News Advisor Should risk-takers pay more for insurance?

Should risk-takers pay more for insurance?

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It’s one of those questions which sparks heated debate – should people who are overweight or smoke pay more for private health insurance?

Those who says ‘yes’ mount a personal responsibility argument – do the crime, pay the dime. Those who say ‘no’ argue that there are factors beyond the control of those who need more medical care for obesity or smoking-related illness.

The issue arose again in the wake of the Commission of Audit report, which listed smoking as the only specific example of the “limited number of lifestyle factors” which could attract a penalty from insurers. But the failure to exclude obesity, one of the greatest contributors to ill health, triggered speculation that overweight people might also face fee hikes.

It is purely about encouraging better behaviour as part of a broader plan to improve health in the population.

According to the latest figures from the Australian Bureau of Statistics, 62.8 per cent of Australians over the age of 18 are overweight or obese.

Currently, private health insurance in Australia is ‘community rated’, which means that everyone can buy the same insurance at the same price, and cannot have their policy renewal declined, regardless of their health, lifestyle and risk. This is different to life insurance, for which non-smokers get a discount.

Dr Michael Armitage, CEO of Private Healthcare Australia (which represents 21 health funds) gave both sides of the argument to ABC news radio, but he acknowledged its divisiveness.

“Perhaps we could investigate it, but everyone needs to understand that there’ll be some consequences,” he said.

So should we copy the US system and charge extra premiums for those who light up and eat poorly? Or would this put private health care further out of reach of those who need it most?

The New Daily has spoken to two of the most opinionated experts on this topic to help you decide.

newdaily_060514_obesityDr Steven Hambleton
President of the Australian Medical Association
His view? We shouldn’t charge more

Obesity and smoking represent enormous costs to our community, as does alcohol. Indeed, 50 per cent of those who use tobacco as the manufacturer intended will die from it, and will cost us a huge amount of money along the way.

But it is not really true that the premiums paid by all are forced up by the lifestyle choices of some, as the Commission of Audit suggests. That is a simplistic way of looking at the premium price.

It is also a simplistic view of personal choice. You’ve got to look at education levels, socio-demographics, and background. There are a lot of reasons why people smoke and can’t stop.

And sadly, obesity is definitely not always a personal choice. Obesity has many, many causes. It can be genetic. It can be to do with your mother’s gestational diabetes or her nutrition during the pregnancy. You could have been malnourished in utero. Low birth weight kids often bounce back and become obese children.

Obesity can also be influenced by housing, whether your father had a job, and the education levels of your family. You’ve also got to look at the environment, to say whether it was safe to walk to school, the density of fast food outlets around your neighbourhood, the cost of fresh food, and whether one or both parents were working and to what degree.

There are so many things that influence a person’s health outcomes. To penalise those people with health insurance means that insurance can become potentially unaffordable. 

We need to make health insurance affordable for everybody. This is the wrong place to be turning the dial. It’s a very short-term view of health in the community, which is why we don’t support it.

Mark Fitzgibbon
CEO of NIB Health Funds
His view? Smokers and the overweight should pay more

We would like to see community rating changed to allow us to reward people who, through their positive health behaviour, warrant rewarding.

Community rating is designed to protect people from being penalised for health conditions over which they have no control – principally age.

I don’t think those who first established community rating ever it to protect those who wilfully undertake activities which damage not only their own health but impose enormous cost on the broader insured population.

But the contemporary epidemic is obesity. Levels have doubled in our society in the last 20 years, so we like the idea of looking at ways of rewarding people for managing their weight.

Now, safeguards would need to be built in. Obviously there are some people who, through no fault of their own – it may be a genetic condition or some other chronic illness – are obese.

For example, as part of an application we might ask people for their BMI. If it’s abnormal, we might then say to them that this is suggesting that you wouldn’t be eligible for our discount, but if you can demonstrate to us that you’re actively seeking to manage your health, you have a letter from your GP, you’ve enrolled in a health program, then we’ll apply the discount.

We would never refuse to cover somebody who is a smoker or overweight. There is no risk of people being alienated from the system altogether. It is purely about encouraging better behaviour as part of a broader plan to improve health in the population.

Is it fair that the entire insured population, people who are trying to do the right thing, should automatically pick up those bills? We think not.

This is a debate we need to have.

What do you think? Should people who smoke or eat too much pay more? Leave your comment below.

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