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After a year of random testing for smokers, Michigan’s Weyco can’t say for sure if its zero tolerance smoking policy works.

"Our per-person healthcare costs are down," observes Gary Climes, Weyco chief financial officer, "but we have other health-related programs in place. The smoking policy was only a sixth or seventh of the entire wellness effort. There’s not been enough time to pinpoint how much the smoking policy can be credited for those reduced costs."

This year, Weyco employees who refuse to take mandated medical tests and physical examinations will see their monthly health insurance premiums jump by $65. By next year, their annual insurance bills will grow by more than $1,000 if they still fail to follow instructions.

The big problem for businesses such as Weyco, Union Pacific, and now Scotts, is the traditional balance of cost and reward. Certainly, smoking employees result in higher expenses. Life and fire insurance companies have hard numbers to prove their cases, and their premiums reflect it. But corporate America is finding that quantifying the precise costs versus potential savings in healthcare is difficult.

For instance, the Bureau of National Affairs reports that 95 percent of companies who banned smoking saw no financial savings, and the U.S. Chamber of Commerce insists that no significant employee absences can be directly attributed to smoking.

Employers with an aging workforce and who provide healthcare coverage for their retirees have another consideration. A 1997 article published in the New England Journal of Medicine titled "The Health Care Costs of Smoking" concluded that "if all smokers quit, healthcare costs would be lower at first, but after 15 years, they would become higher than at present." The reason: ex-smokers would not die as early, and consequently, require more expensive healthcare as they got older. The report concluded that smoking was clearly bad from a public policy point of view, but that the economics related to healthcare costs were not so evident over the long-term.

So, what are companies to do as they look at the impact of healthcare on their bottom lines? Besides shifting increasing costs to the employee, employers are left with only one alternative. Stem the rising tide of healthcare expenses with more employee wellness programs. According to a report in the American Journal of Health Promotion, in its national survey of 2,180 employers, 90 percent reported potential cost savings offered by preventive care programs – gained through lower healthcare costs and less absenteeism.

According to last year’s survey conducted by the Society for Human Resource Management, the number of companies offering health and wellness programs is up across the board. For instance, 34 percent of companies surveyed offer smoking cessation programs (up from 29 percent in 2001), 31 percent offer subsidized gym memberships (up from 26 percent five years ago) and 25 percent sponsor weight loss programs (up from 17 percent in 2001).

Addresses: Bureau of National Affairs Inc., 1231 25th St. NW, Washington DC 20037; (202) 452-4200, www.bna.com. U.S. Chamber of Commerce, 1615 H Street NW, Washington DC 20062-2000; (202) 659-6000, www.uschamber.com. New England Journal of Medicine, 860 Winter Street, Waltham, MA 02451-1413; (800) 843-6356, http://content.nejm.org. American Journal of HealthPromotion, 1120 Chester Avenue, Suite 470, Cleveland, OH 44114; (248) 682-0707, www.healthpromotionjournal.com. Society for Human Resource Management, 1800 Duke Street, Alexandria, VA 22314; (800) 283-7476, www.shrm.org.