The Wall Street Journal | February 25, 2013
By Jen Wieczner

Your company already knows whether you have been taking your meds, getting your teeth cleaned and going for regular medical checkups. Now some employers or their insurance companies are tracking what staffers eat, where they shop and how much weight they are putting on—and taking action to keep them in line.

The goal, say employers, is to lower health-care and insurance costs while also helping workers. Last month, 1,600 employees at four U.S. workplaces, including the City of Houston, strapped on armbands that track exercise habits, calories burned and vital signs, part of a diabetes-prevention program run by insurer Cigna. Some diabetic AT&T employees also use mobile monitors; in September, AT&T also started selling to employers its blood-pressure cuffs and other devices to track wearers 24/7.

But companies also have started scrutinizing employees' other behavior more discreetly. Blue Cross and Blue Shield of North Carolina recently began buying spending data on more than 3 million people in its employer group plans. If someone, say, purchases plus-size clothing, the health plan could flag him for potential obesity—and then call or send mailings offering weight-loss solutions.

Marketing firms have sold this data to retailers and credit-card companies for years, and health plans have recently discovered they can use it to augment claims data. "Everybody is using these databases to sell you stuff," says Daryl Wansink, director of health economics for the Blue Cross unit. "We happen to be trying to sell you something that can get you healthier."

Some critics worry that the methods cross the line between protective and invasive—and could lead to job discrimination. "It's a slippery-slope deal," says Dr. Deborah Peel, founder of Patient Privacy Rights, which advocates for medical-data confidentiality. She worries employers could conceivably make other conclusions about people who load up the cart with butter and sugar.

Analytics firms and health insurers say they obey medical-privacy regulations, and employers never see the staff's personal health profiles but only an aggregate picture of their health needs and expected costs. And if the targeted approach feels too intrusive, employees can ask to be placed on the wellness program's do-not-call list.

For their part, companies say tracking employees' medical data saves money because they use it to make people healthier—and sometimes reward them in other ways, too. 

Johnson & Johnson, JNJ +0.65%for example, pays employees $500 to submit their biometrics and other health information; J&J then offers eligible employees an additional $250 if they get pregnancy counseling, enroll in a disease-management program or get their colonoscopy on time. The "tailored and targeted messages" paired with the monetary incentives are a "great way to bring people to participate in the program," says Dr. Fikry Isaac, the company's vice president of global health services.

With companies under more pressure than ever to reduce health-care spending, the so-called advanced analytics industry provides an opportunity to zero in on errant employees and alter their behavior. "As an employer, I want you on that medication that you need to be on," says Julie Stone, a Towers Watson benefits consultant.