speaker Paul Ryan drifted into those murky waters in an April 27, 2016, town hall meeting, asserting healthy people can’t be rewarded for their lifestyle under President Barack Obama’s landmark legislation.

Ryan framed his criticism around a comparison to a hypothetical neighbor.

"I’m 46, I stay in shape, I don’t smoke, I have a couple Miller Lites now and then, but I stay healthy, I work on it," Ryan said during the meeting at the Georgetown University Institute of Politics and Public Service. "My next-door neighbor could be (the) same demographic, same age, he could drink a case of beer each night, two steaks, you know, not run, be 100 pounds overweight."

Then the claim about Obamacare: "Under the law, you can’t reward a person for better behavior. You can’t have incentives to be healthier. That makes no sense."

Does Obamacare (officially the Affordable Care Act), really prohibit incentives that would charge less to healthier people?

"Like Bill Clinton would say, it depends on what ‘you’ means," said Soeren Mattke, managing director of Health Advisory Services for the nonpartisan Rand Corp. think tank.

A tale of two interpretations

Indeed, insurance companies under the Affordable Care Act cannot require different rates based on a person’s health and lifestyle. The HealthCare.gov website even expressly states companies "can’t take your current health or medical history into account" when setting premiums.

The one caveat lies in the definition of health history.

The ACA allows five factors to be considered in setting premiums: location, age, plan category, whether dependents are covered and tobacco use. Tobacco use could fall into the health "behavior" category Ryan referenced, though smoking wasn’t among the unhealthy vices he laid out for the hypothetical neighbor.

But Ryan’s claim doesn’t specify insurance companies. And if the "you" is interpreted as referring also to employers — that’s how many of the experts we consulted read it — the claim gets dicier.  

"The Affordable Care Act allows employers to vary premiums by up to 30 percent to be able to reward employees not only for participating in wellness programs but to achieve specific metrics of health," said Meena Seshamani, director of the Office of Health Reform at the U.S. Department of Health and Human Services.

The law even increased the maximum reward for involvement in a wellness program from 20 percent to 30 percent of the premium, also boosting the max to 50 percent for those in a smoking cessation program.

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Some 49 percent of Americans are insured through their employer, according to the nonprofit Kaiser Family Foundation. But not all employers have such programs, and then only a portion tie in financial incentives.

Kaiser’s 2014 employer survey found 74 percent of firms offering health insurance have some kind of wellness program. Among those with programs, 36 percent of large firms and 18 percent of small firms offer financial incentives for participation.

Ryan’s office didn’t respond to our inquiries seeking clarity on who he was referencing or evidence to support his statement.

Wellness programs in dispute

Despite the Affordable Care Act language, wellness programs remain a gray area of health care law — and a moving target.

The U.S. Equal Employment Opportunity Commission has sued some companies over wellness programs they believed went too far with incentives or disincentives. Wellness programs are typically a combination of screening activities (questionnaires and/or clinical tests) and interventions to specifically address risks such as weight, smoking, fitness and drug use.

One such case stemmed from the U.S. District Court for the Western District of Wisconsin, where the EEOC alleged Flambeau, Inc., a plastics manufacturer based in Baraboo, violated the Americans with Disabilities Act by requiring employees to participate in a wellness program in order to get company health insurance. Judge Barbara Crabb dismissed the case in December 2015, however, agreeing with the company that the program fell under an exception allowing for activities related to administering an insurance plan.

The EEOC is appealing the ruling, even as it issued a new rule in mid-May attempting to clarify how wellness programs can comply with the ACA, the disabilities act and the Health Insurance Portability and Accountability Act (HIPAA).

This and similar EEOC lawsuits elsewhere are making employers hesitant to implement wellness plans that require certain benchmarks, said Tom Miller, resident fellow at the conservative American Enterprise Institute think tank.

"It’s one thing to participate and be rewarded for it, it’s another set of hurdles if you start requiring people to succeed at achieving certain goals," Miller said. "It doesn’t mean you can’t do it, but there’s a lot of smoke in the air that discourages employers from going that far as a general rule."

Our rating

Ryan said, "Under (Obamacare), you can’t reward a person for better behavior. You can’t have incentives to be healthier."

Ryan is largely on point if the "you" refers only to insurance companies, but there’s nothing in the context to justify such a narrow interpretation. The claim was broad and implied a ban on incentives. That’s not the case.

Wellness programs, while not available to everyone, are specifically authorized by the Affordable Care Act as a means for employers to raise or lower premiums by up to 30 percent based on employees’ health-related behavior.

For a statement that is partly accurate but leaves out important details or takes things out of context, our rating is Half True.