It doesn't make sense to charge fat people higher insurance premiums.

It doesn't make sense to charge fat people higher insurance premiums.

It doesn't make sense to charge fat people higher insurance premiums.

The state of the universe.
Oct. 29 2009 4:14 PM

The Fat Premium

Congress toys with a silly plan to make Americans lose weight.

Read more of Daniel Engber's columns on obesity and health care reform.

Scale. Click image to expand.
The perils of linking insurance costs to weight

Safeway CEO Steven A. Burd thinks he's solved the nation's health care crisis. The California-based grocery chain has kept its insurance costs stable for the last four years, he says, while its competitors have watched their bills rise by an average of 38 percent. That's because Safeway encourages its workers to pursue a healthy lifestyle: If you're thin and you don't smoke, you can get a significant discount on your premiums. Otherwise, you've got two choices: Pay more for your insurance or mend your wicked ways.

Daniel Engber Daniel Engber

Daniel Engber is a columnist for Slate

Burd has spent the last several months making supersized claims about this incentive-based approach to health care. In June, he told the Senate that if the government had adopted a Safeway-style program in 2004, we'd have saved $600 billion by now. That makes a federal soda tax look like peanuts.

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It would be nice if these flashy numbers were verified by someone not wearing a Safeway management shirt. (The CEO variously describes them as coming from "my calculations" and "our calculations.") Nevertheless, lawmakers from both parties, as well as President Obama, are getting onboard with a Burd-inspired plan to help employer-sponsored insurance plans penalize fat people and smokers with higher premiums. The "Safeway Amendment," which was added to the Senate's health care bill earlier this month and has been proposed in the House, may soon end up as federal law.

There's only one problem: Insurance plans that discriminate according to body size are idiotic, unfair, and possibly illegal.

I'll explain why in a minute, but let's start with a short lesson on how these Safeway-style "wellness programs" came to be. Back in 1996, Congress passed the Health Insurance Portability and Accountability Act, which forbade discrimination among members of group health plans according to their health status. That meant CEOs like Burd couldn't deny coverage or apply higher premiums to people who happened to be sickly or accident-prone; there could be no higher rates for those who had congenital heart defects, or enjoyed skydiving, or happened to be morbidly obese. But the law left open the question of whether insurance plans could lower costs by encouraging healthy lifestyles through more exercise and better diets. In 2006, the federal government got around to clarifying the rules on "wellness programs." In the first place, there would be no limits on rewarding good behavior so long as everyone had equal access to the program. An insurance plan might reimburse members for joining a gym, for example, or entering a program to quit smoking. If participation were the only criterion for getting the reward, everything was legit.

The 2006 clarification also created a second, fuzzier category of wellness programs, in which a plan member's health status could indeed be used against him. Under certain conditions, the government said, a company could set up a system of payouts contingent on an employee's achieving specific health goals. The plan might lower your premium if you joined a gym and lost weight, or entered a program to quit smoking and actually succeeded. That's the kind of program Steven Burd has in place at Safeway: Instead of paying workers to exercise, Safeway pays them to lose weight or stay thin. (In terms of insurance premiums, that's the same as charging them extra money for being fat.) According to the federal regulations, such outcome-based rewards carry their own restrictions: They must be offered to members at least once per year, for example, and they can't exceed 20 percent of the cost of coverage. (The body-size discounts on Burd's plan max out at about $300.)

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These rules didn't go into effect until the summer of 2007, and so far very few employers have experimented with premium discounts. But if the Safeway Amendment becomes law, two things would change: First, the regulations governing wellness programs would be codified as federal law; second, the limits on incentives would be increased to 50 percent. Burd already charges the fattest workers in his health plan extra for their coverage; under the new regime, that penalty could be more than doubled.

We're not talking about a radical change in policy so much as an expansion of what is already on the books. But if Burd gets his way, the loophole in the HIPAA nondiscrimination rules would get bigger, and more employers might adopt the kind of wellness programs used by Safeway.

OK, what's so bad about penalizing workers for being fat?

The most egregious flaw in the Safeway program is the way ittreats body size as a risk factor in and of itself. Yes, obesity is correlated with higher rates of cardiovascular disease, diabetes, and other ailments—but that doesn't mean that everyone who's fat is going to get sick. A 2008 study from the Archives of Internal Medicine found that a full one-third of all obese patients were "metabolically healthy" in terms of their blood pressure, cholesterol levels, and other measures. Meanwhile, one-fourth of the patients whose BMI was in the normal range showed abnormal metabolic signs. So a policy that varies its premiums as a function of body size is guaranteed to punish a bunch of people who are perfectly healthy and reward a bunch of people who are at risk. (According to the study, these backward incentives would affect about 18 percent of the population.)

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Safeway's body-size threshold also ensures that some discounts would be doled out on the basis of trivial differences in body composition. If someone with a BMI of 30.1 trims down to 29.8, has he really reduced his risk of disease?  (For someone who's 6 feet tall, that means losing two pounds.) The body mass index was never meant to be used for diagnosing individuals: It's a notoriously sloppy measure that can't distinguish between lean and fatty tissue. Those with athletic builds are often misclassified as being overweight or obese, and some researchers have found that exercise actually leads people to put on weight. Perversely, the Safeway plan could incentivize some of its members to stop exercising. Indeed, by making premium discounts contingent on weight loss rather than healthy behavior, Burd's program may encourage fat people to trim down at any cost. A sensible diet with lots of fruits and vegetables may be less effective than voluntary starvation—or even gastric bypass surgery, which carries its own grave risks and side effects.

The fact that significant weight loss is nearly impossible to maintain poses yet another problem for outcome-based wellness plans. It's a safe bet that any obese person who manages to score the Safeway discount in a given year will be back in the penalty a few years later. That means plan members are incentivized to enter a cycle of yo-yo dieting, which may actually increase their risks of cardiovascular disease (although not all researchers agree on the dangers of weight cycling).

Even if the Safeway incentives did encourage healthy behavior, their implementation would almost certainly be unfair. Much of the criticism of Burd's amendment—and there's been plenty—has focused on the ways in which the program might single out people who are already impoverished. As I've said before, being poor can make you fat, and being fat can make you poor. Rates of obesity and poverty are closely linked across the country, and—among women, at least—the more money you have, the thinner you'll be.

In other words, the workers most likely to run afoul of Safeway's BMI threshold are those most burdened by the process of losing weight. Members of the skinny elite can treat themselves to pricey gym memberships, luxe organic produce, or a piece of the $60 billion diet industry. What about the folks who can't afford to pay for Gyrotonic? Sorry, higher premiums. If you're fat because you're poor, the Safeway penalty makes you poorer still—and that in turn makes it harder to lose weight. This Catch-22 may end up pricing the neediest members out of the system—and it could explain Burd's alleged success at cutting health care costs.

On top of all of this, Safeway-style wellness programs must be carefully designed to accommodate federal and state laws. Last year, a pair of public health experts from Harvard, Michelle Mello and Meredith Rosenthal, reviewed the legal limits of lifestyle discrimination in a paper for the New England Journal of Medicine. They considered all the ways that a program might be against the law, even if it meets the criteria set out in the HIPAA regulations. Charging fat people higher premiums might violate the Americans With Disabilities Act, for example, which protects the health benefits of anyone with an "impairment" caused by a "physiological condition." (So far, there's no clear precedent on whether obesity qualifies as such.) A Safeway-style program could also be challenged on civil rights grounds: Obesity rates are higher among blacks than whites, yet blacks tend to have less visceral fat given the same BMI. And then there's the fact that most states in the union prohibit employment discrimination on the basis of certain behaviors—like smoking—that are conducted outside of working hours. (Michigan specifically bans weight-based discrimination.) Given these concerns, and several others, Mello and Rosenthal concluded their analysis with "an overarching litmus test of program legality: health plan sponsors of wellness programs cannot 'pay for performance'—they can pay only for participation."

Nothing about the Safeway Amendment makes sense. When the Senate finance committee approved its version of the health reform package earlier this month, Chairman Max Baucus announced that his bill would extend coverage to almost every American, and that it "would prohibit insurance companies from discriminating on the basis of gender or health status." If Congress really wants equal access to medical care, why are we fattening a loophole for discrimination?