[The following is part 2 of a two-part guest post by Adfecto from Aspire 2 Wealth. I recommend you read part 1 first. Though I initially disagreed with him, I admit that he made some great points. He was kind enough to consolidate many of those thoughts into two posts. If you like this article, consider subscribing to his RSS feed.]
The elephant in the room when considering multi-tiered cost structure for health insurance is that it all boils down to a form of discrimination. If we go down this path, it is the same as saying women should pay more for insurance because, "pregnancy is so darn expensive." There are hundreds of studies that say this group or that group is more susceptible to disease XYZ. Some, but not all, of these groups are protected by our laws against discrimination, and to some extent so are their medical records, their genetic code, and their personal lifestyle choices. If we start picking and choosing which of these factors can play into insurance pricing, where do we draw the line on that?
Why are we so worried about upping the cost that unhealthy people pay for health insurance anyway? Of course, it is because if they pay more it is assumed I will pay less. A natural self interest makes us quick to raise rates for the other guy; especially if it is because that person is an irresponsible "fat person" or "dirty smoker." What we forget is that this can very quickly turn on us. What happens when we get sick? We would quickly change sides in this argument if our own child was born with a predisposition for a certain expensive illness. Alcohol consumption has been linked to various diseases. How many people who fought to have smoking banned in bars would suddenly be labeled 'unhealthy' if alcohol consumption was considered? The six beers Joe had during the Super Bowl now mean he should pay more? Not in my backyard; in other words, it is all fine until your personal poison is singled out or you will be directly affected for the worse.
The last point I want to make is that there is even some evidence that in the end, it isn't even more expensive to treat unhealthy people. A new study by a Dutch research team that finds it is actually cheaper to provide medical care for unhealthy people than those who are healthy has recently been published in the Public Library of Science Medicine journal. The study specifically looks at the usual scapegoats, smokers and obese people. It concludes that in the short run, they incurred more health care expenses, but in the long run they cost substantially less. The study found that the 'unhealthy' people had a shorter lifespan and this caused their lifelong health care expenses to drop well below those who were deemed to be 'healthy.' If the goal is to make people pay their fair share, it would seem that unhealthy people should actually pay less. This finding completely contradicts to the 'common wisdom' and shocked many experts. In spite of this data, I still contend that to properly share risk, everyone should pay the same.
My point it this, insurance is suppose to spread risk and keep health care expenses predictable and manageable for everyone. I don't think an actuary's model, a doctor's subjective assessment, or a geneticist's analysis should affect how much a person pays for health insurance. To do otherwise would undermine the very reason for insurance in the first place.
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