Tuesday, November 01, 2011

Lifestyle Choices and Health Care Costs

In recent posts, I raised an objection to "free health care" on the grounds that it is a subsidy for unhealthy lifestyle choices.

It also objected that it is misnamed, because the health care is not free. What we are really talking about is a legal right (where no moral right exists) for people to make unhealthy lifestyle choices and to force others to pay any resulting medical costs under penalty of death. "I choose to smoke. You must pay for my lung cancer treatment under penalty of death if you should refuse. "

One move that an increasing number of companies are taking against this is to require that unfit employees pay more for health insurance. Specifically, obese people and smokers have larger payroll deductions than other employees. "If you choose these options, you pay the costs – not your co-workers."

Overall, the use of penalties is expected to climb in 2012 to almost 40 percent of large and mid-sized companies, up from 19 percent this year and only 8 percent in 2009, according to an October survey by consulting firm Towers Watson and the National Business Group on Health. The penalties include higher premiums and deductibles for individuals who failed to participate in health management activities as well as those who engaged in risky health behaviors such as smoking.

(See Reuters, Firms to charge smokers, obese more for healthcare)

This, to me, seems a reasonable way to go. It provides people with a financial incentive to make healthier choices. It also provides parents who care about their children an additional incentive to give their children healthier habits. And it provides a more immediate and comprehensible disincentive to participate in those options than vague warnings about the possibility of having medical problems in the indefinite future.

The fact is that these choices that some employees make are one of the reasons employees are paying so much for health insurance, and why some companies do not offer health insurance at all. They simply cannot afford to make this option available and stay in business.

Somebody has to pay these costs. If the smokers and the obese are not paying them, then somebody else is.

There are people objecting to this practice as being unfair to poor people who do not have the same access to fresh foods or a gym that rich people do.

There are also fears the trend will hurt the lower-paid hardest as health costs can eat up a bigger slice of their disposable income and because they may not have much access to gyms and fresh food in their neighborhoods.

I was surprised that some people would consider this a serious objection. It eats up a bigger slice of the disposable income of those who choose to smoke, overeat, and under-exercise. This is the true in the same way that higher ticket prices eat up a bigger slice of the disposable income of those who go to movies. But the option is still there not to go to movies, smoke, overeat, or under-exercise.

I see no reason to give a person who makes the choice to smoke or overeat or under-exercise the option of forcing others to pay for the consequences of their actions than to give investors who lose their money the option of forcing taxpayers to bail them out of their financial problems. Freedom means that you have the liberty to make your own choices, and to live with the consequences, good or bad.

A better response, I would argue, is not to fight for subsidies for unhealthy lifestyle choices, but to use these costs as an additional incentive to get people to make healthier choices. The purpose of these options is not to fleece the poor and to get more money from them. Instead, the hope is that they would choose options where they can avoid paying these additional costs.

Actually, my first thought when I read the objection that the poor have less access to good food and gym membership was, "Then shouldn't we be working on giving them better access?" Which option is better: to pay huge amounts of money to cover avoidable health care costs, or to use that money instead to provide people with healthier options? If we are going to subsidize lifestyle choices, let's subsidize health and fitness rather than that which is unhealthy and unfit.

That, however, was before I asked my second question, "How much does it cost to not smoke, to not overeat, and to not under-exercise anyway?"

Of course, all of this is incompatible with the idea that people are entitled to "free" (force others to pay under penalty of death) health care. It is more compatible with the idea that those who create an avoidable cost should pay the avoidable cost – or, if they don’t want to pay the costs themselves, to avoid those costs instead.

18 comments:

jimrandomh said...

This argument would work if the majority of health care costs were generated by bad behavior, but unfortunately that is not the case. In the case of diet and exercise, the long-term effect on finances are so far removed from the behavior that for normal people with normal discount rates, changing the cost structure has no effect at all.

But there are cases where subsidizing health care - or more precisely, severing the link between usage and finance - does have significant effects on behavior. The bad side of it is that people don't price compare, and they spend on things with poor cost-benefit ratios. The good news is they're much less likely to skip physicals, or let contagious diseases go untreated.

But the really important thing, is that paying for everyone's health care prevents people from dropping below subsistence income. Health care costs have a terrible tendency to put people in the position of not making or having enough money to survive, even if they do everything right and work as hard as they reasonably can. That leads to tragic, avoidable deaths.

It also leads to crime. One of the great achievements of western society was a dramatic reduction in the number of cases where people must choose between robbery and starvation. Most of the remaining cases come from people who've fallen through the cracks of the health care system.

Alonzo Fyfe said...

jimrandomh

I do not see how my argument requires the assumption that the majority of health care costs are generated by bad behavior.

It doesn't matter - whether it is a majority or a minority. That portion of health care costs generated by bad behavior ought not to be pushed onto others, but born by people who engage in that behavior.

Again, it doesn't matter of a majority of my income is used to pay for going to the movies. That activity should be paid for out of my pocket - there is no reason to allow me to force others to pay for my choice.

I have covered contageious diseases in previous posts - arguing that it is a public good and, as such, it is something we have reason to have governments subsidize.

And this article specifically endorses a practice of giving poor people access to resources that would allow them to prevent future illness (such as health screenings).

Finally, I have defended the practice of redistributing income to provide basic welfare goods. Consequently, your objections on that account regarding subsistance income and "having enough money to survive" are also not applicable.

This is a blog post on a principle that would be applciable to creating a health-care system, not a full treatise on everything and anything relevant to the subject of health care.

DataPacRat said...

I find that I agree with a great deal of what you post - so when I found myself not /wanting/ to agree with some of this post, I tried to figure out why.

I think I have, in that I'm one of those oddball edge cases which statements of general principles have a hard time covering well. I don't smoke, don't drink, eat reasonably healthy, and exercise - but due to my height and weight, I fall under the category of 'obese'. That is, despite behaving in the ways your post suggests encouraging, under the system you describe I would still be punished in order to encourage me to behave in those way.

'Obesity' is often a handy way to describe 'unhealthy', but not always - and the cases where the former isn't connected to the latter would seem to need to be accounted for, in order for your described distribution of health-costs to be fair.

Or maybe I'm wrong - I often am.

Alonzo Fyfe said...

datapacrat

Yes, there are medical conditions that cause obesity independent of the efforts of the individual. Thyroid and petuitary disorders, for example, cause people to retain water (and weight) others get rid of.

Allowances would have to be made for this.

Joshua Bennett said...

Why do you say taxation is forcing you to pay "under penalty of death"? When was the last time someone was executed for not paying taxes in our country? This sounds suspiciously like something a libertarian would say.

DataPacRat said...

Alonzo Fyfe

So far so good - but who gets to decide such allowances?

If a doctor's recommendation allows a patient to pay less taxes - then suddenly there's an incentive for doctors to compassionately nudge questionable cases to the no-tax side, and to nudge ordinary obese people to the no-tax side in exchange for consideration, and so on.

If it's politicians - then, most likely, you will have people who have no training about medical issues having to decide whether or not something counts as 'unhealthy behaviour'.

Alonzo Fyfe said...

Joshua Bennett

Ultimately, every government sanction is backed up by somebody with a gun who has the authority to kill you unless you select some other option.

The fact that most people select a less violent option does not deny the fact that the option of killing those who resist is the ultimate authority behind all law.

Alonzo Fyfe said...

DataOacRat

Tho types of questions you raise are pervasive. There is no option that would allow us to escape them. Even if we go wishfully public funded health care, who gets to decide who gets health care.

Joshua Bennett said...

Alonzo

You don't need a government for the option to kill someone to be available. I am perfectly free to kill someone who is endangering my life or that of my loved ones. Hell, I could shoot someone for overcooking my pasta, but that seems rather excessive when there are more effective and less permanent ways of dealing with the issue. Would you argue that, because it is within my power to kill the chef at the Olive Garden, he is obligated "under penalty of death" to cook my pasta correctly? I surely hope not.

We normally reserve the use of lethal force for government because this keeps us from killing others for our own benefit or for slight infringements that don't merit such an extreme response. As with private individuals, though, the ability to solve a problem with violence does not mean that such a thing is permissible. It's foolish to assume that government can do whatever it likes simply because it is allowed to use deadly force in some occasions.

Doug S. said...

Obesity is not a choice that is subject to praise or condemnation to any significant degree. Telling someone to lose weight is about as effective as telling them to be taller. (The only treatment for obesity that has been shown to be effective is bariatric surgery.)

Some further reading.

Joshua Bennett said...

Before people get into a debate about whether obesity (or smoking, or whatever) is a choice, I suggest reading this article on Less Wrong.

mojo.rhythm said...

"I choose to smoke. You must pay for my lung cancer treatment under penalty of death if you should refuse. "

That's outrageous hyperbole. There is an easy way out of it: excise taxes on unhealthy goods! Make people contribute a good portion of money to the public insurance pool if they elect to purchase goods that make them fat and unhealthy. That way, it cannot be said that you are making others pay for your health care.

Alonzo Fyfe said...

Joshua Bennett

I do not recall saying that government can do whatever it likes simply because it is allowed to use deadly force on some occasions.

Instead, what I recall saying is that there is no such thing as "free medical care". There is only "medical care that one is going to force others to pay for - ultimately backed by a sanction to use physical violence up to and including death against those who refuse."

mojo.rhythem

No, that is not hyperbole. It is a literal fact about the nature of so-called "free health care". The term "free health care" assumes - falsely - that it is being provided without cost. What I am relaying here is the fact of the matter. "Free health care" means putting the cost on other people and ultimately threatening them with violence, up to and including death, if they should refuse.

In the case of welfare goods in a land of pleanty, I have argued that this can actually be legitimate.

In an example I used of an airplane crashing near an oasis in the desert owned by a single individual, the passengers are perfectly justified in threatening violence up to and including death against the owner of the water if it is needed to keep the passengers alive. The passengers have no obligation to sit in the desert and die of thirst while a single person holds on to all the water.

However, in calling this action legitimate, I do not pretend it is something other than threatening violence, up to and including death, against the owner if he should refuse to allow redistribution of the water.

mojo.rhythm said...

"Free health care" means putting the cost on other people and ultimately threatening them with violence, up to and including death, if they should refuse.

I live in Australia, where our national health insurance is funded by medicare taxes and excise taxes on unhealthy goods. We say that our health insurance is "free", but it is obviously a colloquialism--a shorthand for progressively funded health-care.

If I get indicted for tax evasion (i.e. refusing to pay my medicare taxes), the worst penalty may be prison, but not death. The death penalty is illegal here. I am "forced" to chip in my share to the public pool, but will never be threatened with death by the government for not doing so. That's why I accused you of hyperbole.

Alonzo Fyfe said...

mojo-rhythm

And what would happen if you refused to go to jail?

And what keeps you in jail when you get there?

Ultimate, it is somebody with a gun and the authority to give the option to surrender or take a bullet.

mojo.rhythm said...

I get you now. The threat of death is due to the chance that I could be killed if I attempt escape from prison.

It might sound like semantics, but if a person is killed trying to bust out of jail, isn't that because she tried to escape prison and not because she didn't pay Medicare taxes?

Surely, there is a massive difference between that sort of indirect, roundabout threat of death that you described, and directly and verbally threatening to kill someone for not paying their taxes?

I'm not denying your point, it is a technical truth, but the original way you phrased it gave me the honest impression you consider a single-payer health care system, absent taxes and fees on unhealthy goods, to be a form of medical Stalinism.

Sheldon said...

I read this some time ago, and after thinking about this for awhile, I have just returned to comment.

I am an advocate of universal single payer health care, which on some level, would be "free". Of course, I acknowledge it would be paid for by taxes.

I have no real problem that those who engage in harmful activities like smoking and overeating or bad eating should be assessed more of a tax burden for the "free" health care. This could be done by taxing those things directly and directing funds into the national health insurance fund. And ceasing to subsidize the processed food industry.

I just want to raise a primary point. Most of us are now involved in a private for profit health insurance system. Presently then, by participating in this system, I pay into the health insurance co. (along with a portion from my employer), and because I am healthy and use very little health services, I am still paying for the health care of others. Plus I am paying the high salary of insurance co. executives, and shareholder dividends. It may be the case that eventually I will use the value of health services that I have already paid for, or not. And it is likely the case that I am presently paying for the health care of others, and some of this cost probably is due to the poor choices and practices you speak of.

But if indeed we had a universal national health care system with "free" or at least minimal access costs, then potentially we would have more leverage to assist people in making healthy choices. In fact, we could potentially design the system to be geared toward preventative care.

So as I see it, your argument here isn't really against "free" health care, but just that costs for poor choices should be shifted to people who make them. Fine, but why have a system that skims off the top for private profit?

Scott B said...

I see two problems with your argument. First, you imply that the "cost to not smoke, to not overeat, and to not under-exercise" is trivial, or zero. In contrast, witness the fairly huge -- and largely ineffectual -- industries attached to all three efforts.

Nicotine patches and gum, faux cigarettes, hypnosis, and so on. Fad diets, books, diet foods, various sorts of surgery. Gyms, sports clubs, exercise equipment. Maybe the costs are higher than your hand-waving suggests.

The bigger problem is that I think your position on this is in conflict with your moral system, "desirism".

There are clearly many people whose desire to smoke, overeat, or under-exercise are sufficient that they're willing to accept the risks associated with those behaviors. While you may feel you have sufficient reason to seek to inhibit these behaviors, that doesn't mean that everyone does.

By that simplistic model, we should outlaw private car ownership -- the health risks are enormous, and I find I get along just fine without it.

The moral calculations are more complicated that. It seems clear that we're willing to accept some sorts of risky behavior, like private drivers. Finding exactly where to draw that line is difficult, and simply declaring that smoking, eating, and sloth are on the wrong side of it isn't a legitimate argument.

I'd argue, to the converse, that we have many and good reasons to create an environment where basic health care is accessible to everyone, regardless of their economic position. We all benefit when those around us are healthy.

I certainly wouldn't object to government efforts to get people to choose healthier options, but I see that as part of a health care program, not a substitute for it.