Risk-Based Health Care Premiums: A Modest Proposal.

If we could just figure out which patients to pin the blame on for higher health care, would our health care be better and less costly?

As we come to yet another crisis point in trying to achieve an American solution to the inefficiency, inequity, and incompetence of our American health care system, I thought that I might weigh with an idea.

On the way home a while back, there was a call-in show on NPR about costs in health care. More than a few people called in to suggest that those who burden the health care system with their bad choices (smokers and the obese in particular) should be denied coverage and treatment. That got me thinking about how we might combine our concern for personal responsibility, the need to assign blame, and our current inability to fund health care to come up with an equitable solution.

Now I’m not an expert on health care costs and policy, but I think I might have come up a fair approach. Here’s my modest proposal:

Risk-Associated Supplemental Health Care Premiums

Smokers. It makes perfect sense that smokers ought to pay an extra premium for health care. But if we are looking at the overall burden and cost to health care, smoking — in the end — may not be quite so bad . Between 25-30% of individual health care costs — for everyone — are incurred in the last 18 months or so of life. The last time I checked we all died, so the fact that smoking kills people earlier than otherwise can have a perverse affect, namely that smokers tend to die younger, quicker, and therefore cheaper overall than non-smokers.

I've got one of these -- think of it as a great big outdoor cigarette

However, I am well aware of the enormous estimates of the cost of smoking to society put forward by the American Lung Association and other anti-tobacco bodies. However, I have to say, after reading some of ways that these numbers are extracted, that I am less shocked by tobacco than I am reminded that anti-tobacco has become an enormous and self-interested global industry of its own. I’d hate to see what would happen if we applied the same statistical methods to other human activities. The cost of “lost work productivity,” for example, that could be specifically attributed to tobacco would pale in comparison to that lost to Ebay and social networking sites. And if we were to factor in the health costs and ripple effects (such as the lost productivity and stress on other people stuck in traffic waiting for the freeway to clear) of accidents occurred while texting, we might well conclude that we could balance the federal debt simply by shutting down Facebook and Twitter.

But regardless of how you try to spin those numbers, smokers already pay $2.025 on each pack sold here in Washington State, of which $.43 cents goes to “education” (that is, it goes to anti-tobacco groups and progams) and $1.59 into the state’s general fund. Last year alone that amounted to 392.49 million real (not statistically generated) dollars. Personally, I find it unconscionable that we rake in profits from a legalized addiction and then ban the addicts from the public places (like parks) that we use them to disproportionately fund. It’s not just sick, it’s wrong.

Not sure to whom to assign blame here ... but at least we would know the cost would be paid for.

I say, let’s place all smoking taxes into a “Smokers’ Health Insurance Pool” (SHIP). Create supplemental health care insurance designed for smokers to cover costs directly related to their smoking and to provide tobacco cessation programs proven to work. 350 million dollar annually (in just our state alone) should be enough, but we could raise taxes on cigarettes for smokers if need be: we know they’ll pay it. A dollar a pack is estimated to raise approximately 9 billion dollars nation-wide.

Anyway, automatically enroll anyone with a medically diagnosed “tobacco use disorder” (the current term) in the plan.  Allow dependents to be covered for demonstrable tobacco-related illnesses if their exposure meets a certain threshold.  The Surgeon General has declared that there is no safe level of exposure to second hand smoke, but having a threshold seems fair to me since there are many things that produce harmful particulates and residues in excess of any second-hand tobacco smoke but which are not identified as public health threats (camp fires, BBQs, and mowers, for example). Smokers will then directly help defray the cost of their own elevated health risk, and we can fund public goods with money that doesn’t come from organized hysteria, hyperbole, and hypocrisy.

I then thought, “Why not extend this strategy to other people who similarly impose burdens on the health care system?

It seems only fair.

Unlike smokers, however, there is no present revenue stream to tap in order to pay for supplemental insurance. So, to keep the smoker’s money from being pilfered by other groups, we would have to set up separate supplemental insurance plans, funded by taxes or fees, for individuals who burden the system with their choices. Groups of individuals that would belong to this system would be people like:

I refuse to gratuitously put up pictures of fat individuals. We can all look at an obese kitty and go "Ahhhhhhh" instead.

#1: The obese.

Beating up on the obese and trying to turn them into the next best thing to a smoker is quickly becoming the next big crusade as lawyers, state governments, public health advocates, and other agencies begin to drain even big tobacco. And there’s no doubt that being significantly overweight tends, over the long run, to result in health problems. Perhaps some kind of tax based on body composition (not the BMI, which was never intended to analyze individuals), assessed on a year to year basis, might be the way to go. Yearly physicals would be required (like auto licensing) to certify weight classification. Those over some reasonable bar indicating morbid obesity (obesity inclined to result in health problems directly attributable to their weight) would be assessed a hefty fee that would go into an Obesity Mitigation Fund (OMF) to cover related health expenses and to provide both behavioral and, if needed, surgical support. With nearly 25% of Americans meeting that definition, the OMF should build up fast. But I would also allow some of these people, whose conditions warrant it, to be covered by the Americans with Disabilities Act (ADA) and force public transportation, air lines, schools, and such places to provide reasonable seating, access, and other accommodations for them just like they have to for other disabled persons.

Think of this as a health cost balloon.

#2: Fertile females.

It’s hard to find anyone who’s more of a guaranteed health care drain than a woman likely to be pregnant. In fact, fertile women might be thought of as one of health care’s premium liabilities. Besides the risk to both mother and child (the USA is, after all, nearly a third world country when it comes to maternal and infant mortality) it costs between $6,000 (vaginal, no complications) and $16,000 (caesarian, no complications) just to give birth (not to mention prenatal and post-partum care, lost productivity, etc.).  Now some women can have low-cost babies (about $1,500 for vaginal, no complications) with midwifes and doulas, but we have to be prepared for something to go awry with the mother, baby, or both.

And if the birth is premature, the costs skyrocket. The average cost of the first year of a premature baby’s life in 2009 was about $59,000, of which the parent(s) only bore an average of about $2,000 out of pocket. Many preemies cost hundreds of thousands of dollars just to get them to the point where they can go home. And that cost doesn’t stop at birth or at a year. Preemies have been shown to be at markedly higher risk for a range of complications that extend over their whole life. So any potentially fertile female should pay a premium into a Maternal Insurance Supplemental System (MISS) beginning with menstruation until they are either sterilized or hit menopause. Women who remain childless through age 60 should have some of this portion of their taxes reimbursed to them in the form of increased Social Security payments, helping them in their retirement and providing an incentive for zero population growth.

#3: Costly parents.

Parents, who after all choose to produce children, also choose to enforce all kinds of behaviors and activities with negative medical consequences with their kids. Such parents ought to pay extra premiums per qualifying child (that is, there should be no “family rate”). These premiums ought to be high to encourage good choices regarding child rearing for a healthy public and to defray the additional and long-lasting costs of their bad choices. Once the child reaches 18, these premiums should transfer to the child, now an adult, be born by the individual. Some might see this as unfair, but we have to recognize that we all bear responsibility as adults for our own lives. Besides, these risks attend individuals, not parents, and if the parents die before their child who will pay for the ongoing risk? In addition, knowing that they would have to pay a premium for the rest of their adult lives might encourage children to take better care of themselves. Some of the categories here might include:

  • Parents with obese children. Since childhood obesity has the highest risks, greatest durability (hardest to get rid of), and longest effects, parents ought to be assessed at twice the rate of obese adults per obese child. These fees should go into the OMF (Obesity Mitigation Fund, see above). The children, however, if they reach adulthood as morbidly obese adults should be eligible for ADA coverage (see above) since they had little control over these formative years.
  • Nothing like good healthy competition to drive health care costs up.

    Parents who put their children in sports. I can’t begin to tell you how many of my peers (including myself) are hobbled and hampered by injuries we sustained in sports as kids. Although sports are often touted for their health benefits, we now know that young bodies are not meant to sustain the kinds of stresses and injuries most sports produce. Even back in 2001, sports and recreation injuries among youth and young adults cost us 448 million dollars (in one year alone). If we add in the direct and residual costs of traumatic brain injuries, joint and connective tissue damage, spinal problems, physical and occupational therapy, psychological trauma, the need for early joint replacements, and at the loss of productivity caused by these problems during the mature adult years — well, we might find that it would be a lot less costly to just give people a Guiness and a Marlboro and tell them to stay put and enjoy each other’s conversation.  Anyway, it stands to reason that parents who enroll their children in sports and activities like soccer, football, ice and roller skating, skiing, basketball, volleyball, hocky, equitation — in fact, just about any sport other than curling (but perhaps falling on the ice is an issue even here) — ought to be assigned a hefty premium. These premiums should go into a Sports Liability Insurance Pool (SLIP). Responsibility for paying this premium ought to be transferred, just as the responsibility for the health risks are, to the child at maturity. There might be many benefits to sports, but we have to recognize that health care saving is just not one of them.

  • Parents whose homes are too clean. Studies indicate that keeping homes too clean and not exposing children to dirt and other contaminates seems to predispose them to life-long chronic respiratory illnesses, allergic reactions, and under-developed immune systems. Parents’ homes should be spot-checked for the appropriate amount of grime or pay a fee, per child, into a Cleanliness Risk Insurance Supplement Pool (CRISP).  This fee would, again, transfer to the child when s/he comes of age because the effects of such early predispositions do not go away.
  • Parents who let their children ride ATVs and motorbikes. Seriously, just look at the numbers. Bikes are bad enough. We ought to impose extra health care taxes on those too.

#4: Adults in sports and recreation activities.

Any adult who joins a sport and physically demanding recreation (hiking, marathons, triathlons, skiing, wind surfing, etc.) during adulthood should pay into the SLIP (Sports Liability Insurance Pool) for the remainder of their adult lives since sports injuries often do not show their full effect until later, and keep going even after one has stopped playing the sport.

Even with helmet and forward and rear lights, this guy is STILL not going to fare well in an encounter with an Escalade.

#5: Bike commuters.

Yes, it might save on parking, reduce one’s carbon footprint, and allow for a certain sense of egotistical moral superiority. But anyone who climbs on an unsteady, weather-exposed, and hard to see aluminum frame and rides out — completely exposed, and often in the dark and rain — amongst a mass of 5,000+-pound machines that are going between 25 and 70 mph in multiple directions, that are already crammed into too small of a space, and that are controlled by people who are texting, dozing, singing, talking, makeup-applying, drunk, aging, and enraged has a death wish. (Oh, I forgot, these people have special PLASTIC SAFETY HATS on. Now there’s protection from an automobile.)

In any case, anyone who commutes by bike to work on the streets ought to pay through the nose into a Pedacyclist Underinsured Risk Group (PURG) for their extra healthcare risk unless they use dedicated bike lanes that are physically separated from auto traffic (i.e., not crammed on the side, making auto lanes even smaller, and separated only by paint). Even then pedacyclists ought to pay through one nostril (perhaps tolls on these bike only trails could handle the cost), because they aren’t any better drivers than auto drivers (and you quickly find this out any time you’re riding on bike trails).

In the future: people with genetic predispositions.

In the future, we might extend these ideas of individual responsibility into insurance payments based on genetic testing. We already have tests for certain kinds of cancers, conditions like Huntington’s, and other medically costly conditions. We already know that premature infants will, on average, require more medical attention than others. Asking parents, and then individuals to pay a small extra premium in order to help defray the expected extra medical costs doesn’t seem all that unreasonable, does it? It’s true that these people didn’t do anything to acquire these dispositions, but nobody else did either. And since it’s the individuals who have the conditions that are likely to need treatment, who else should pay for it?

Let's stop blaming each other for being sick or needing medical care and take care of taking care of each other.

There could, of course be more groups we might add. But already you can probably see that some people will have multiple additional premiums to pay. An overweight smoker would have a hefty premium, but so would a sports-playing bike commuter who enrolls his/her children in Little League or soccer. Add in premiums transferred from your childhood and potential genetic predispositions, and it could get really expensive. But if we’re talking about assigning individual blame and responsibility for health care coverage based on individual choices and risk we have to use the same cost criteria and base our assessments on more than moral finger-pointing masquerading as health policy.

And so you don’t think I’m cutting myself a break here, I and my family fall into nearly all of the above categories. Come to think of it, I imagine most of us and our families do.

And that’s the point.

By now I hope you have the idea that I really don’t think risk-based health care premiums are fiscally or ethically viable. No, I really think we should stop blaming people who need medical treatment for problems that really come from our unhealthy health insurance system. I think we should concentrate on providing health care, not health insurance care, so that all people can get the care, and the treatment, they need.

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