However, the letter — written by Thomas Hutchinson, director of CMS's
Medicare Plan Policy Group — goes on to note that “even if we changed our
1987 position on obesity…this would have a very limited effect in light of
a subsequently enacted provisions [sic] contained in the Health Insurance
Portability and Accountability Act of 1996 (HIPAA).”

Why? Here's where it gets a little complicated. Most federally qualified
HMOs would be subject to the HIPAA provisions, which prohibit
discrimination against participants in “group market” health insurance
plans based on their health status. Most of the federal HMO members are
classified as members of “group market” plans. Thus, if CMS determined
obesity to be a “health status,” the HMOs wouldn't be able to charge higher
rates to their obese members, because this practice would violate the HIPAA
anti-discrimination provisions.

The only exceptions to this rule are members of “individual market” HMO
plans. The HIPAA provisions don't apply to these members, so if CMS
reversed its 1987 decision, obese individuals in that category would
arguably be the only ones subject to paying higher premiums, Hutchinson
said.

But Hutchinson also noted that the anti-discrimination provisions don't
prohibit insurers “from using premium discounts or rebates, or modifying
copayments and deductibles, ‘in return for adherence to programs of health
promotion and disease prevention.'” In other words, HMOs could offer lower
rates to those members who agreed to participate in bona fide wellness
programs, which would presumably include exercises designed to achieve or
maintain a healthy weight.

Banzhaf said the ruling “provides an important, immediate, and direct
financial incentive for the obese to lose weight, and finally permits
insurance companies to do what they have been hoping to do.”

“The decision could also impose true personal responsibility on those who
balloon health care costs for everyone,” Banzhaf added, arguing that each
obese person averages roughly $1,500/year in additional health care costs.
When you calculate that one in three adults is obese, “most non-obese
patients are forced to pay $500 a year more in insurance premiums each
year, or to receive $500 less in benefits under our current system,” he
said.