In an effort to address the very real epidemics of smoking and obesity, the Senate Finance Committee approved a well-intention but reckless amendment that would allow employers to hike premiums by as much as 50% on those who engage in so-called unhealthy behavior. This legislation would go a long way towards selectively penalizing those with pre-existing conditions, without adequately penalizing the causative behavior that leads to ill health. It would also reward insurance companies while protecting some very powerful special interest lobbies in Washington
Both obesity and smoking, two examples of bad behavior cited by sponsors of this amendment, unquestionably result in higher health care costs for everyone. Estimates show that smoking costs our economy $193 billion annually in health care expenses and lost productivity. Treating obesity cost as much as $147 billion last year alone. Even those of us who believe individuals should have the right to abuse their bodies in any way they wish cannot ignore the very real fact that the rest of us end up picking up the tab for the higher costs associated with smoking and obesity. Economically, this behavior wreaks damage on people who have never picked up a Marlboro or a Big Mac.
Yet despite its good intentions, this amendment addresses the high costs of bad behavior by throwing the baby out with the bath water. First and foremost, it allows insurers to discriminate against those with pre-existing conditions by dramatically hiking their health care costs. Second, it does not distinguish between those who are overweight because of calorie consumption and those who are genetically predisposed.
Obesity is a condition that is often, but not always, preventable. For many, it is a genetic predisposition that is best managed through robust medical treatment, which would be much harder to obtain if health care costs were hiked for those who need it most.
It is also unclear how employers or insurers would determine who smokes, short of subjecting every individual to mandatory lung examinations – which would in turn hike costs exorbitantly even for former smokers or for those who have symptoms associated with cigarettes but who do not smoke. Smokers, like drinkers, also vary in their behavior. Would those who smoke one pack a day be subjected to higher premiums than so-called social smokers, who cop a cigarette once in a while? Who would be responsible for policing this behavior and reporting smokers to employers or insurance carriers, so they could be penalized?
A better alternative is to address the behavior contributing to the high economic costs associated with obesity and smoking. Rather than forcing individuals to pay higher premiums, legislators should impose higher taxes on cigarettes and products associated with obesity. The Congressional Budget Office estimates that a three-cent tax on sugary drinks would raise $24 billion, which could be used to pay in part for the cost of health care reform. Consumers who drink high calorie soda would end up contributing more to offset costs everyone shoulders as a result of their behavior.
Make no mistake: health insurers will use any excuse to hike premiums on consumers. Allowing them to selectively penalize certain subscribers leaves very few of us immune. The better solution is to force those consumers who engage in unhealthy behavior to offset their actions by paying higher taxes for the privilege of saddling our health care system with billions in higher costs.
Julie Roginsky is a CNBC contributor who has extensive experience in government, politics and public relations on both the federal and state levels including serving as the Washington communications director for former Senator Jon Corzine.