Moral Hazard or Morality for Health: An Ethical Debate on Insurance Coverage for the Obese

Abstract

Health insurance for individuals classified as obese is a topic of ethical debate given the rising costs of premiums and the pressures of an unstable health economy. Difficult questions arise relative to health insurance and coverage for obese populations. For instance, do the chronic disease claims, attributed to individuals classified as obese, cause an inequitable rise in the cost of healthcare to normal-weight populations? Facts indicate an increased cost of care for obese populations compared to normal-weight populations. Health insurance is a complex service industry with multiple stakeholders, which give rise to ethical uncertainty in fidelity, veracity, and social responsibility, especially since insurance is a business that must generate profit to sustain itself. It is important for health policy makers to consider variable ethical philosophies when designing legislation that guides health insurance coverage for populations classified as obese. Utilitarian and libertarian philosophies are used to compare viewpoints relative to health insurance policy for the obese in the United States. These philosophies contrast the “good for all” versus the “right of the individual” in ethical decision making for health policy. The context of health insurance as a foundation for moral debate health about healthcare of obese populations is presented and debated herein.

Introduction

A social dilemma looms like a storm cloud above healthcare regarding the ethical role of the insurance industry in health promotion and its relationship to healthcare coverage for individuals classified as obese. It is not new that a major issue for most underinsured or uninsured obese is the lack of affordable cost of insurance coverage based on socioeconomic factors: income, formal education, race, and employment status.¹ Yet even the insured who are classified as obese now face higher premiums, rates, and co-pays because of their noted risk status.^2,3 The very nature of the insurance industry creates a moral conflict in this debate, as most insurance companies are for-profit entities and must answer to shareholders when profits are counted. Still, there is variability in types of insurance business models, relating to how they reinvest profits, and thus partially representing moral drivers within the organization. Reinvestment in risk reduction allows many insurance companies to assist populations for whom they provide health coverage, with programs geared to helping clients maintain good health behaviors and reach healthy weight targets. This article describes the ethical debates centered on insurance and the policies that frame the current health system in relation to populations classified as obese.

Defining Health Insurance and Current Policy Debates

Ethical conflicts can occur in situations of uncertainty. Such uncertainty, in matters of healthcare, can depend on the values espoused by individuals, populations, and organizations.⁴ Intentional ethical reasoning assists in identification of the ethical issues, and helps to provide a process to resolve competing moral values. The uncertainty for the debate relative to health insurance and obesity arises on several ethical levels.⁵ For the individual who is obese, values relative to autonomy, personal responsibility, and social accountability arise to present a conflicting issue with society based on personal health status and its cost.⁵ For the insurance company, values relative to primary fiduciary duty or responsibility, beneficence or non-malfeasance of action, fidelity (faithfulness), and veracity (truth) must encompass both the population insured, the companies sharing premium costs, the governing entities to which they are bound, and the healthcare provider who is the end payee. In addition, Accountable Care Organizations (ACOs) are a group of individual or facility providers and payers who are responsible for the healthcare of a defined population. They represent yet another stakeholder. The very nature of such a complex network complicates the balance of social justice, whether insurance coverage is privately or publicly funded.⁶

It is essential to define the premise by which health insurance operates to understand fully the ethical uncertainty in relationship to coverage for individuals/populations classified as obese. Health insurance, as with most insurance, is based on a communitarian approach to coverage for healthcare cost because decisions benefit the community of stakeholders through actuarial risk reduction.⁷ In an oversimplified explanation, actuarial cost of accounting is the mechanism by which the actual cost of care for any given individual or population is spread over time and in a form of distributive justice. However, the ultimate goal and central social responsibility of any business entity is to maximize profits, and even nonprofit insurance enterprises must work to sustain their practice over time. Thus insurance takes a different philosophical and theoretical approach to healthcare costs than do healthcare providers: while the former is based on transactional cost theory, agency theory, or resource-based theory, the latter is generally based more on human caring theory. These philosophical and theoretical ideals contrast, at times creating stark conflicts for debate.

It is to be acknowledged that insurance companies and insurance underwriters operate under a code of ethics that address fidelity and veracity to the public, and that professional healthcare organizations have been vital to providing guidance to ethical business principles of health insurers.⁸ Further, provisions of the Patient Protection and Affordable Care Act (PPACA) impose ethical obligations on health insurers and group health plans whose protection extends to that of individuals classified as obese.⁸ These protections, along with insurance laws, have resulted in major fines when the insurance companies failed to uphold the ethical public trust monitored by state and federal law.⁸ The moral debate between insurability and the population of individuals classified as obese begins by defining the national status of obesity as a condition of illness.

National and State Obesity Status

Overweight is defined as an excessive amount of body tissue that may come from muscles, bone, adipose tissue, and water. Obesity specifically refers to an excessive amount of adipose tissue. Nationally, 68% of all adults exceed a body mass index of 25. In the United States, 64% of women exceed standard body mass index (BMI) and 72% of men exceed BMI. Nationally, 33% of all adults have a body mass index of greater than 30. In addition, 35% of women and 32% of men in the US exceed a BMI greater than or equal to thirty.⁹

Medicare pays $1,723 more for those individuals classified as over normal weight than it pays for normal-weight beneficiaries. Medicaid pays $1,021 more for over normal weight than it pays for normal-weight beneficiaries. Private insurers pay $1,140 more for over normal weight than they pay for normal-weight beneficiaries. Additionally, by service, Medicare pays $95 more for an inpatient service, $693 for a non-inpatient service, and $608 more for prescription drugs in comparison with normal-weight patients. Medicare pays $213 more for an inpatient service, $175 more for non-inpatient service, and $230 more for prescription drugs in comparison with normal-weight patients. Private insurers pay $443 more for an inpatient service, $398 more for non-inpatient service, and $284 for prescription drugs in comparison with normal-weight patients.⁹

As an example, the obesity epidemic is well documented in the state of North Carolina, where adults and children are classified as some of the heaviest in the country. In 2007, 65% of adults in North Carolina were overweight or obese. Thirty-three percent of North Carolina children were obese in 2009, and children born since 2000 have been predicted to be the first generation of North Carolinians to have shorter life spans than their parents. It is also predicted that one in three of these children will develop diabetes, and even more dire, one-half of obese children who are African American are expected to develop diabetes. Having an obese mother predisposes one to a lifetime of obesity, and health research has generated models that can predict, by the age of 3.5 years, who will live a lifetime as an obese individual absent lifestyle changes instituted by the family.¹⁰

Obesity can lead to a lifetime of illness due to the development of health conditions such as diabetes, stroke, heart attack, and some forms of cancer. Public-health experts routinely address obesity-related chronic disease processes and risk factors such as coronary artery disease (CAD), hyperlipidemia (HLD), type two diabetes mellitus (T2DM), hypertension (HTN), cerebrovascular accidents (CVA), nonalcoholic fatty liver disease, gallbladder disease, osteoarthritis or degeneration of cartilage and bone joints, sleep apnea and other breathing problems, breast, colorectal, endometrial and kidney cancer, complications of pregnancy, and menstrual irregularities.⁹ Hence, the relationship between obesity and chronic disease is well established and reflects a higher rate of actuarial risk to insurance companies and a higher cost to the healthcare system.^2,3

Moral Action for Health: Insurance Programming to Reduce Risk

Employers, health plans, and state and federal government agencies have a vested interest in preventing obesity, as well as helping individuals who have developed chronic conditions as a result of their weight. Government payments for healthcare through the Medicare and Medicaid programs pays for about 30% of total healthcare cost in the United States.

All major health plans, large employers, and even the federal government have programs to help their insured members or employees improve and manage their health. The Johnson and Johnson Company saved $250 million during the previous decade by having employees participate in programs to improve their health.¹¹ The most effective programs are those that help individuals to change their lifestyle to more healthful ones. Such programs focus on risk reduction in the population including those associated with weight control.

Programs to help individuals improve their health are based on years of research that documents the benefits of making lifestyle changes to prevent, or improve the management of, chronic health conditions. The Diabetes Prevention Program (DPP), a 10-year study funded by the CDC, found that lifestyle changes amounting to 150 minutes of weekly physical activity and moderate dietary improvement prevented development of T2DM in 58% of at-risk individuals over a 3-year period.¹⁰ Currently, through the Department of Health and Human Services, $119 billion is being provided to healthcare institutions to help individuals improve their health by making lifestyle changes, to be more active, and to eat a healthful diet that aids in weight management.¹¹

What are the programs that assist individuals classified as overweight or obese (high risk for chronic disease), and how are people identified for them? Although they vary in scope and intensity, all major health plans offer case management and disease management programs to identify those at risk for chronic conditions and to help those who have chronic conditions improve their self-management.¹² A majority of Americans have health insurance plans provided by their employers and either the employer or the employee choose the level of these services based on premium fees. Citizens who have Medicaid coverage actually have case and disease management provided through primary-care physician practices designated as the Medical Homes.^13,14 A Medical Home is a medical practice that is responsible for care and coordination of all of the care for the individuals who are patients of the practice. The medical practices that serve as Medical Homes for Medicaid recipients often have case managers to assist the physicians in coordinating the care for individuals with certain chronic health conditions such as diabetes and heart disease. The case managers review the medical records of these patients, meet with them when they come in for appointments, talk with them over the telephone, and sometimes even make home visits. These efforts assure that the care plans and physician orders for the individuals actually are carried out to provide cost-effective, quality care.^13,14

Health plans offer wellness programs to their insured individuals, to provide primary prevention of chronic health problems by helping clients increase physical activity, manage stress, eat more healthfully, and learn their risk of chronic health conditions, all of which contribute to weigh management.¹⁵ Enrollment in designated health programs is often based on a health risk assessment (HRA) process, most often a questionnaire used to determine an individual's risk for specific chronic or acute health conditions. HRAs are used to determine whether an individual can benefit from a specific education program or intervention to learn self-management of the disease condition. Often, online health risk assessment questionnaires are provided by the insurer to assist individuals in knowing what conditions they are most at risk for and what one can do to mitigate those risks. This is in addition to programs to improve prenatal care and thus have healthier children from birth, an early predictor of weight management in children.

Insurance companies then use claims data to identify those who could benefit from case management and disease management programs. In most cases, these services are provided through confidential telephone conversations, but can be online via e-mail, live chat, reminders by cell phone, or by other means. Case managers generally work to assess the individual during an acute or catastrophic health situation, but also work with individuals who have chronic health conditions that are complex in nature. They help clients find the services they need within the framework of quality cost effective care working with the individuals, their families, physicians, and employers, which reduces the actuarial cost to the company.

Disease management programs such as UnitedHealth's “Health in Numbers” give persons with chronic health problems information, education, and assistance to self-manage their conditions.¹¹ The relationship between such chronic conditions and weight status was established earlier. Programs vary from health plan to health plan, and they vary in accordance with employer preference, but they can include online coaching, mailings, telephone coaching, worksite classes, and face-to-face coaching at the primary care physician's office or the worksite. Improved self-management of chronic health problems helps prevent development of complications and improves the quality of the individual's life. Employers benefit by having decreased absenteeism, presenteeism (being physically present but not working at one's capacity owing to health issues), and decreased cost of employee health claims.^16,17

Thus there is mutuality in benefit—in terms of health for the individual classified as obese, in terms of human resource and economic management for the employer, and in terms of actuarial realities and social responsibility for the insurance company and its stakeholders.

Utilitarian Approach to Insurance Coverage and Social Justice for Obese Populations

In consideration of a utilitarian perspective of those classified as obese, reasoning embraces the classic notion of “bringing about the greatest good for all.”¹⁸ In order to frame the utilitarian approach, the following questions are posed: (1) What exactly does this perspective mean as a public-health issue and social condition? (2) What are the ethical considerations in the matter of “those who can control their weight” versus “those who cannot control their weight?” and (3) What are the implications and decisions for addressing obesity on a grand scale with its inherent greater morbidity and mortality on an already-strapped health system?

Profound implications arise for individuals classified as obese in terms of consequences produced when they confront “the right thing to do.”¹⁸ Consider the treatment of those who can control their weight and the treatment of those who cannot. Multiple ethical viewpoints can be used to examine the individuals suffering from obesity, including the principle of each person's right to individual self-determination, or a purist utilitarian point of view.¹⁹ With two thirds of the country overweight/obese, at what point do we induce or seek to constrain individual behavior to conform to societal standards? Historically, we have used retrospective studies and research to identify risk factors as they relate to weight level and chronic disease and to establish data sets to equate the merit in the balance among behaviors related to eating, nutrition, and exercise as a form of weight management for improved health status.

However, there are socioeconomic and ethnic groups at higher risk for obesity. Age-adjusted obesity with body mass index is higher in African American and Hispanic women than Caucasian women.⁹ These groups show a genetic predisposition toward obesity as they age, with more than two thirds of U.S. adults in these groups overweight or obese, and more than one third obese, according to the National Health and Nutrition Examination Survey (NHANES) 2003–2006 and 2007–2008.⁹

In a debate using utilitarianism, everyone's happiness is impartially considered; no one's particular interest is weighted or impartially biased.¹⁸ Given that, who sets the needle on the moral compass? Does the employer, who negotiates and pays the majority of the health insurance premium? Does the third-party payer, who provides the care…or the individual, who consumes the benefit and provides the co-payment? The real question resides in the point of tolerance in the measurement of obesity. The fulcrum is a question of power: who has the authority to determine “who pays” versus “who does not pay” in the matrix of health conditions? All have a vested interest in the consequences of obesity on public health.¹⁸

The moral implications include individual decision making with the known consequences of “will” versus “free choice” in what is available and what is not. Many third-party payers encourage formal physical activity and exercise with incentives. According to the literature, only about 31% of adults in the United States engage in routine physical activity, defined as three sessions per week of vigorous physical activity lasting 20 minutes or more, or five sessions per week.⁹ Obviously, two thirds of the population may not voice their lifestyle decisions; it is likely they are not engaged in active exercise, given the preponderance of obesity-related chronic health conditions. It would seem reasonable that increased availability and access to healthy foods, with opportunity for improved physical activity, would improve that percentage. This approach has its own success stories.

The Bladen County School system in North Carolina found one solution for their 17 public schools. With so many of the children living in that county being underserved, one of those schools (Dublin Primary School) obtained an efficacious $17,000 United States Department of Agriculture grant in the fall of 2011 for raw, healthy fruits and vegetables to be offered three times weekly to children in grades prekindergarten through fourth grade. This program to promote healthy behavior to control weight status has proven a resounding success. The winning food, according to the school principal, proved to be fresh plumcots, with raw celery bringing up the rear.²⁰ This consensus was derived from a sample of children who might not otherwise have the family resources to purchase plumcots. When not in the classroom, a 9-year-old demonstrates that he can point out the number of fat grams in the nutrition content on food packaging. Such behavior on the part of the child influences family decisions in the grocery store. So healthy-food programs are changing behaviors in ways that influence weight status, one grade-school student at a time.

It is imperative that this generation stop the obesity epidemic one individual at a time in the learning years. The public-health migration into the schools and classrooms has proven beneficial on an individual level, with increased emphasis on physical exercise, nutritious seasonal foods, and teaching of sound health principles. In summary, it is a societal responsibility to teach the next generation the consequences of caring for their bodies, and the relationship between weight and health, both present and future. Failure to adhere to health management as it relates to weight economics means we all pay.

Libertarian Approach to Insurance Coverage and Moral Hazard in Obese Populations

A libertarian approach to the conflict posed between the individual classified as obese and health insurers sees the individual is a moral agent, responsible to act in his or her own interest, as controller of his/her own body and life, without interference from others.^21,22 One caveat to this high level of autonomy is the following ethical provision, the natural law that we not violate the rights of others when acting in a self-determinate manner.²³ The conflict is heightened when agents such as government policies or insurance companies set restrictions to benefits based on one's weight status. The libertarian social viewpoint opposes policies and practices that restrict individual rights.^21,22 However, the question arises of whether the libertarian right to refuse insurance coverage necessarily poses a higher risk than the health insurance itself does. Would health insurance necessarily lead to improved health behaviors for those individuals classified as obese? Perhaps a closer examination is in order to make a clear determination of the value place on health insurance.

It is a libertarian right to refuse health insurance and associated premiums, and embedded in such rationale is the libertarian notion of moral hazard. Moral hazard is defined in the literature as a means by which the self-protective activity to purchase pooled insurance acts as a disincentive to improved health behaviors. For individuals over established weight-to-height standards, this means that they may fail to engage in programs to monitor and reduce weight.¹⁹ Moral hazard then contraindicates thought that health insurance is a form of distributive resource allocation promoting health outcomes to the benefit of the obese. Research has demonstrated that health insurance can often entice obese individuals to engage in behaviors that they would not otherwise because they know that coverage for healthcare is available.²⁴ So, the libertarian idea is that health policies requiring the purchase of insurance should not be imposed, as they bring negative consequences to individual autonomy, and even show evidence that mandated insurance coverage supports risky behaviors.

Another form of moral hazard bears out when insured individuals classified as obese use healthcare services excessively because the coverage is perceived as a right, not a privilege of attendant costs to all stakeholders.^5,24 However, this moral hazard assumption does not take into account that those who are obese pay higher premiums and co-pays for health insurance and they pay external costs such as tax contributions, nor does it account for the cost of risky health behaviors of normal-weight individuals, which provides equity in costs risks.¹⁹ It would appear that the most significant example of obesity increasing costs to others is when the obese are uninsured, but then all uninsured weight populations would contribute in some measure to that cost increase.^26,27

Social Dilemma: Insurance Duality as Morality for Health and Moral Hazard

The authors have attempted to present a sound ethical argument supporting the debate of whether health insurance for obese individuals serves as a moral means for securing health or as an avenue of moral hazard. The use of utilitarian and libertarian ethics served as the foundation of the debate to draw attention to the potential philosophical conflicts that arise when measuring the uncertainty of action needed to be taken by policy makers. Each approach should be used, and each carefully weighted, during the decision-making process leading to healthcare policies for obese populations.

The utilitarian approach brings potential consequences of neglect of the rights of the individual and of obese populations, who are a disadvantaged group with complex health conditions. Further, the utilitarian view does not acknowledge that the presence of high chronic disease rates attributed to obese populations stimulates innovation in research funding, healthcare, and treatment modalities resulting in new pharmaceuticals and other products that are mutually beneficial to all with chronic disease regardless of weight status.¹⁹ Thus there is a balance in positive external cost accountability from technological innovation relative to increases in health insurance premiums, creating beneficence to or at best providing nonmaleficence to normal-weight populations.¹⁹

In contrast, the libertarian approach poses consequences relative to overemphasis on individual rights, often to the detriment of responsibility to self and accountability to others. Individual decisions that fail to acknowledge the impact of personal actions to others counters the natural law to not violate the rights of others. Further, evidence notes that moral hazard may reduce societal focus on prevention programs needed to improve health status of populations with obesity.²⁵

The conclusion is that health insurance policy makers need to consider both ethical approaches when making decisions. It is not an either-or process. Rather, it is an ethical process of measured thought taking into account the beneficence and non-malfeasance of policy directed to serve obese populations while also serving those normal-weight individuals who share in the risks of rising health insurance premiums based on actuarial factors.²⁸ Further, policies that have been developed, such as the Patient Protection and Affordable Care Act, and other measures already offer some protections against health insurance companies, helping keep health organizations accountable, and monitoring healthcare system entities whose social responsibility is focused on profitability. While these entities have distinct codes of ethics, monitoring their actions through application of the law is of mutual benefit to obese and normal-weight populations. Vital to the establishment of public policy surrounding health insurance is the pursuit of ethical debate on how policy impacts populations classified as obese and how it affects the normal-weight as well.²⁸ Ultimately, benefits could potentially be realized through provision of accessible healthcare apart from weight status or status relative to insurability, whether health insurance is private or public, if there is an effort to reduce cost and decrease the rate of uninsured.²⁹

Footnotes

Disclosure Statement

No competing financial interests exist. C. Chapman is an employee of a nationally recognized insurance agency.

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