Trimming Waistlines by Trimming Government

October 27, 2004 • Commentary

The Journal of the American Medical Association recently published a study purporting to link increased soda consumption with weight gain. This comes on the heels of studies linking obesity to urban sprawl, longer commutes to work, time in front of the television, time on the Internet, not enough physical education in schools, vending machines in schools, marketing and advertising of junk food to children and countless other trends, foods, habits and (in)activities.

Unfortunately, a slew of nutrition activists and nanny‐​statists want to use the fact that some Americans are getting bigger to limit what all Americans can choose to eat. And so we’re seeing lawsuits waged against food companies, calls for “fat taxes” on calorie‐​dense eatables and moves for restrictions on the advertising and marketing of junk food.

Of course, sensible people oppose such measures and prefer a system where everyone is free to make his or her own decisions about diet and lifestyle, but also is required to bear the consequences of those decisions.

But there are a number of things we can do that could both facilitate an increased sense of personal responsibility and harness the power of the marketplace to encourage good decisions about diet and activity. For one thing, we could allow health insurance companies to do “medical underwriting” — charging lower insurance premiums for people who exercise regularly and follow healthy diets. That only makes sense, as those people are expected to have lower health care costs than donut‐​munching couch potatoes.

Standing in the way of medical underwriting are legal prohibitions against allowing insurers to assign risk in health insurance premiums the same way they do with auto and life insurance premiums. Currently, many states require insurers to charge the same premiums for any member of a group health plan, regardless of risk. Removing those barriers would encourage insurers to begin experimenting with carrot‐​and‐​stick approaches to healthy lifestyles. One company might give premium discounts for gym memberships, for example. Another might foot the bill for nutritional counseling. In short, we’d get a system where health insurers compete amongst themselves to contrive a system that best balances the health and self‐​interest of consumers.

Health and Human Services Secretary Tommy Thompson said at an obesity summit last June that there are no federal restrictions on medical underwriting. His counsel’s office confirmed that not only are there no federal laws against it, there are no binding court decisions or federal regulations, either. So the obstacle to this innovative approach lies at the state level.

Congress can help eliminate state laws that encourage unhealthy lifestyles by enacting legislation similar to the Health Care Choice Act, sponsored by Rep. John Shadegg. Shadegg’s bill would enable the residents of any state to purchase health insurance in any other state, under the laws and regulations of the state where the insurer is incorporated. That would create a nationwide market for health insurance. Making the U.S. a “health insurance free trade zone” would allow consumers to avoid unhealthy regulation and encourage states with anachronistic health insurance regulations to deregulate or else face the risk of health insurers reincorporating elsewhere.

A nationwide market for health insurance would spur competition among insurers to attract customers. It would also spur competition among the states to attract insurers. The resulting effect on health care would be to create 51 “laboratories of democracy” where consumers would benefit from two tiers of competition.

Of course, Congress has already taken a step toward encouraging healthier lifestyles by increasing access to health savings accounts. Health savings accounts give consumers the money that their insurance companies would otherwise control; whatever the insured doesn’t spend stays in his account and grows tax‐​free. Bringing the costs of unhealthy lifestyles closer to consumers encourages more careful attention to lifestyle choices. If a consumer knows that any money not spent on health care can be rolled over into a retirement account, he’s more likely to make the kinds of lifestyle decisions that keep him in better health.

A nationwide market for health insurance would go a long way toward restricting the obesity problem to the obese, instead of subsidizing it by spreading the costs of weight gain over the entire population. Most importantly, it would harness the power of markets and competition to uncover the most effective way to encourage healthy lifestyles, and free health insurance and health care providers to provide incentives to choose those lifestyles.

It certainly won’t guarantee an end to the obesity problem, but it would be preferable to policies that encourage irresponsibility and restrict choice for everyone.

About the Authors