Should fat people pay a penalty just for being fat?
Charging overweight policyholders more is a hot topic among private health insurers. The rationale is twofold. First, fat people are more likely to develop expensive health problems. Second, fat can be avoided or reduced through exercise and healthy eating. If we charge fat people more for health insurance—or charge thin people less, which amounts to the same thing—people will improve their habits.
Insurers have been moving aggressively in this direction. But as David Hilzenrath explains in the Washington Post, there are two different ways to implement such "wellness incentives." Some employers reward workers just for participating in wellness programs. Others peg their rewards to the bottom line. Hit the weight target, or you don't get the discount.
Incentives based on outcome, as opposed to incentives based on effort, are hugely controversial because weight loss is much easier for some people than for others. Biological factors such as genes make some of us more susceptible to weight gain. So do environmental factors such as poverty. That's why some liberals are upset about the health reform bill approved last week by the Senate finance committee. The bill lets insurers increase financial incentives (i.e., penalties) based on weight and other outcomes. A union official tells Hilzenrath that such incentives are insurance discrimination "based on preexisting conditions."
Actually, the bill offers plenty of protection to policyholders who have trouble losing weight. It bars private insurers from enforcing incentive programs that are "overly burdensome," "highly suspect in the method chosen to promote health or prevent disease," or "a subterfuge for discriminating based on a health factor." And it obliges them to waive outcome requirements for anyone who finds the target weight "unreasonably difficult due to a medical condition."
The more significant challenge comes from the bill's treatment of public health programs. It would introduce "incentives for healthy lifestyles" into Medicare and Medicaid. The incentives, funded by a $15 million annual appropriation to Medicare (for demonstration projects) and a $100 million annual appropriation to Medicaid, would be awarded to beneficiaries and designed "to reduce their risk of avoidable health outcomes that are associated with lifestyle choices, including smoking, exercise, and diet." By law, the incentives wouldn't affect federal benefits. But to change behavior as intended, they'd have to be substantial.
When the government tells insurers what they can or can't do, it's easy to restrict outcome-based incentives. Why let those nasty, greedy companies charge people more for being fat? But the public sector is a different ballgame. When taxpayers fund wellness incentives, they're entitled to see results.
That's why the health reform bill promises to rigorously measure "changes in health risks and outcomes" among Medicare and Medicaid beneficiaries, including "ceasing use of tobacco products," "controlling or lowering their cholesterol," "lowering their blood pressure," and "controlling or reducing their weight." In the case of Medicaid, it restricts incentives to beneficiaries who "demonstrate changes … by meeting specific targets."
So don't expect the government to protect fat people from outcome-based incentives while footing the bill for health care. The more it pays, the more results it will demand.