Health Insurance for All – A Weighty Issue

The prospect of universal health coverage for all Americans is weighing heavily on lawmakers right now. But, if the current proposals pass Congress, Americans may be looking at an even “weightier” problem. New economic research suggests that having health insurance actually makes people fat, and that, in turn, increases health care spending.

A working paper recently published by the National Bureau of Economic Research (NBER) discovered that Americans who have any type of health insurance coverage, either public or private, are more likely to gain weight and be obese. According to the research, Americans with private insurance had increases in body mass index (BMI) of 1.3 points, and those with public insurance had BMI increases of 2.1 points. (Both of these findings were statistically significant.)

The healthcare costs associated with obesity are overwhelming, and account for nearly $150 billion annually in the United States, roughly half of which is already funded by Medicare and Medicaid. This translates to an additional $1400 per year in medical costs for an obese person compared to a normal-weight individual. Remarkably, the cost of treating obesity-related conditions and diseases has risen faster than the incidence of obesity itself. The cost has nearly doubled in the last decade, while the incidence of obesity has only increase by 37%. Today, obesity-related costs account for 9.1% of total medical spending.

Economists have long shown that workers with employer-sponsored health coverage, as well as all tax-paying Americans, pay the costs associated with obesity through increased taxes, decreased wages, or increased insurance premiums. Now, the authors of the NBER paper actually call health insurance an “economic subsidy for obesity.” The authors assert that people with health insurance are less health-conscious and less attentive to weight gain since they believe health insurance will cover the costs of their weight-related maladies. The authors offer weak evidence that better insurance coverage begets greater weight gain, and risk-adjusted health insurance deters weight gain. Other economists have come to different conclusions using different economics models and estimations, but most agree that obesity needs to be addressed before medical costs can ever be contained.

Rather than making healthier lifestyles available to all Americans, will universal health coverage create a moral hazard in matters of body weight? The authors of the NBER paper think so. Instead, they contend that providing incentives for healthy behaviors and lifestyle choices will improve social welfare more than providing blanket coverage for everyone. If the latter becomes reality, the United States may need a mighty big blanket.

References

Bhattacharya J, Bundorf K, Pace N, Sood N. Does Health Insurance Make You Fat? (Working Paper 15163). NBER Working Paper Series. July 2009.

Bhattacharya, J., & Bundorf, M. (2009). The incidence of the healthcare costs of obesity Journal of Health Economics, 28 (3), 649-658 DOI: 10.1016/j.jhealeco.2009.02.009

Finkelstein, E., Trogdon, J., Cohen, J., & Dietz, W. (2009). Annual Medical Spending Attributable To Obesity: Payer- And Service-Specific Estimates Health Affairs DOI: 10.1377/hlthaff.28.5.w822