A bill pending in the House would expand employers' ability to collect employees' medical information, including the results of genetic tests, through "wellness" programs. Participation in these programs is nominally voluntary—but failing to participate can cost an employee thousands of dollars.

The bill passed a House committee earlier this month on a party-line vote, with Republicans in favor and Democrats opposed. Its fate is uncertain, especially after the implosion of the GOP's broader health-care agenda on Friday.

Defenders of the bill say it merely clarifies some murky provisions of current law, while opponents say it tramples on workers' privacy while giving employers a golden opportunity to discriminate against employees at risk of getting sick. It's a tense debate—and an odd journey we took to get here.

The story starts, as stories about American health care often do, with the fact that employers are expected to provide health insurance to their employees. This began as an artifact of World War II-era wage controls and persisted through Obamacare's mandate that employers with at least 50 employees offer coverage. With that in mind, the concept behind a wellness program is straightforward: since healthy employees cost less to insure, companies give employees money for engaging in healthy behaviors.

Participation can involve meeting blood-pressure, smoking, or exercise goals. In return, under the limits established through Obamacare, employees receive rewards of up to 30 percent of the cost of individual health coverage—and up to 50 percent for smoking-cessation programs. (Obamacare overrode the previous limit of 20 percent on the dubious assumption that these programs are highly effective in reducing health costs.)

Wellness programs can also solicit personal medical information, including genetic data, to identify disease risks. But there are limits on how this information is collected and handled, usually by third parties rather than directly by the employer. Personal medical data cannot be given to the employer except in an anonymous, aggregated form, for example, and genetic testing cannot be tied to financial incentives. Companies are also barred from collecting medical information about employees' parents or children (which is considered genetic data about the employee himself, since disease genes are shared within families).

The problem is that these limits are cobbled together from a variety of different laws, some of them ambiguous or contradictory. The agency tasked with overseeing these programs, the Equal Employment Opportunity Commission (EEOC), has come under fire from both sides.