The dangerous gym membership

(Steve Helber - AP) It sounds like a great idea: Private insurance plans in the Medicare Advantage program offering gym memberships, a small investment that could curb health care costs among seniors. But what some see as innovation, others view as a stealth campaign to lure the healthiest seniors into the private plans while leaving Medicare with the worst risks.

In the New England Journal of Medicine, researchers Alicia Cooper and Amal Trevedi look at Medicare Advantage plans that added fitness club memberships to their benefit packages in the mid-2000s. They compare enrollees in those plans to other plans that didn’t add a gym membership and to the plan’s old membership before it started paying fitness club fees. The result? Medicare Advantage enrollees who sign up for a plan with a gym membership tend to be decently healthier.

We found that persons enrolling in plans after the addition of a fitness-membership benefit reported significantly better general health, fewer limitations in moderate activities, less difficulty walking, and higher PCS scores than did persons who enrolled in the same plan before the fitness benefit was added and in matched control plans that never offered a fitness benefit.

Even with important components in place to promote more balanced risk pools — standard benefits packages, risk-adjusted payment, and guaranteed coverage — some Medicare Advantage plans may engage in favorable selection by designing insurance benefits that selectively appeal to healthy persons.

A gym membership as a health insurance benefit is a bit of a double-edged sword. The benefits are pretty obvious: Access to a gym could keep enrollees healthier and curb chronic conditions, like heart disease and diabetes, that currently eat up about three-quarters of our health care costs.

But a gym membership — plus a good advertising campaign — can also be used as a risk selection tool. Think about who signs up for a Medicare Advantage plan with a fitness club membership: As the NEJM study shows, it’s probably the senior who is active, relatively healthy and has the ability to work out.

Where this could actually become most significant isn’t necessarily in Medicare Advantage, but under a Medicare reform plan like the one that Reps. Paul Ryan (R-Wisc.) and Sen. Ron Wyden (D-Ore.) proposed late last year, where seniors would get a set amount of money to shop for a Medicare plan, the government-run plan being one of their options.

It may also become relevant in the soon-to-launch health insurance exchanges. In those state-based marketplaces, insurance plans will have to cover a set of essential health benefits and except every applicant. But they do not face any limits on what they can cover. There’s nothing to stop an insurance plan, for example, from offering a gym membership or, if they want to get really aggressive, covering entry fees for marathons.

The health reform law does contemplate the issue; last year, Health and Human Services rolled out regulations that spelled out plans to use “risk adjustment” mechanisms to deal with “risk selection.” It gets pretty wonky, but the idea is to use certain regulatory measures to disincentivize plans from cherry picking healthier members.

Insurance plans will have to accept all applicants beginning in 2014, just as Medicare Advantage must take in all seniors over 65. But advertising a plan as the go-to health insurance source for marathoners could lure in a healthier subscriber base, disrupting the rest of the market place in the process.