Do the Overweight Pull Their Weight?
By Bryan Caplan
A result from Kate Bundorf that (a) I’d like to believe, (b) Seems logical in light of basic micro, but (c) Still strikes me as implausible:
Who pays the added costs associated with high rates of obesity? Most health insurance in America is purchased by employers, who negotiate a single rate to cover all of their employees. That might imply the employers (along with their slimmer workers) subsidize health expenditures on the obese. But Bundorf found otherwise. In the working paper “Incidence of the Healthcare Costs of Obesity,” published last year by the National Bureau of Economic Research, Bundorf and co-author Jay Bhattacharya, also a health economist at Stanford, compared the wages of obese and non-obese workers, taking into account whether or not the subjects had employer-sponsored health insurance.
They found that non-obese workers earn higher cash wages than their obese colleagues—but only in workplaces that offer health coverage. They concluded that employers are likely to be offering lower cash wages to obese workers to compensate for the higher cost of insuring them. In other words, the cost of being overweight is borne by the employee rather than the employer.
I’ve often argued that alcoholic workers internalize the cost of their reduced productivity, because employers soon see their poor performance and penalize them accordingly. And obviously, obesity is a lot easier to see than alcoholism. But are employers really clever enough to penalize the obese for driving up their firm’s insurance premiums?