Thursday, June 08, 2006

Health Insurance and Privacy

Earlier this week, I went to a meeting about my company's health insurance plan for the upcoming fiscal year. I learned a lot about how they operate the health insurance. My company actually self-insures, meaning that they keep the health insurance premiums that they collect and pay for the health insurance claims themselves. As a backup, they buy reinsurance just in case the claims exceed the collected premiums. They contract with a large health insurance company to administer the plan.

They were proud that last year, the premiums revenue exceeded the claims. The main cost of the claims was due to prescription drugs, although it was lower this year than in the past years because they stressed to people to buy generics. Still, due to the skyrocketing drug costs, the new plan has higher drug co-pays. They aim for a 70%-30% health insurance/consumer cost share on the drugs, and with the increased cost of drugs, they have to raise the co-pay. Otherwise, the plan is the same as last year, with the premium going up by a very modest 1.35%.

My company offers a lot of health and lifestyle improvement classes, such as smoking cessation and weight loss classes, and now I understand why. It's because when people stop doing things that are bad for their health, the company doesn't have to spend as much on health insurance claims. It's not that they're doing it out of the kindness of their hearts; they're trying to decrease the bottom line. At least since they are self-insuring instead of handing the premium revenue over to a private company, the extra premium revenue from our improved health isn't going to line somebody's pockets. Instead, it's the reason that our insurance premium is going up by 1.35% when for other companies it's going up by 7% or more.

Personally, I think that it's none of my company's business what I do with my health. The company should not be concerned about whether I smoke or eat too many cheeseburgers, because the only thing that they should care about is how well I can do my job, a job that neither requires an extensive lung capacity nor being on my feet. But my company is concerned with these matters, because they are taking me on both as an employee and as a health insurance dependent.

People should be hired because they are the best candidate for the job. We have laws that protect against discrimination against people due to race, gender, religion, etc., because those should not be factors in the search for the best candidate for a job. Likewise, people's potential cost to the company in health insurance claims should not be a factor either. But because the cost of my health insurance premium alone (not to mention the claims I might generate as a high-risk employee) is nearly 20% of my compensation (and an even bigger percentage for employees with lower pay), it is a big factor. There have been cases of obese people and smokers being passed over for jobs and pay raises, precisely because of the potential extra cost of funding their health insurance. There's even an infamous Wal-Mart company memo recommending practices to discourage unhealthy job applicants, to reduce company health care costs.

As you no doubt know, I am a formerly obese person, having lost 68 lbs through hard work and perseverance. Because of this, I am not particularly sympathetic to overweight people's claims that they cannot lose weight. The laws of physics are infallible: if you eat fewer calories than you expend, you will lose weight. I do, however, understand the psychological impediments that make overweight people feel as if it is hopeless, and the physiological conditions that make weight loss very difficult. (Perhaps I will write a blog entry about this at some point.)

Whether or not people can or cannot lose weight, their weight should not be a factor in hiring decisions. Unfortunately, it is a factor in hiring decisions, and it will remain a factor as long as companies stay in the business of offering health insurance benefits to their employees.

We could easily eliminate this factor while retaining insurance benefits by implementing a single-payer health insurance system. I have already presented the Pareto optimality argument for a single-payer system, and I think that the right to privacy concerning our health is another good reason. Oh sure, the gubmint isn't really that in to our right to privacy these days, but I would rather George W. Bush know all about my family's history of colon cancer than have my potential employer reject my job application because of my family's health history.

1 comment:

Ginger said...

The insurance plan at my last job was rather strange I thought. I bought the single plan, since John is covered at his job. A single plan did not cover pregnancy/maternity care. I could however have developed a nasty drug or drinking habit and gotten it covered. I could have had a nervous breakdown (not impossible at that job) and it would have been paid for. The most natural thing in the world, like delivering a baby, was not. Weird!