Obesity As A Pre-Existing Condition

I think by now, the whole country knows about Alex Lange, the four month old Colorado baby who was denied health insurance by Rocky Mountain Health Plans because of his weight.  He’s 17 pounds, which puts him in the 99th percentile for weight – although he’s also near the top of the charts for height.  Alex is exclusively breast fed, and by all accounts is a very healthy baby.  Rocky Mountain Health Plans reversed their decision following a national outcry, and has established new underwriting guidelines for infants that don’t take obesity into account.

One of the major aspects of health care reform that has gained a lot of traction this year involves doing away with medical underwriting on individual health insurance policies, and would require health insurance carriers to accept all applicants, regardless of health history.  Obesity is considered a pre-existing condition by all of the individual health insurance carriers in Colorado.  Obviously applying these standards to a healthy, breastfeeding baby is ill advised, but I believe it makes sense for adults.

The guidelines are currently pretty lenient when it comes to weight.  Most carriers start to increase the premiums on their policies if an applicant has a BMI of around 30 – which is the cutoff for obesity, according to the CDC.  Being overweight, but not obese (BMI of 25 to 29.9) doesn’t result in a rate increase at all with many carriers.  So a 5’5″ female can weigh up to 180 pounds and still qualify for a standard rate with many of the individual health insurance carriers in Colorado, assuming she is a non-smoker and doesn’t have any other pre-existing conditions.

I’m curious to see what happens to underwriting regarding obesity and tobacco use as health care reform moves forward.  Both of these factors are known to increase health care costs.  They’re also factors that each person can control – not saying that it’s easy, but it can be done.  I can see the benefit to making sure that everyone gets accepted for health insurance, regardless of weight, as it’s counterproductive for society as a whole to have people who are uninsured.  But I believe that it makes sense for obese applicants, and tobacco users, to pay more for their health insurance in order to offset the higher claims they are statistically likely to have.

I’m curious to hear what our readers think about this topic.  Should obese applicants pay more for their health insurance than normal weight applicants?  What about smokers?  Does this amount to something akin to a regressive tax, since lower income people are more likely to be overweight, and also more likely to be smokers?  Should income then be taken into consideration when setting health insurance premiums?

Comments

  1. Obesity and diabetes is a growing problems nowadays. It is caused by todays lifestyle which does not involve lots amount of exercise. Most people are just happy sitting in their office chair and they do not even want to sweat.

  2. I would like to comment on this statement, “But I believe that it makes sense for obese applicants, and tobacco users, to pay more for their health insurance in order to offset the higher claims they are statistically likely to have.”
    Please note that my BMI is 42, I walk two miles a day, the only other health problem I have is asthma (which the specific medications I am on are what caused me to gain weight which has been hard to get rid of), I am a teacher (so I’m always on the go), I do not drink or smoke, my heart is fine, I have normal blood pressure, but I cannot get insurance because of my weight. I’m sorry I had to do something to save my life and may cost insurance more, in the future, but what should I have done differently?
    I think there needs to be different underwriting for people like me who are healthy, and have been obese for over 3 years. On top of that, I wouldn’t cost anything when it comes to being pregnant as I cannot have children. I don’t have a uterus. I understand that there should be higher premiums for people who are obese, but what about those of us who don’t have any other health problems associated with obesity?

  3. DC, you bring up some excellent points, including the issue about insurance costs for women who have had a hysterectomy or a tubal ligation. When it comes to obesity (and really, any other condition), underwriters are generally looking at the statistical likelihood that the applicant will need healthcare in the future. Obviously, any current conditions are taken into consideration too, but since the insurance would be paying for future health problems, they tend to focus on that. If an applicant already has condition xyz, the carrier knows with certainty that condition xyz could cause claims in the immediate future. But if the applicant has conditions that are deemed a precursor to condition xyz, the underwriters have to look at the likelihood that condition xyz might arise in the future. Obesity is one example. Many obese people do not currently have health conditions associated with obesity. And some of them will never develop those conditions. But a statistically significant percentage eventually will develop at least some of the conditions associated with obesity. So even if the applicant currently has no health conditions at all other than obesity, the obesity will be taken into consideration during underwriting because of the statistical likelihood that eventually it will cause other health conditions.

    If the PPACA stays intact through the next legislative session, all health insurance will be guaranteed issue as of January 2014, and pre-existing conditions (including obesity) will no longer prevent applicants from obtaining health insurance. If your school does not currently provide group health insurance (which is guaranteed issue and your weight should not be an issue), you could apply for CoverColorado or GettingUsCovered, assuming you’re here in Colorado. If not, you can look to see what your state’s high risk pool option is. The PPACA created pre-existing condition high risk pool coverage in all 50 states. Best of luck to you, and I hope you’re able to find coverage soon.

  4. Don Levit says:

    Louise:
    I can see how the mandate addresses the issue of adverse selection, in that it also covers pre-existing conditions.
    I am curious what dynamics you think may occur, once a person has an individual policy through the exchange.
    Does it not behoove him to check with the exchange every few years to see if he can get a better premium?
    What has he got to lose?
    More importantly, what do you think the insurers have to lose?
    Does the ability to switch insurers at will introduce adverse selection?
    Don Levit

  5. Don, I think it would absolutely be in an insured’s best interest to check in with the exchange every few years to see if he can obtain a better rate. Many of our clients do this already, although pre-existing conditions are of course an obstacle in the current individual market. Once that’s no longer an issue, my guess is that we’ll see less variation in price when it comes to individual policies. So although people will still likely shop around, they may find that similar policies with other carriers have prices that are similar to what they already have. There will be more standardization of coverage (not completely the same from one carrier to another, but rough guidelines for levels of coverage will apply to all carriers). Obviously we can’t know for sure what will happen, but that’s my guess.

    Once pre-existing conditions are no longer an issue, insurers will be left to compete for volume (rather than trying to limit their pool of insureds to the healthiest members of the population), as that will likely be their key to success. It will be interesting to see what the carriers do to distinguish themselves from their competitors in the exchanges.

    I’m not sure that adverse selection would result from the ability to switch carriers at will, since people would already have coverage with carrier A before switching to carrier B. They may gain some level of improved coverage and/or lower premiums by doing so, but not on the scale of going from uninsured to insured.
    What are your thoughts on all this?

  6. Don Levit says:

    Louise:
    I agree with you that the level of difference in premiums should not be as it is now.
    I wonder how the actual pricing would occur?
    For example, a 40 year old who has a policy for 3 years, does he get any kind of discount from his present carrier for his age 43 premium?
    Or, will the premiums be attained age only, so that a 43 year old just starting the policy with the insurer has the same premium as the 40 year old whose policy is 3 years old.
    The key here is “Will the insurers want to maintain their policyholders over the years,” or will they continue the churning, which is an expensive way to run a company, in my opinion.
    My comment is simply one that I have not seen in the mainstream press. People tend to think primarily of the initial coverage being mandated to avoid adverse selection.
    If an insured has a guaranteed-issued policy, it seems to me his primary reason to switch would be price.
    It seems to me like a game that will be played every 3 years or so, if enough pf a discount is available.. And, if true, the same old model will ensue.
    Don Levit

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