Gym membership coverage: A potential double-edged sword for the insurance market

MedicareSome private insurers participating in the Medicare Advantage program have begun offering gym memberships as a way to encourage older consumers to stay healthy and active. While many consider this to be good news, others say that the practice is a double-edged sword. Inclusion of gym memberships may signal that insurers are attempting to procure the healthiest individuals while leaving the high-risk policies in the hands of the Medicare program.

This practice may have an impact on how health insurance exchanges. These state-run insurance programs will provide limitless coverage to consumers. Insurers participating in exchanges may choose to adopt gym memberships, drawing more healthy consumers away from the Medicare Advantage program. If the program is left with only high-risk policyholders, it may begin to hemorrhage money at a rapid pace. If this is the case, insurers will look to raise rates for the people left in the program, which could make policies unaffordable to those that need coverage.

As gym membership coverage becomes more popular in the health insurance industry, the practice is likely to have profound, if understated, consequences for the insurance market. In December of last year, the Department of Health and Human Services introduced new regulations that would help mitigate the potentially negative effects the practice would have on the market as a whole. The total impact will not be wholly known until 2014, when new health insurance regulations take effect.

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