US employers pass on high health insurance costs to overweight staff

Many overweight US workers are paid less than slimmer counterparts in the same jobs to cover the cost of health insurance, according to research.

As the price of health insurance has risen, the shortfall in wages for obese workers had more than tripled over the nine years to 1998, from $1 an hour to $3.40, a report by Jay Bhattacharya and M Kate Bundorf of the National Bureau of Economic Research reveals.

“Even if employers nominally pay for health insurance premiums, it is really employees who bear the cost of employer-sponsored insurance,” the authors wrote.

Since insurance firms tend to penalise the obese by charging higher premiums, businesses tend to adjust by depressing their wages.

“We find that the incremental healthcare costs associated with obesity are passed on to obese workers with employer-sponsored health insurance in the form of lower cash wages,” the paper says.

However, the research shows that those whose employers were not bank-rolling their health insurance were not underpaid relative to slim colleagues.

“There are virtually no wage differences between obese and non-obese among those who receive coverage from sources other than their employer,” it said.

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