Thursday, September 10, 2009

Food for thought on health care reform

Michael Pollan, UC-Berkeley prof and best-selling author, has an interesting op-ed in today's NYT "Big Food vs. Big Insurance." Pollan points out if insurers are forced to accept all customers, they will have incentives to deal with indivdual behaviors such as overeating and smoking directly.

The moment these new rules take effect, health insurance companies will promptly discover they have a powerful interest in reducing rates of obesity and chronic diseases linked to diet. A patient with Type 2 diabetes incurs additional health care costs of more than $6,600 a year; over a lifetime, that can come to more than $400,000. Insurers will quickly figure out that every case of Type 2 diabetes they can prevent adds $400,000 to their bottom line. Suddenly, every can of soda or Happy Meal or chicken nugget on a school lunch menu will look like a threat to future profits.
Pollan makes some speculative arguments about how this would play out, focusing mainly on soft drinks, school lunches, and fast food. Question for my MBA 505 students: how could economic incentives be used to discourage obesity?


  1. Given that the average age of onset of Type 2 diabetes is in the mid-forties, $6,600 a year is not going to amount to $400,000 for a lifetime unless the average person with T2D lives to be over a hundred.

    Also, I'm all for people having healthier and more earth-friendly eating habits (not to mention transportation, etc.), and I think if we did so average weights might go down, but I think it's pretty unscientific to make obesity the one-word summing-up of what crummy eating habits may lead to. The reality's far more complicated.

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