Obesity Premiums in North Carolina

October 16, 2009

North Carolina will begin charging higher premiums for obese employees enrolled in their state health insurance plan.

“Tobacco use and poor nutrition and inactivity are the leading causes of preventable deaths in our state,” said Anne Rogers, director of integrated health management with the N.C. State Employees Health Plan. “We need a healthy workforce in this state. We’re trying to encourage individuals to adopt healthy lifestyles.”

No, you’re trying to save money. And that’s a good thing. The Federal government should take notice. Half of all medical costs for the overweight and obese are paid by Medicaid and Medicare. Those are the real social costs of obesity. And they only exist because public health plans do not charge weight related premiums—well they don’t charge at all. Weight related premiums could internalize the costs of obesity and end most support for fat taxes using the externality argument. Though it’s unclear how one would do this when the government is providing health care rather than health insurance.

Private sector employers appear to have been targeting tobacco and weight in their insurance pricing ahead of state health plans.

“We’re beginning to see a lot of employers extremely interested in this,” said Tim Smith, president of BioSignia, in Durham, which provides for private employers a system of measuring employees’ risk factors for the onset of chronic disease. The company presents only aggregate data to the employers and does not disclose information about individuals, Smith said.

I’m not sure to what extent private insurers are practicing weight discrimination, but it is occurring. If they weren’t, it is likely the non-obese in the risk pool would be subsidizing the higher health costs of the obese. With insurance companies being profit driven, I don’t know why they wouldn’t all raise premiums on the obese (except for possible administration costs). Let’s hope they can (continue to) do this under coming health insurance price controls. The bigger the public health plan, the stricter the price controls, the greater the obesity externality—and the more of a reason for food taxes.


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