Shedding excess weight: Medicare's decision to consider obesity an illness could mean cost savings for insurers--eventually.

Life has changed significantly for 54-year-old Sherry Huff of Texas since her elective bariatric surgery last year. After losing more than 100 pounds following the procedure, she's not only improved her health, but also eliminated her daily medications and saved a significant amount of money on mounting healthcare costs.

Bariatric surgery, also known as gastric bypass surgery, uses different techniques to reduce the size of the stomach and intestines and limit how much food a person can eat. With celebrities such as pop singer Carnie Wilson and TV reporter AI Roker touting success from their own experience with the surgery, it's become well known over the past several years.

The surgery has helped Huff become more mobile and eliminate pain from walking. In addition, she noticed an immediate reduction in her health-care costs; she was able to discontinue the 14 pills and three insulin shots she took daily to control her high blood pressure, high cholesterol, diabetes and other ailments. Huff's out-of-pocket medication costs totaled $500 a month, and her insurer faced another $1,000 in monthly expenses. Six months after the surgery, her only remaining health condition is asthma, which she says is now under control.

Bariatric surgery is one of the many ways that millions of Americans are trying to lose weight. The U.S. government also is trying to shed the pounds on the increasing number of Americans becoming overweight or obese. In the summer of 2004, the U.S. Department of Health and Human Services announced that Medicare would add obesity to its list of covered illnesses.

Examining Evidence

Under the new policy, the Centers for Medicare and Medicaid Services will review scientific evidence to determine which drugs and interventions improve health outcomes for obesity. As many as 25 million Americans are estimated to be eligible for the entitlement at a potential cost of billions of dollars. Obesity treatments that may be considered under the new policy include diet plans, weight-loss medication, use of dietitians and gastric bypass surgery.

Some health plans doubt that the policy's new language will have an immediate major impact on the health insurance industry, but they believe the benefits will afford them added savings long term. Treatments, for instance, could prevent costly surgeries.

Dr. Sam Ho, senior vice president and chief medical officer for PacifiCare, said that by recognizing obesity as an illness, Medicare is treating it as a disease or not excluding it as a nondisease. "So, they may now have a stronger basis to, in fact, deny coverage of other treatments or diagnostic testing, and we think that's good because it's the ability to take obesity and treat it as an illness, disease or condition and apply the same rigorous review of technologies, devices, procedures, medications and treatment options as provided in other conditions, which presents a more objective basis for determination of coverage," he said.

Others are skeptical. John Maginnis, vice president of marketing and creative services for Blue Cross and Blue Shield of Louisiana, calls the HHS announcement "vague" because there is no general agreement on the classification of obesity as an illness. "No clarification has been made as to how this slight change will affect Medicare's coverage and payment policies, if at all," he said. When the Louisiana Blues plan does review Medicare's policies as a reference, he added, it will make independent decisions on coverage and payment. "At this point, there isn't enough information to support a major change in coverage for obesity as a disease."

Under the new policy, if an obesity treatment could be proved to improve the health of a Medicare recipient, it would be covered, according to HHS Secretary Tommy Thompson. Many insurers say they will follow Medicare's lead. Currently, many health plans rely on evidence-based medicine to determine which procedures and treatments related to weight loss are covered.

"It's interesting that Medicare is adding the language because I'm beginning to see a trend in commercial insurance away from coverage of obesity surgery," said Dr. Roy Arnold, corporate medical director for Blue Cross and Blue Shield of Montana. The company covers obesity surgery for select groups of self-insured clients, and it's excluded for its fully insured business. "I don't think Medicare beginning to recognize obesity as a disease and perhaps even covering surgery is going to have much impact on changing that for us," Arnold said.

While Medicare generally drives the private sector when it comes to coverage, it's been the reverse for weight-related health problems, as Medicare has lagged behind in recognizing obesity as an illness, said Mohit Ghose, a spokesman for America's Health Insurance Plans. "Regardless of whether or not obesity is a disease, health insurance plans have had a variety of interventions available for a while." For years, private insurers have been developing and covering wellness programs, nutritional counseling programs and other initiatives aimed at preventing and reducing weight-related health problems. "In this case, the private sector has been ahead," he said.

Defining the Problem

Obesity is reaching epidemic proportions. Approximately 127 million U.S. adults are overweight, 60 million are obese and 9 million are severely obese. Obesity, which is generally defined as being at least 30 pounds heavier than one's ideal weight, is linked to numerous health ailments, including heart disease, diabetes, stroke, asthma, certain types of cancer, gallbladder disease and premature death. Many public health leaders recognize obesity as a neglected public health problem. Overweight individuals have a body mass index--a measurement tool used to determine excess body weight--of 25 or more. Those who are obese have a BMI of 30 or more, and severe obesity is indicated by a BMI of 40 or more. Using the BMI formula, a 5'10" tall man would be overweight at 175 pounds and obese at 210.

Increasingly, Americans are acknowledging responsibility for their weight. A Time/ABC News poll found that 87% of respondents agreed the primary responsibility for obesity rested with the obese person. An Associated Press poll found that 75% of overweight participants blamed themselves for their situation.

But that's not always the case. "There's a paradigm among nonmedical folks, particularly in some segments of the insurance industry, that obesity is a self-inflicted disease and ought to be managed by patients themselves," said Montana Blues' Arnold. "As a physician, I understand there are certain individuals that once they become significantly obese aren't physiologically capable of losing weight."

Evidence shows that obesity is taking a big chunk out of taxpayers' pockets, and government officials are increasingly focusing on the issue.

Senate Majority Leader Bill Frist, R-Tenn., said, in a speech before the National Press Club in July, that obesity is "epidemic" and called for addressing it in his six-point plan to overhaul the U.S. health-care system.

Obesity-related costs are growing. Obesity is responsible for at least 300,000 deaths per year and costs of around $75 billion in 2003, or approximately $350 per year for every American adult. The cost in death, disability and lost productivity due to obesity has come close to rivaling that of tobacco, which is reportedly responsible for 440,000 deaths per year in the United States and costs more than $75 billion in direct medical costs, according to Dr. Mike Magee, a correspondent for Health Politics, a weekly, Internet-based news program on health care and government policy.

A study by the nonprofit research organization Rand Corp. found that obese people spend 36% more on health services than people of normal weight, with Medicare and Medicaid bearing a large proportion of the costs. In addition, obese Americans spend 77% more on medications than those of normal weight, according to the study.

Providing Cover

Many insurers already cover a variety of weight-related procedures, services and medications, including gastric bypass surgery, weight-loss programs and other treatments. In fact, 18% of plans cover exercise counseling and/or cardiovascular fitness programs as a basic benefit and 67% of plans provide exercise counseling and/or cardiovascular fitness programs through a vendor and/or discount network, according to a 2002 America's Health Insurance Plans survey. Also, 76% of health insurance plans provide access to health/fitness centers through a vendor and/or discount network, according to the study.

Some plans, however, have elected not to cover certain options. PacifiCare, for instance, doesn't cover some anti-obesity medications because research has found only very minimal weight loss after six months, said Ho. "The issue of obesity is a lifestyle issue--reeducating and changing people's behavior to eat less and exercise more, which is harder than taking a pill or listening to the latest fad," he said.

Medicare announced that bariatric surgery will be its initial focus, rather than diet pills and behavior-modification therapies. Currently, Medicare covers gastric bypass and other obesity surgeries only if the patient has another obesity-related illness such as diabetes or heart disease. The procedure costs approximately $30,000 per patient.

The American Society for Bariatric Surgery estimates 140,600 bariatric procedures will be performed in the nation this year, more than eight times the 16,200 procedures 10 years ago. But some industry experts wonder whether Medicare's policy change will prompt a rise in individuals seeking gastric bypass surgery.

"I believe it may," said Dr. Robert Nierman, medical director for clinical coverage for Boston-based Tufts Health Plan. While Nierman said morbid obesity isn't prevalent among the Medicare population, he believes more beneficiaries will begin to express interest in the procedure because the surgery hasn't been covered in the past. "However, with increased age comes increased risk, even without obesity, so Medicare may want to tighten how it puts the coverage out to avoid higher complication rates," he said.

Tufts Health is among several insurers that currently cover gastric bypass surgery for those patients in which the surgery is deemed medically necessary. The health plan covers approximately 400 surgeries a year, and demand among its members continues to rise, Nierman said.

Gastric bypass's inconclusive safety and efficacy results, however, are making some health plans more skeptical. Louisville, Ky.-based Humana Inc. stopped covering the surgery in September 2003 for that reason. Research shows that one in every 100 to 300 patients die from complications from bariatric surgery and another 10% to 20% experience surgery-related medical problems.

"One of the issues with gastric bypass surgery is the scientific evidence on outcomes is mixed," said Mary Sellers, a spokeswoman for Humana. "If a person doesn't have adequate information and education about these surgeries and what is required of them to modify their behavior in order to have a successful outcome for the long term, the results may not be what they expect them to be."

Key Points

* The U.S. Department of Health and Human Services recently announced that Medicare would add obesity to its list of covered illnesses.

* A Rand Corp. study found that obese people spend 36% more on health services than people of normal weight. A large proportion of those costs are borne by Medicare and Medicaid.

* Gastric bypass (bariatric) surgery will be Medicare's initial focus, rather than diet pills and behavior-modification therapies.

Learn More

Blue Cross and Blue Shield of Montana

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Humana Health Plan Inc.

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PacifiCare Life and Health Insurance Co.

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Tufts Associated Health Plans Inc.

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UNICARE Health Plans of Texas

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For ratings and other financial strength information about these companies, visit www.ambest.com.

A Closer Look at Obesity

* More than half of U.S. adults are overweight and nearly one-third are obese

* Obesity is the second leading cause of unnecessary deaths, causing at least 300,000 deaths in the United States each year.

* Annual health-care costs from obesity are about $100 billion.

* Obesity is more damaging to health than smoking, high levels of alcohol drinking and poverty, and it affects all major bodily systems--heart, lungs, muscles and bones.

* Researchers have associated obesity with more than 30 medical conditions, and many agree that it's strongly related to at least 15 of those conditions. Overweight and obese individuals are at increased risk for such physical ailments as high blood, coronary heart disease, stroke, osteoarthritis, pregnancy complications and gallstones 

* Obesity is increasing globally, with currently more than 300 million obese adults around the world.

* African Americans and Hispanic Americans have higher rates of overweight and obesity than Caucasian Americans.

* Nearly 62% of American women are overweight and about 34% are obese.

* Obesity has increased across all education levels and is higher among less educated people.

Source: American Obesity Association, Rand, World Health Organization

RELATED ARTICLE: Surgery for weight loss.

Roux-en-Y gastric bypass, one of the most common procedures that can be used to cause significant weight loss in obese persons, involves creating a stomach pouch of a small portion of the stomach and attaching it directly to the small intestine, bypassing a large portion of the stomach and duodenum.

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Source: MedlinePlus, a service of the U.S. National Library of Medicine and the National Institutes of Health