That’s a question more and more business leaders are wrestling with as two-tiered health premiums gain traction in corporate boardrooms. Increasingly, companies are answering yes, and asking smokers to pay higher health insurance premiums than their non-smoking colleagues—or even not hiring them altogether. On July 1, according to Bloomberg BusinessWeek, Macy’s began charging smokers $420 more a year in health coverage, something PepsiCo and Gannett already do (albeit at even steeper premiums). Last year, Whole Foods started giving non-smoking employees bigger discounts in their stores. And employers ranging from Scotts Miracle-Gro to the Cleveland Clinic to, now, Humana, are not hiring smokers at all, either company-wide or in certain states.
As health-care costs continue to skyrocket and a struggling economy keeps corporate earnings under pressure (even if many are still doing remarkably well), it’s no wonder companies are taking a hard look at ways to control health insurance costs. No one can claim that smoking isn’t bad for employees’ health. And finding ways to encourage people to stop the habit is a good thing, of course. Smokers pay more for life insurance—why shouldn’t they pay more for health insurance too? Smokers are not a protected “class” or people who could be discriminated against, though legal risks should be considered.
But what about the leadership risks? No matter how much money such a program might save, there are issues business leaders should take into account before butting smokers out from jobs or benefits. Motivation through dangling carrots—such as smoking cessation programs with rewards for those who quit, or at least just a bigger benefit for non-smokers, like Whole Foods does with its employee discounts—tends to get a better response than wielding sticks. People usually prefer feeling rewarded for good behavior rather than punished for bad.
In addition, a complete ban on hiring smokers could force employers to lose out on some perfectly qualified and talented people who just haven’t managed to kick the habit. Those who do get hired could start to wonder why colleagues who practice other harmful-to-your-health activities, such as over-eating, drinking too much or not exercising, aren’t penalized as well. As Lewis Maltby, the president of the National Workrights Institute, told the New York Times in February, “The number of things that we all do privately that have negative impact on our health is endless. If it’s not smoking, it’s beer. If it’s not beer, it’s cheeseburgers. And what about your sex life?”
Most of all, employers asking employees to take a urine test to prove they’re not smokers should contemplate what that says about the level of trust they have in the people who work for them. Yes, I realize companies do this all the time with drug tests, but smoking cigarettes is still legal, the last time I checked. Asking people—and believing them—helps companies. Before its recent ban on smokers in Arizona, Humana started a tobacco ban for new employees in Ohio two years ago, USA Today reports. “The Ohio program did not test for nicotine use among new hires like the Arizona program will, but the company said the effort has worked,” the story states. “In Ohio, 78% of Humana's employees report being tobacco-free.”
Don’t get me wrong, I’m all for encouraging wellness programs for employees and offering rewards—even monetary ones for those who don’t smoke. But how the more hard-line variety of these programs are carried out may have cost consequences on the culture and talent side that don’t show up on the benefits bottom line. Business leaders should make sure they’re weighing those, too.
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