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Tax Those Who Don't Exercise?

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Did you know? The lack of exercise by others increases your health-care premiums more than their lack of insurance coverage costs them!

If taxing healthy people who don't buy health insurance makes sense because their inactivity makes coverage more expensive for others, then it would seem that taxing unhealthy people who do not exercise makes even more sense, though I recommend neither.

In order to control its own health-care costs, the grocery chain Safeway studied health care, as described in an earlier post. It estimated that

• 70% of healthcare costs are driven by behavior;
• four chronic conditions comprise 74% of health-care costs; and
• obesity is a driving factor in all four chronic conditions.

Taken together, this means the biggest driver of health-care costs is obesity -- a largely reversible and in many cases behavioral condition! Safeway estimates that applying incentives to health care would result in dramatically lower health-care costs and healthier citizens. The incentives they were contemplating were not to get off the couch and buy health insurance, but rather to get off the couch and engage in healthy behavior, such as eating right and exercising.

For most people, their weight can be addressed by taking in 1,750 fewer calories per week, 250 fewer calories per day, or by burning off the same amount through exercise. This can be achieved by substituting a handful of raisins for one of candy; by eating one fewer chocolate cookie; or by pacing for an hour while on the phone, six days a week.

I am a believer that you catch more flies with honey than with vinegar. You more effectively change behavior through incentives than with penalties such as selective taxes. If we are looking for an incentivizing activity that would lower the cost of coverage for everyone, then we should discourage smoking, encourage exercise, and promote eating more fruits and vegetables and fewer bacon double-cheeseburgers. This seems like the most effective path to dramatically reducing health-care costs while improving the healthiness of the overall population.

Rather than taxing individuals, let's encourage states to experiment with such incentives and give them the flexibility to be creative. We should also encourage all governments to learn from the insights companies have gained in their efforts to encourage healthy behavior by their employees. After all, the American Dream was not built on targeted taxes, but rather on people being rewarded for the results of their own efforts.

Mark R. Kennedy leads George Washington University's Graduate School of Political Management and is Chairman of the Economic Club of Minnesota. He previously served three terms in the U.S. House of Representatives and was Senior Vice President and Treasurer of Federated Department Stores (now Macy's).