Healthy behavior incentives more effective than unhealthy lifestyle taxes
Arizona Gov. Jan Brewer has proposed the most controversial health care idea of the year: fines for fat. To avoid cuts to organ transplant coverage in the states Medicaid system, Mrs. Brewer originally suggested charging Medicaid recipients a $50 co-pay if they are obese or they are regular smokers. Earlier this month, Mrs. Brewer, a Republican, confirmed that transplant coverage would be paid for with other cuts - but the “fat tax” is still on the books. Federal regulations likely will kill the plan, but its still worth taking a closer look at whats wrong - and right - with this idea.
Whats right? The health care system acts as a giant subsidy system, distributing the costs of treating unhealthy Americans onto others. This wasnt such a bad idea decades ago. In the 1940s and 1950s, visiting a hospital usually meant you were having a baby, you had caught a contagious disease or you had suffered a workplace injury. If you were suffering from, say, polio, its not unfair that your co-workers help with the costs.
But medicine has been transformed in the past few decades. Improved workplace safety, mass immunizations, new drugs and better surgical technologies have shifted the cost structure of American health care. Now, health care expenses are surging because of the costly consequences of voluntary behavior choices, such as smoking, drug use and obesity. To pick just one statistic to make the point: A recent National Cancer Institute study found that one in five smokers diagnosed with cancer continues to smoke, creating new health risks even if they are successfully treated for earlier behavior. Since lung cancer usually appears later in life, taxpayers pay for the extra costs through Medicare.
Comfortable in the assumption that doctors can fix any mistakes, millions of Americans casually indulge in unhealthy behaviors as a matter of routine. And why not? Only 12 cents of every health insurance dollar comes directly from ones own pocket - and the costs of the rest are borne by co-workers (private insurance) and taxpayers (Medicare and Medicaid). If we dont attack this hidden subsidy somehow, Americas health care costs will rise unchecked forever.
However, Mrs. Brewers $50 fat fee isnt really a solution to this problem, for three reasons.
First, its tookind. An annual $50 penalty is too small to change behavior, even for a Medicaid patient. The cash raised would help solve Arizonas short-term budget problems but do little to curb rising health care costs in the long term.
Second, the plan is toocruel. Singling out the obese for an extra fee without public support was doomed to provoke the same backlash that rightly killed soda and sugar taxes in other states and cities.
Finally, its tooimpractical. Its easy to test for smoking, since a simple swab test can confirm if a person has smoked recently or not. However, obesity is medically more complicated. Its preventable in the majority of cases, but not in every case. Any government fee or tax based on, say, body-mass index numbers will mean controversial bureaucratic choices. Add in the fact that interest groups already are planning class-action lawsuits against the measure and Mrs. Brewers fee is unlikely to ever see the light of day.
Yet the biggest problem with the plan is that its toobackward. Mrs. Brewer - a leading Tea Party member - comes across poorly because she is supporting a plan that looks, smells and tastes like a new tax. And its probably all for nothing, since punitive, top-down measures have never done much in the battle against obesity.
There is another path. Arizona Medicaid officials hinted that their plan will include some positive incentives. Sadly, while the state was specific about the politically toxic penalties, it has said little about what the incentives might look like. Thats a mistake: The incentives should have been the only thing in the plan, not the footnote.
Healthier Americans cost the “sick care” system less in the short term and far less in the long term. Its easier in law to pick incentives than assign penalties, so offering patients a chance to share in the savings from their own healthy behavior should have been the focus of Arizonas plan.
Private-sector experiments with incentivized insurance already have shown some promising results. But these tests were limited - because the same union rules and regulations that limit penalties on the unhealthy also place legal limits on incentives for healthy behavior. To liberal regulators in Washington, incentives arent politically correct unless everyone can share in them equally.
Its no surprise that many Arizonans think its unfair to pay cash penalties for unhealthy behavior. But it should be a surprise that the law treats cash rewards with the same disdain. Instead of wasting her precious political capital on a doomed fat tax, Mrs. Brewers time would be better spent defending her states right to create incentives for better outcomes and pushing for a plan thats all honey instead of one thats mostly vinegar.
Original Source: http://www.washingtontimes.com/news/2011/may/5/honey-a-better-cure-than-brewers-vinegar/