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The Almighty Buck Businesses

Charging the Unhealthy More For Insurance 1106

Posted by kdawson
from the no-carrots-for-you-here's-a-stick dept.
Joe The Dragon sends us a BusinessWeek story, run on Yahoo, about Clarian Health and the new thing they are trying with health insurance coverage for their employees. They are charging unhealthy people more. The article goes into some depth about whether this is a good idea and whether the practice might spread. "In late June, the Indianapolis-based hospital system announced that starting in 2009, it will fine employees $10 per paycheck if their body mass index (BMI, a ratio of height to weight that measures body fat) is over 30. If their cholesterol, blood pressure, and glucose levels are too high, they'll be charged $5 for each standard they don't meet. Ditto if they smoke: Starting next year, they'll be charged another $5 in each check."
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Charging the Unhealthy More For Insurance

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  • by JeanBaptiste (537955) on Tuesday August 07, 2007 @05:16PM (#20147539)
    thats another 20
    • Re: (Score:3, Funny)

      On top of the $5 I already paid?

      And my BMI is usually just less than 30. Yet my body fat is around 6%, which is kind of at odds with the summary, but pointing out errors in summaries is kind of boring here.

      Luckily I'm self employed and pay exorbitant rates regardless.
      • by jguthrie (57467) <jguthrieNO@SPAMbrokersys.com> on Tuesday August 07, 2007 @05:25PM (#20147727) Homepage
        Actually, I don't think it's at odds with the summary, it's just that the BMI is a pretty useless measure of someone's health.
      • Re: (Score:3, Interesting)

        by AKAImBatman (238306)
        I'm more worried about the Cholesterol. Some people have naturally high cholesterol. It doesn't impact their health any, but there's no way they're ever going to come out with a "normal" reading. Are they going to get fined for having "poor health" even when they don't?

        Lame idea.

        I much prefer the idea my insurance company has. They give you this monopoly money for doing healthy stuff, getting checkups, and generally keeping in good condition. You can later redeem the fake money for real stuff like merchandi
        • by cayenne8 (626475) on Tuesday August 07, 2007 @05:37PM (#20148003) Homepage Journal
          "I'm more worried about the Cholesterol"

          You need to worry about triglycerides too. I'm predisposed to very high levels...as high as 1200+ in the past....down to 540 these days....started on meds again and working out to try to get them under 200.

          The reason I state this? I can't GET freakin' insurance.....unless you are working for someone else in a group plan, you can't get anyone to insure you. I have no other problems, BP is good, etc. I can more than afford to pay for insurance, but, I cannot get anyone reputible to sell it to me.

          I didn't realize it would be so tough to get it at any price.

          • Re: (Score:3, Informative)

            by cduffy (652)
            Some state governments have programs available for folks who are otherwise unable to find coverage. It's not necessarily cheap, but it's something rather than nothing.
          • by Sponge Bath (413667) on Tuesday August 07, 2007 @05:54PM (#20148347)

            I can't GET freakin' insurance...

            You should check if your state has a state risk pool.

            I am also self employed, and since I got sick once years ago I also
            was not insurable through individual policies. A state risk pool gives people
            like me coverage when nobody else will.

            It's a little screwy because it is still a private insurer (at
            least in the state of Texas) that is contracted by the state.
            The premiums are set at double the average, so the private insurer
            makes loads of cash (and the tax payers don't take a hit), but at least I have insurance.

            The deductible is high, but I do get the negotiated rates
            which are usually 1/3 to 1/2 of what the uninsured are charged.

            • Re: (Score:3, Interesting)

              by daeg (828071)
              You may also want to take a look at some of the high-risk HSA accounts. The deductibles can be quite high, but they tend to insure riskier individuals because the out of pocket expense is a huge limiting factor to insurance abuse.
      • by PopeRatzo (965947) * on Tuesday August 07, 2007 @07:04PM (#20149407) Homepage Journal
        Recent research published in JAMA says that the BMI is not necessarily a reliable predictor of health. Not nearly as reliable as waist circumference, according to the article.

        Apparently there are healthy chubby people whose musculature surrounding their vital organs is sound, and skinny people who got that way through diet whose hearts, liver, etc are surrounded by flab.

        That still doesn't excuse the idea, embarrassing in the richest nation on earth, that anyone should have to go without medical care from cradle to grave. As far as I'm concerned, if you believe that you, a healthy person, should not be responsible for paying into a system that gives care to a less wealthy unhealthy person, you have a fucked up, un-American world view. You don't have to be a bible believer to know that if you want to pull the heaviest loads, you hook up the strongest horses. That's why the rich pay a greater share of their wealth in taxes (or are supposed to). The dual economic crises of the "sub-prime" credit market and runaway health care are exposing the fundamental weakness in Milton Friedman's theory of the so-called "free market".

        Why not have the Fire and Police Dept provide services based on the victim's ability to pay? Because that's not the way we do things in a great, rich nation. So why should health care be any different? We don't allow the Fire or Police Dept to base their service model on profits, so why medicine? We wouldn't suggest that Fire Departments should not save someone from a burning tenement slum because they couldn't afford to properly fire-proof their property, so why suggest that someone who is poor and has become overweight due to a substandard diet should be denied health care?
  • by Anonymous Coward on Tuesday August 07, 2007 @05:17PM (#20147545)
    Charging drivers with more accidents higher rates for auto insurance?
    • by Tackhead (54550) on Tuesday August 07, 2007 @05:21PM (#20147639)
      > Charging drivers with more accidents higher rates for auto insurance?

      "Exempting highly-skilled workers from having to pay unemployment insurance premiums, and raising premiums on burger flippers."

      That's where it'll stop.

      • by rakslice (90330) <rakslice@@@gmx...net> on Tuesday August 07, 2007 @09:37PM (#20150969) Homepage Journal
        Remember, a highly skilled worker is just one head injury away from being an unskilled worker.
    • by McFortner (881162) on Tuesday August 07, 2007 @06:35PM (#20149009)
      The problem is that this is GROUP health insurance, not individual health insurance. The insurance company is taking a chance based on the group average. Some will cost more and some less than average. That is how they play the game. So they should not be able to charge more to some people in the group. This is just a way to make more money off of the consumer.

      Now if these were individual health plans, then the market should decide. Don't like what company X charges, go to one that charges less. But employees don't have this choice in a group plan, so I'm against it.

      Michael
  • by deadmantyping (827232) on Tuesday August 07, 2007 @05:18PM (#20147565)
    That sounds like it could be considered a form of discrimination. I doubt that obese people would take this move lightly.
    • Re: (Score:3, Interesting)

      by superwiz (655733)
      A form of discrimination? Older people are more (much more) likely to have poor health. Certainly, more likely to have high blood pressure. So the question I have is how is this not age discrimination?
  • BMI?? (Score:3, Insightful)

    by faloi (738831) on Tuesday August 07, 2007 @05:19PM (#20147595)
    If they actually just look at the base BMI number, there are going to be some athletic people in great shape paying more for health insurance. And then you get into a dangerous area of penalizing people for some things that are (potentially) out of their control. I smell some lawsuits, and some expansion of what's covered under ADA and EEOC rules...
  • Is this bad? (Score:3, Insightful)

    by screensaver400 (652819) on Tuesday August 07, 2007 @05:20PM (#20147611)
    I'm sorry, but this sounds dead on to me (and my BMI is over 30). If I'm too lazy, or too sick, to keep my BMI down, or if I have preexisting medical conditions that make me much more likely to cost the insurance provider more, I have no problem with being charged more. This is a great incentive to take preventative action, when possible (BMI, smoking, a better diet, etc), and it is a reasonable provision when not possible.

    This will lower the insurance for the fit and healthy who never see a doctor (but want the insurance "just in case", and raise the cost for insurance for those who are ill or lazy and go often (I'm speaking in the long run, of course).

    Sounds fine to me.
  • by Hardhead_7 (987030) on Tuesday August 07, 2007 @05:20PM (#20147621)
    Encouraging Americans to be healthy is great. I don't really have a problem with charging those who smoke more, for instance. But high blood pressure? Come on, that's hereditary. Once you start discriminating against people for their genetic makeup, you're on a slope that is not just slippery, but frictionless.
  • Bad idea (Score:5, Insightful)

    by mblakeley (1135127) on Tuesday August 07, 2007 @05:21PM (#20147627)
    This is a horrible idea. The entire point of insurance is that everyone pays a more-or-less baseline amount and some people don't realize any of that value and some people realize more than they put in. Of course, now that Americans expect to realize 100% of any tax or insurance payments, and if even one penny goes to someone else, well, that's socialism! Insurance is inherently socialist. That's why it's called INSURANCE. If you're expected to pay an equal amount to what you receive, you don't really have insurance, you're paying as you go.
    • Re: (Score:3, Insightful)

      by JesseMcDonald (536341)

      The entire point of insurance is that everyone pays a more-or-less baseline amount and some people don't realize any of that value and some people realize more than they put in.

      No, that's precisely the opposite of insurance. The "entire point" of insurance is to mitigate uncertainty. The way to do this is to charge according to estimated risk. (Not the same amount as you later receive back -- that is what makes it insurance and not just savings.) To ignore known differences in risk when determining pre

  • How not to do this (Score:5, Insightful)

    by onkelonkel (560274) on Tuesday August 07, 2007 @05:23PM (#20147699)
    I would have expected this to be spun 180 degrees. i.e. Jack the rates up for all and then announce you get a $10 discount for meeting the BMI standard rather than a $10 penalty for failing to meet it. Same outcome, but less likely to piss people off.
    • by MojoRilla (591502) on Tuesday August 07, 2007 @05:35PM (#20147975)
      The truth often does piss people off. From the article:

      After benchmarking other companies, Clarian, which had already been encouraging employees to join smoking cessation programs and take health risk tests, decided charging employees was more "transparent." Other companies "were providing what they called incentives through credits or discounts toward health premiums," says Wantz. "What we found was what those employers were doing, many times, was raising their premiums and discounting them back."
      I can't fault a company for being transparent. Even if it is news I don't like.
    • Parent is right. Make this an incentive. That way, people who care will get a discount.

      Punitive measures will backfire due to human nature. If you're paying the extra $10 for being 5 pounds overweight you are likely to think: Oh well, I'm paying to be fat so I may as well get 20 pounds overweight.

  • Mostly OK (Score:5, Interesting)

    by 31415926535897 (702314) on Tuesday August 07, 2007 @05:26PM (#20147753) Journal
    I would support a proposal like this with a couple of stipulations:

    1. I would want it to lower my (a "healthy" person) premiums, deductibles, out-of-pocket expenses. I'm not trying to sound selfish, but the reason mine were so high to begin with is because of all the unhealthy people. If they're just going to use this to help their own bottom line without helping those that make the health insurance system work (the healthy people, again), then they can shove that plan where the sun don't shine.

    2. Don't use BMI. It's a crappy measure. Anyone who lifts weights regularly can easily be considered obese by BMI (even if they're not a "body builder"). I've been over that line my whole life and I'm not fat.

    One of the things that I really like about it is that it provides extra incentive for someone to be healthy. Want to save $50 / month? Get in shape, and that will help lower the expenses & burdens of the insurance system for everyone else. It's like taxing a congested road to help clear it up, or taxing emissions to clean up the environment. Sometimes money talks louder than anything.
  • by amigabill (146897) on Tuesday August 07, 2007 @05:29PM (#20147833)
    I always thought of medical insurance as a socialist concept. Everyone pays into a bucket, and the sick people take out of it when needed. So long as there are more healthy people than sick people, it should work. Even in capitalist implementations of medical insurance schemes.

    So if sick people need to pay more than healthy people, what's the point of having insurance? Healthy people then shouldn't need to pay anything, as they aren't costing anyoen anything. And sick people should pay everything, as only they need it. Which completely voids any reason to send any money to the insurance guy. OK, that's going further than this article summary sounded, but if this idea gains any momentum that may be where we end up at.

    How about this, as a related idea... Old people should pay more into social security because they use it more. young people should get discounts because they're a long way away from taking it. I bet todays elderly would get all riled up if we tried to make that change, eh?

    If this is meant to be motivation to fix things, some things cannot be fixed. I've got high cholesterol. Very high. And very bad ratio of HDL to LDL. I'm relatively young, 31. I've gotten into running, have done a couple relay marathons (split the maraton distance between four runners) and am currently training for a 1/2 marathon. While still bad, my cholesterol measurements were better BEFORE I started running. Now after doing it for a few years, my cholesterol is 20 total points higher and it's time for the pills to fight it. Weird but true. Not sure what my genetics have in mind, but the doctor told me of other patients more athletic than I am trying to become are not able to lower their cholesterol without pills either. No amount of financial motivation can change that, and no amount of financial punishment for testing poorly will help either.
    • by randomchicagomac (809764) on Tuesday August 07, 2007 @06:16PM (#20148709)
      No, insurance is not about socialism. I'm healthy and in my 20s. I don't pay into insurance because I good-heartedly want to subsidize the healthcare of the unhealthy. I do it because I'm not that well off, so paying $200/month with 100% certainty is actually _much_ better for me than not having insurance, but running a half a percent risk per month of getting a $20,000 bill (even though .005*20,000 is only half of $200). Insurance allows me to spread the risk among other, equally healthy people, so that I can plan my life around it rather than risking bankruptcy.
    • by E++99 (880734) on Tuesday August 07, 2007 @06:32PM (#20148959) Homepage

      I always thought of medical insurance as a socialist concept. Everyone pays into a bucket, and the sick people take out of it when needed. So long as there are more healthy people than sick people, it should work. Even in capitalist implementations of medical insurance schemes.

      So if sick people need to pay more than healthy people, what's the point of having insurance? Healthy people then shouldn't need to pay anything, as they aren't costing anyoen anything. And sick people should pay everything, as only they need it. Which completely voids any reason to send any money to the insurance guy. OK, that's going further than this article summary sounded, but if this idea gains any momentum that may be where we end up at.

      The concept of medical insurance has been highly perverted. It actually works as insurance if it's only there to protect you from the costs of things like major surgery. But when it's used as a buffer to pay for EVERY medical expense it turns into something that is nothing like insurance, and is a lot like a socialist economy. The reforms, such as the ones being discussed, are attempting to make it more like insurance again. Part of that requires that higher risk people pay more because they're buying more. Just like if your house is located in a flood zone on a fault line you're probably going to pay a lot more for your home insurance than if your house is an underground bunker in Kansas. It doesn't matter if you inherited your house, and so it's not fair because it wasn't your choice. It still costs more if you want the insurance, and it IS fair.

      How about this, as a related idea... Old people should pay more into social security because they use it more. young people should get discounts because they're a long way away from taking it. I bet todays elderly would get all riled up if we tried to make that change, eh?

      The analogy doesn't fit. Social Security is an income annuity product which Americans must buy. The analogy would be giving working people discounts on their Social Security payments if they were in poor health or charging them extra if they were in good health -- or else increasing a retiree's benefits if they are in poor health or reducing their benefits if they are in good health. With commercially sold annuities you can do this -- get a higher benefit for your money by sending the insurance company your medical records to show a medical condition, like a heart attack or stroke, which implies a shorter life expectancy.

      If this is meant to be motivation to fix things, some things cannot be fixed. I've got high cholesterol. Very high. And very bad ratio of HDL to LDL. I'm relatively young, 31. I've gotten into running, have done a couple relay marathons (split the maraton distance between four runners) and am currently training for a 1/2 marathon. While still bad, my cholesterol measurements were better BEFORE I started running. Now after doing it for a few years, my cholesterol is 20 total points higher and it's time for the pills to fight it. Weird but true. Not sure what my genetics have in mind, but the doctor told me of other patients more athletic than I am trying to become are not able to lower their cholesterol without pills either. No amount of financial motivation can change that, and no amount of financial punishment for testing poorly will help either.

      It's not a punishment. Statistically, you are more likely to end up needing open heart surgery at some point compared to someone else just like you without the high cholesterol. The point of insurance is to pay a smaller amount (the premium) to cover the small possibility of requiring a larger amount (the cost of the surgery). If you were twice as likely as the other guy to need the surgery, then the fair price for that insurance would be twice as much as the fair price for the other guy.
  • by John Sokol (109591) on Tuesday August 07, 2007 @05:30PM (#20147851) Homepage Journal
    We could just put all the unhealthy people in gas chambers and kill them.
    Oh yea, that was tried in the 1940's and for some reason people didn't like that. (don't flame me, I am being sarcastic.)

    For someone who is sick or with a family member who is sick, just keeping a job and earning money is difficult, then add to that charging more health insurance costs, even if they could afford insurance would just push more people over the edge.

    Increasing insurance costs would just be a slower, less obvious and more politically correct way to kill them off.

    But it would be just as immoral, maybe even more so!

    Anyhow Sick-o the movie already points out how screwed the system is.
  • This is crap (Score:5, Interesting)

    by palladiate (1018086) <{palladiate} {at} {gmail.com}> on Tuesday August 07, 2007 @05:33PM (#20147911)

    They can go screw.

    I have a BMI over 30. I used to play baseball. Heartrate? 63. BP? 122/63. Glucose, white cell count, red cell count? Normal. My doctors say I'm perfectly healthy, except for the rare form of cancer.

    I truly fear the future where we treat insurance as a personal thing. We invented insurance as a way to spread risk. If we charge you directly for your risk, we are creating no economic benefit. It just means that in the future, I'll have to bear the entire cost of my cancer treatments.

    And the healthy? You'll get the privilege to pay a private company to absorb zero risk.

  • Women of course... (Score:5, Insightful)

    by Bartab (233395) on Tuesday August 07, 2007 @05:34PM (#20147947)
    Women have higher health costs, what with their frequent specialized doctors care, occasional pregnancies, and longer life span. They should be billed at a higher rate as well.
  • by Jimmy King (828214) on Tuesday August 07, 2007 @05:35PM (#20147963) Homepage Journal
    Unless this is combined with human judgement and common sense, this is bad. Even with that I think it's highly questionable. BMI doesn't account for how much of your weight is muscle over fat. Someone who lifts weights regularly can be "overweight" according to BMI.

    For example I'm 6'2" and 280 lbs. I've got some fat on me, I won't argue that. I also work out daily, deadlift 350+lbs, and can run a 6 minute mile (although I wish I hadn't after I do). I'm going to be generous and say 30% bodyfat, which I think is a good bit above reality. That's 84 lbs of fat. Losing 20% (56 lbs) to put me at 10% bodyfat, which is fairly low for anyone other than professional bodybuilders (and those guys who go way lower are being arguably just as unhealthy) leaves me at 224 lbs. According to this BMI calculator [nhlbisupport.com] I'm still way overweight and nearly obese and am currently ridiculously obese in my 40" waist jeans. According to that I should weigh 145 to 195 lbs. 145 lbs? Talk about unhealthy for someone who's 6'2". My Junior year in high school I weight 190-195. I was skinny. Not muscled, not ripped, skinny. Not unhealthy thin, but I would say more than 5-10lbs less than that would have been unhealthy.

    How about a better idea? If you go to the doctor all the fucking time you pay more.
  • by sirwired (27582) on Tuesday August 07, 2007 @05:38PM (#20148025)
    Okay, giving discounts, bonuses, etc. to say, folks that don't smoke, or something of value for regular exercise, great! But charging for many conditions that are hereditary, and/or difficult to control is stupid, as it just pisses off perfectly good employees, who then may quit because you are nickel and diming them.

    This is one reason so many companies pound diversity and non-discrimination into their employee's heads over and over. Why? Because it results in the hiring and retention of quality employees. If a quality employee is fired, paid less, harassed, or whatever because of some trivial or irrelevant factor, such as gender, hereditary high blood pressure, race, religion etc., some other, more intelligent employer can pick them up, and they will be making money for somebody them instead of Morons, Inc. It is a colossally stupid business mistake to drive away (or not hire employees) for factors not relevant to your business.

    Yes, unhealthy employees drive up health insurance costs for a business. But driving away otherwise perfectly good employees costs a business a heck of a lot more. It is an obvious fact that employees who voluntarily quit are generally those good enough to get paid the same or better elsewhere; otherwise, they would be far less likely to leave to begin with.

    SirWired
  • by Todd Knarr (15451) on Tuesday August 07, 2007 @07:21PM (#20149625) Homepage

    The whole point of insurance is to spread the costs around. Not risks, costs. Let's take an example. Suppose there's a group of 1000 people, and in any given year one of them's going to get hit with a $100,000 bill. None of them can afford that large hit, but all of them can afford to pay $100 per year. So they start a pool, each paying in their $100 with the understanding that the pool will cover the entire bill for whichever of them gets unlucky that year. Sure, the other 999 have to pay even if they don't get hit that year, but they also avoid the even higher expense of preparing to handle that big bill and the worrying over what'll happen if they get unlucky before they've saved up enough to handle it.

    Now, suppose the guy running the pool for everybody decides there's an awful lot of money floating around in the pool. He could, he thinks, work out which person'll be the unlucky one that year. If he can, then he can charge that person the full $100,000 that year. That'll cover the pay-out and leave the other $99,900 in the pool for him to play with. Yes, this is the extreme case, but it's what the insurance companies here want to do taken to it's logical conclusion.

    But wait a minute. If I'm a member of the pool, the whole reason I'm paying my $100 every year is so I won't get hit with the high bill if my number happens to come up that year. If I'm going to get hit with that huge bill anyway, why am I paying in? I'm not getting any protection from it, I'd be better off with that extra $100 every year to spend myself. The more it moves towards that extreme case, the less reason I have to pay into the pool. And even at the near end, the more people decide to pull out of the pool the more the guy running it has to charge those who're left, which makes it less attractive for them to remain in the pool, which means more people will pull out. And when there's nobody left, who will the guy running the pool get his money from? Oops.

    • If it's guaranteed that one person will get a $100 000 bill, you're right. In health insurance, it's not. It's a 0.1% chance for each person that they'll get a $100 000 bill. If someone has the ability to cut their risk in half, down to to a 0.05% risk, (without increasing anyone else's risk in the process), that will lower the over all cost by $50.

      What we're talking about is offering people willing to do that some money. Could pay them $50, thus breaking even. Could pay them $40 and lower everyone's premium by one cent. By paying me $40 to lower my own risk, everyone has saved money, not just me.

      Doing such and such changes the cost by $X. This system internalises the externalities, and that's a Very Good Thing. (Clearly we should only be doing this when someone can lower their risk.)

      (Yes, the article [or summary--didn't read TFA] talks about charging people for raising their risk instead of paying them to lower it, but it gives exactly the same results, ignoring any psychological reactions to perceived differences and however that will effect behaviour. Economists like to pretend we're perfectly rational beings, but we really aren't. Present it as a carrot instead of a stick and it should work well.)

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