What’s Fair?
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Dr. Ron Leopold, a VP at MetLife and my fellow panelist at the New England Human Resource Association’s recent convention, also tee’d up a Wall Street Journal poll that had people buzzing. Apparently, the Journal had surveyed several thousand employees in 2003 and asked them if it would be fair to require people who live unhealthy lives to pay more for their health insurance than people who lived healthy lives. By a 46-37% margin, people said, “no” — that it would be unfair to ask people who lived unhealthy lives to pay more for health insurance. The WSJ went back and conducted the same poll in 2006, and this time, by a 53-32% margin, people said “yes” — it would be fair to charge more to people who lived unhealthy lives.
Shared risk is the bedrock of insurance generally, and health insurance in particular. 1% of the population spends 30% of the money, 5% spends 50%, and 20% spends 80%. Most people pay for services rendered to the sick when they’re healthy, so that the healthy folks will pay for their health care when they get sick.
But what if people start believing that your health status — and the cost of your health care — is a function of your lifestyle — and not just your genes or some random act of God?
What’s “fair” may be about to undergo a radical definitional transformation.
I wonder what the survey results would show if you asked (1) is it fair to charge smokers a surcharge of, say, $30 per month for their health insurance and (2) would it be fair to charge the obese (BMI of 30 or more) a similar surcharge?
Personally, I think both surcharges would be fair and reasonable. The key point here is that most of us are, presumably, more than willing to pay for others’ bad luck (serious accident, bad genes, etc.), but we are a lot less willing to pay for their bad behavior. Personal responsibility should count for something when it comes to both health care and health insurance.
Health insurance costs fall hard on small businesses. When premiums get too high, employers tend to drop coverage or increase employee cost sharing. It should come as no surprise, then, that employer attitudes are changing about covering employees with higher costs–especially when employees with unhealthy conditions, such as obesity and tobacco use, can take steps to reduce their health risks. That is why some states, such as Rhode Island, are making a wellness health insurance product (that rewards efforts to reduce health risks) available to small employers.
This type of response, however, is different from simply making employees with higher health costs (such as those associated with Type 1 diabetes or a congenital heart condition) pay more for their health insurance. The real problem is the rising cost of health insurance. Unless something can be done to control rising medical costs in a reason and “fair” manner, I too am afraid that the risk-spreading nature of health insurance will change from spreading risk among employees in a particular pool (i.e., the small group market), to shifting the risk of “unhealthy” folks to Medicaid programs or the hospitals (in the form of uncompensated care).
The cost of health insurance, in general, is already too high for all. My insurance premium went of 43% this year alone (to $1200 a month). This increase puts my insurance premium at a higher amount than my mortgage. I would be paying more for something that I may never use (insurance) than for something I use every day of my life.
The good news about such drastic increases (even 10% is a drastic increase in a sluggish economy) is that it makes the decision to drop insurance altogether that much easier.
I make $90k a year and pay my own benefits. I think I can do a better job of self-insuring than any insurance company out there. The risk of having a major medical event and going bankrupt is possible but it’s also possible with all of the limited coverage plans out there. Perhaps having insurance will lesson the amount owed by me, but in all likelihood, the amount would still be more than I could afford. So, I’ll be putting my $1200 into an investment vehicle for myself instead of giving it to an insurance company.
To answer your question, I’m not going to let the cost of my health care be driven by a company out to make a profit off of the sick and dying. But it most certainly will be directly connected to my own health….since I’ll be the one paying the bill directly.
This is a fascinating topic, and has been hinted at in a prior posting on this blog (A Little History, 6/29/07). There are already employers who utilize the practice of demanding higher premiums of their employees who engage in risky health behaviors, namely smoking. While it may seem to make sense to charge a greater share from those who may end up advancing their care to a more costly point on the health care continuum, the fairness question must be raised.
As more is learned about the humane genome, more is understood about just how much of our makeup is determined, or predetermined, by our genes. For instance, what if some one had a genetic predisposition to become a smoker, or an alcoholic? Research has shown that there is precedent for this (Journal of Biological Chemistry, November, 2005). Would it be fair or ethical, then, to charge these individuals more when the case could be made that their conditions are as genetically valid as high blood pressure, or diabetes?
Conversely, can rate relief ethically be given to those who respond more positively to wellness initiatives? Could this not be traced to a genetic predisposition as well?
As the field of genetics advances, and personalized medicine becomes more and more prominent, we must address what can reasonably be attributed to one’s genes. It may be that the definition of “risk” – in this context – will transform right alongside “fair”.
Bottom line is many of my friends and family have aslo dropped there health insurance , we simply cannot afford it.
The plans they offer and the money they charge is crazy
$350 a month with no RX , thats a heating bill. do you have heat or health insurance.
Even when I had insurance the doctors were awful and you waited forever to see a specialist.
For profit health care may be working now but the future is not rosy unless your rich.
I have owned a small business since 1978 and this year because of health insurance costs which keep going up , illegal labor , fuel costs there is no profit.
As a US ARMY VetI can tell ya , we sure dont take care of our own in this country anymore. Even the vets coming home from war today will see the healthcare system sucks.
This is a fascinating subject. While I am tempted to agree that people who engage in known unhealthy behaviors (like smoking) should pay higher premiums, the slippery slope presents some real challenges. Who will monitor whether or not a person is engaging in risky behaviors, and what counts as a risky behavior? What if a person engages in unprotected sex? What if a person can’t afford to eat healthy meals and struggles with weight because of it? There is an association between red meat consumption and colon cancer - should people who eat steak pay a higher premium? What about people with high cholesterol who are not compliant with their meds? Where do we draw the line on risky behavior, and how can we determine if people really are or are not engaged in these things? Will they self-report? I think not. Other than smoking (and perhaps extreme morbid obesity) - I’m not sure that it makes sense to scale premiums according to behavior.
I agree with Dr. Val that this would definitely be a slippery slope and difficult to determine. Wasn’t it just a few short decades ago when Doctors endorsed smoking as good for you? And what about the 28 year old marathon runner who just passed away from heart related issues - not the first athelete that we’ve heard of suffering from a heart attack, so would elite atheletes pay an extra premium for pushing themselves further? Would that be risky behaviour?
To me it just seems like another technical fix to an adaptive problem. I think of it as financial fingerpointing. Until Health Care is looked at differently- (perhaps transparency of cost, coupled with complementary medicines among other things?) and people begin using it in a very different way, we’ll all just be in for more of the same.
I agree with Dr.Val and AnnMarie for now. Who knows, there may come a day when we have to, um, literally pay for our mistakes. That came out badly but you know what I mean.
Nick, it kills me that the vets today are getting the shaft -big time.
I think the health savings accounts are the wave of the future. Insurance was really designed to keep people out of bankruptcy in the event of an awful tragedy. Seems like we have gotten used to insurance covering every little aspect of health care, especially in the 1980s. It’s been a shocking jolt to have to actually pay for some or all of our own health care.
I agree with Dr. Val as well, both with the slippery slope idea and with the idea that some people are disadvantaged in the area of eliminating risky behaviors (alluded to in Dr. Val’s statement about it being more difficult for some people to afford healthy food). In particular, I appreciate that Dr. Val touched on the latter because I believe the issue at hand relates to the profound health disparities in the United States. Not only is it more difficult for people of lower socioeconomic classes to access health care because they cannot afford it, but people at lower socioeconomic classes may also find it difficult to have healthy lifestyles because they cannot afford nutritious foods such as fresh fruits and vegetables. In addition, they may find it difficult to increase physical activity if they are working long hours to make ends meets or if they live in areas where crime discourages exercise outdoors. Although many people live unhealthy lives with no excuse, insurance companies charging fees for lifestyle choices further disadvantages those for whom it is most difficult to obtain health care and live a healthy life. I think a more effective way for insurers and health care providers to address the issue of risky behavior is prevention it through education rather than punishment. This could be through offering free classes to stop smoking or resources on how to maintain a healthy weight. I too, do not like the idea of paying for other people’s risky behavior, but the factors leading to risky behavior can be more complicated than they appear.
Further to Barry Carol’s comments about surcharging people who lead unhealthy lifestyles, why stop at smoking and obesity? What about people who take dangerous risks with their lives? Why not surcharge people who skydive, drive race cars, bungee jump, etc. What about people who choose risky occupations - firefighters, police officers, drug enforcement agents and on and on. The point is that is a slippery slope that I don’t know we want to go down.