Punishing Insurance Prices

Scott Atlas from the Hoover Institution had and article recently pointing out that if fat people had to pay more for insurance they would be forced to take responsibility for their personal problems. Under the provisions of ObamaCare insurance costs will be equitable and not based on personal risk factors, so fat people will pay the same insurance premiums as someone who is in shape, even though their expected health costs are dramatically higher.

His argument seems to be that we should force people to take care of themselves by charging them higher premiums. As presented the argument is not quite correct. It is not the government’s business to force people to stay in shape. I am opposed to cigarette taxes intended to curb smoking, and equally against a fat tax meant to force people to exercise. (those who support cigarette taxes should also support a fat tax.) Insurance premiums also should not be a tool for influencing behavior, which is apparently properly done with taxes, as the Supreme Court recently reminded us.

Insurance premiums should reflect expected health costs. Fat people should pay higher premiums simply because they are purchasing higher coverage. Charging them a fair price for their more expensive product is not a punishment, any more than lower premiums for healthy people would be seen as a reward. It is true that higher premiums would also have the effect of encouraging healthy lifestyles, which we should be aware of, but this should be a desirable side-effect of charging the proper price, and not the motivation.

Amanda Marcotte over at Salon (via Scott Rudd) found this suggestion extremely offensive. She declares that fatness is beyond a person’s control, so we should not punish people for being fat. (it seems that numerous experiments have shown that quitting smoking is no more effective than dieting, so I wonder if she also believes smokers should not be charged higher premiums.)

Even if her contention was correct, and fatness really is not an issue of personal responsibility, fat people should still pay higher premiums. They are still seeking a more expensive product even if it is through no fault of their own. Marcotte’s illogic reveals the socialist motives of the supporters of ObamaCare. Insurance, in her mind, is not a product people buy because they need it. Insurance is just a way of distributing the cost of healthcare, while the provision of healthcare is a social responsibility, not a service.

ObamaCare is not meant, contrary to its public selling points, to require everyone to take responsibility for their health costs, and to prevent people from being public liabilities. The equal cost provision gives the lie to that argument. ObamaCare is meant to socialize the provision and payment of healthcare. In this sense the Supreme Court was right, but insufficiently so, when they said that the penalty for not buying insurance is a tax. Not only is the penalty a tax, but also the insurance premium is a tax.

Insurance, as Marcotte and her crowd see it, is exactly the opposite of personal responsibility. Insurance, in their mind, is the means by which we disconnect the provision and payment of health care, so that people do not actually have to pay for the healthcare they need. Asking people to take responsibility for their healthcare would mean requiring the healthcare market to be as individual as possible, and fully allow the health insurance companies to charge premiums based on individual considerations. When everyone is required to buy insurance but the cost of insurance is uniform, the function of the individual mandate is to remove responsibility from others, and not to demand responsibility from the purchaser.

Marcotte’s ridiculous claim that healthy lifestyle choices are not a personal choice reflects the same attitude of deflecting responsibility. Arguing that people can freely choose to be healthier means that people are expected to take responsibility for themselves, therefore, it must be wrong. She cannot accept a world where people need to take responsibility for their health any more than she would accept people taking responsibility for their healthcare.

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2 comments on “Punishing Insurance Prices

  1. פרל says:

    Several practical questions should be considered before introducing higher insurance rates for fat people:

    1) How is a self-imposed/self-caused obesity to be defined, and how is it differentiated from the obesity caused by medicaments, hormonal treatment, problems with lymphatic vessels etc.?

    2) How often are the clients weighted in order to adjust the insurance accordingly?

    3) Do you charge more obese people who for some reason do not seek for a medical help with their problems?

    4) What is the justification for comparing smoking and obesity?

    5) According to this logic, it would be perhaps necessary to charge more also: anorectic (or just too slim) people, people with diseases in the family, people with high blood pressure, people with low blood pressure, people that have stressful work (how do you measure it?), pregnant women, frustrated men…

    6) Should the generally healthy people pay nothing? (That would contradict the whole idea behind social welfare: health insurance and pensia payments are based on the rational – I now pay for the older generation, when I get old, the younger will pay for me. I now pay for those who need the health care, they will pay for me when I need it. There is an imposed idea of solidarity. If you do not want to be part of this imagined community, leave the country for a country with no system).

    And who does decide about all this? In a private health system it would be justifiable, because the insurance companies are just offering their services. In a system with some state involvment, I would argue it would be inappropriate.

    In general, I agree it is better not to smoke and to have a healthy lifestyle.

  2. My main argument is that obesity is primarily the problem of the obese person. It does not really make a difference why they are obese, if it is genetic or bad habits – they need a more expensive product, and they should pay for it. The same would go for any other identifiable high-risk factor.

    The practical issue, e.g. how often to weigh them, is a matter for the insurance companies to work out. It does not affect the discussion of whether or not fat people should pay more.

    Generally healthy people should pay a fair price for the insurance of healthy people. It would not be nothing, but it would be far less than what unhealthy people pay. As you said at the end, all of my arguments are mostly relevant for a private insurance system, and get very messy in a government controlled system – but this is just another argument against a public health insurance. Government-managed insurance will necessarily be a system where healthy people subsidize less healthy people.

    As for the idea that the next generation should pay for the older generation, it is simply unenforceable. What happens to the people who payed for the generation before them, but then the next generation comes and votes against public health insurance, leaving them with nothing? What happens if there are far fewer children in the next generation, and they cannot afford the full cost of medical care for the previous generation? In the end we will have to force people to have children, and not let those children vote.

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