Why do employers subsidize unhealthy behavior? October 10, 2006Posted by federalist in Healthcare, Social Politics.
Our wacky American taxcode has resulted in most people seeking health insurance through their employers. And whether they self-insure or subcontract their health insurance benefits, most employers grant the same coverage at the same costs to all of their employees. Which is unfair to either shareholders, employees, or both (to the degree the health insurance costs are born by each group).
This argument can be followed in many directions, but perhaps the easiest examples of why this is the case are smoking and obesity: Two voluntary behaviors that have been proven to increase healthcare costs.
Are employers allowed to charge different rates based on an employee’s smoking or obesity? The answer seems to be yes:
The Health Insurance Portability and Accountability Act of 1996, or HIPAA, generally prohibits employers from discriminating on the basis of health status or “health condition” of an employee in setting premiums or contributions. The Americans With Disabilities Act bars employers from denying disabled people the right to participate in programs or to receive benefits.
There are some ways around HIPAA’s restrictions, however. If an employer creates a “bona fide wellness program” aimed at reducing smoking or obesity among employees, it can apply some financial incentives and disincentives without running afoul of HIPAA rules.
Which leaves me wondering: Why do shareholders and employees tolerate having to subsidize the bad behavior of others?