Commentary

Health Riskers Ought to Pay

This article appeared in the Atlanta Journal Constitution, May 16, 2005.

Health insurance is essentially the distribution of risk. A large number of people pay into a pool, managed by the health insurance company. The company operates on the assumption that only a few of its customers will get sick enough to require more money out of the pool than what they pay in.

The problem is that due to federal and state regulations, as well as tradition and custom, high-risk customers tend to pay the same or similar premiums as low-risk customers. So people who make good decisions about what they eat, how often they exercise, or what habits they take up end up subsidizing people who make less healthy decisions. It amounts to an incentive for unhealthy behavior.

This is only true of health insurance. Auto and life insurance companies regularly vary premiums with risk. If you have a poor driving record, drive a sports car, or live in a high-theft area, you’re going to pay more for your car insurance than most.

There’s no reason why health insurance shouldn’t operate the same way. This is particularly true with state-issued health plans, where not only do you have the problem of subsidizing and fostering poor decisions, but the burden of those poor decisions then falls on taxpayers.

The question becomes, who should pay the health care costs of a state worker who chooses to smoke, then gets sick as the result of that decision: the person who chooses to smoke, or Georgia taxpayers? I have a hunch what most Georgia taxpayers would prefer.

Some may worry that we’re on a “slippery slope,” here — ” that health insurance companies may soon factor in traits and habits such as obesity, regularity of exercise, or alcohol consumption, too.

But why shouldn’t they? Certainly we should be free to make our own decisions about what habits and vices we choose to indulge. But we should also be prepared to accept the consequences of those decisions. Eat, smoke and drink what you want, but don’t expect people who made better choices — or taxpayers — to bail you out.

It has also been suggested it would be better to reward people who make good decisions instead of punishing people who make bad ones. That’s a nice thought, but isn’t the result the same? Whether you punish smokers with higher premiums or reward nonsmokers with discounts, nonsmokers still end up paying less for health insurance than smokers. As they probably should.

Radley Balko is a policy analyst at the Cato Institute.