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Should People Be Penalized For Their Unhealthy Habits?

by J. Money on Tuesday, June 8, 2010

Duz I Countz? Fat Cat
I saw this poll in Money Mag yesterday and thought it was an interesting one. I’ve had this discussion with friends in the past, but I still go back and forth on it :) Maybe you’re better at it?

Here’s the question in its entirety, along w/ the results and the options people chose from (and if you have a copy of June’s edition, turn to page 24): Should health insurers penalize people for their unhealthy behavior?

  • 31% said – Yes, it promotes good health
  • 22% said – Only for very unhealthy things like smoking
  • 38% said – No, but they should offer incentives
  • 9% said – Never

Now my gut says YES – people should be penalized for not being healthy.  But easy for me to say since I’m skinny as a rail and not addicted to cigs or drugs or anything else of that nature (and no – I’m not addicted to beer as much as I talk about it ;) ). A lot of times people are lazy, however, and need that extra kick in the ass to do something about it.  A $5 or $10 fee won’t do much of anything, but at $50 or $100?  A paycheck?  I’d like to think so!

But then you have the people who can’t get better no matter how hard they try.  Maybe it’s due to an injury, or maybe it’s in their genes, but to penalize those who have no control over their situation (or maybe *less* control I should say) would just be unfair.

The answer I’d probably have picked if it was up there is this: No, don’t penalize the unhealthy, but REWARD those who ARE healthy! I’m not too sure if it would save anyone any money (aka the health industry) but I’d like to think it would generate some good buzz and get people thinking :) Or maybe they already do that now?

Before you answer it yourself, check out some of these stats Money Mag drops at the end. I had to go back and rethink it myself  once I read through them – this is some scary stuff!

  • 21% of U.S. adults smoke
  • Smokers pay $17,500 more than nonsmokers over their lifetime in extra medical costs.
  • The average bill for a hospital stay for lung cancer is $45,500
  • 34% of U.S. adults are obese. (scary!!!)
  • Obese people pay $1,429 extra A YEAR in annual medical costs vs. those at normal rates.
  • 36% of companies that offer wellness incentives give $150 or more to workers who fill out a health risk questionnaire. (Sign me up!)

What do you think? Should people get penalized for being overweight or addicted to cigs?  Whichever route you go, we can all agree that staying healthy is VERY important.  Not only so you can live longer and pay less out of your pocket, but also so you can continue reading this blog forever and ever :)  Stay fit my frugal friends!!!

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(Photo via danperry.com. LOL’d by J$)


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{ 33 comments… read them below or add one }

1 Jake June 8, 2010 at 8:41 am

This one is a touchy subject. I do like the idea of getting discounts for being healthy. Our workplace offers them for going through smoking cessation/ weight loss programs. It is a more positive approach to the subject.

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2 Chloé June 8, 2010 at 8:52 am

Definitely a sensitive topic. I am obese and so is my boyfriend, and our doc told us that 60% of weight problems are genetic. That’s 40% left that is under our control, in weight problems at least.

Pointing the unhealthy behaviors usually make people feel guilty, and they tend to find help in their bad behaviors when they feel that way (eating the stress out… yeah, I know what I’m talking about! LOL), so I’m not sure it would work. I think incentives would be more effective.

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3 Curt June 8, 2010 at 9:45 am

Coming from a person who 2 years ago lost 25% of my body weight (and kept it off) by changing my lifestyle, eating, and exercise habits, I would say absolutely yes. It’s not easy to be healthy in a world with many easier options, it requires discipline. You have to want to be healthy more than you want to eat that chocolate cake/greasy burger, etc. (which I still do…just less of it, and less often). It’s the same as with your finances. You have to want to be financial secure/out of debt/wealthy/etc. more than you want that latest gadget/expensive car/etc. I’m not advocating starving oneself just like I’m not advocating never spending money, just making it so that you think more about the decisions you make. Your actions speak louder than words…

It is a touchy subject, but one that needs to be addressed. I am no doctor, but wonder how much truly is genetic…take a look at all the first generation immigrants who are overweight…with thin families back in their home countries. I had an Indian friend who wanted to move to the US because in from his viewpoint: “in America, even the poor people are fat, what a great, prosperous country!” Is that really a good thing what we have done to ourselves with our prosperity?

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4 Jane June 8, 2010 at 10:09 am

Hey J, my insurance company does have a rewards program for doing healthy things. I haven’t looked into it much myself yet (BAD SELF!), but it’s an honor system points program. My brother-in-law is on the same insurance plan as me and has made several $50 gift cards by logging workouts and meals. I’d be happy to look into this further and either guest post or give you more information via email if you think this would be something that people are interested in learning more about.

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5 Olga June 8, 2010 at 10:15 am

I am with Curt. I had dropped 60 lbs at some point. I quit smoking – what was much harder than loosing weight, much harder, and took over a 100 attempts. It is not easy to wake up at 5am every morning and get going, to pack healthy lunch, and to forgo a frozen latte when it’s 100F outside. It is not easy to be frugal and make mature financial choices either. We all make mistakes at times, or slippages. The idea is how quickly and how wise we recover from those. I would probably go with not penalizing, but rather rewarding – but by a lot more than $150 (what, btw, my husband’s job does). The more money is offered, the more incentive it is to become a healthier being.

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6 Roger Roger June 8, 2010 at 10:22 am

If you are going to penalize people for unhealthy behavior since they are “lazy”, will you also extend that logic elsewhere?

Should able-bodied people who work less than 60 hours a week pay a slacker tax? Or people with good potential who drop out of high-school or college pay a lack-of-effort tax? Or maybe make it a carrot instead of a whip – should people working more than 60 hours get a tax break? Should you get a tax break for every college and grad-school credit you earn?

Non-lazy people currently carry a disproportionate amount of the tax burden because they also earn more than their lazy peers. But do you think you can incentive lazy people to be less lazy via taxes? Or for practical reasons do believe any congress would ever be able to pass that law?

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7 Melissa June 8, 2010 at 10:34 am

My workplace adjusted our health insurance premiums based on whether or not we participated in their wellness programs and counseling sessions. To qualify for the better premiums (To the tune of $1500 in savings), an individual just needs to make a basic effort to improve their health metrics. While this could be seen as penalizing the unhealthy because they are forced to pay more of their premium, one has to wonder why their isn’t a basic desire to be healthy? You don’t necessarily have to drop 15 pounds to qualify for the better premiums, just work with a health coach and wear a pedometer. I believe this allows those of us with genetic health issues a bit of leniency while also not penalizing those of us who attempt to be healthy with higher premiums across the board.

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8 Curt June 8, 2010 at 11:03 am

@ Roger – I see where you’re going, but I think the penalties for being lazy are already there (dying early for being unhealthy, crappy retirement b/c you haven’t saved, increased stress thoughout life because of money issues, lower earning potential for less education, etc), no need to add to that…I just think we shouldn’t reward laziness that’s all. There are downsides to working too hard too…and hopefully people realize those before they burn out…very few people can live by the 100/80/60 rule (anyone can work 100 hours a week for 1 week, anyone can work 80 hours a week for 1 month, if you want to work in this company, expect to work 60 hours a week for a career. I’ve heard this and similar rules commonly referred to in Investment Banking and Management Consulting companies)

Plus, could you imagine the Congress trying to pass something that harsh? They’re trying to please voters, no way anything like that could pass. Being lazy is easier, so naturally more people will fall into that camp than that of harder workers.

My workplace does have some benefit to taking all sorts of annoying online healty quizzes ($20/month discount for the year). It doesn’t actually do anything to make me healthier (on the contrary, it’s probably detrimental, since I have to spend about 2 hours on the computer earning points, but at least it’s only once a year), but I do it for the discount.

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9 Impulse Magazine June 8, 2010 at 11:07 am

I don’t think so because at the end of the day, everyone has a choice on what they want to do

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10 Khaleef @ KNS Financial June 8, 2010 at 11:30 am

I actually think we need to have both. Incentives for very healthy living AND penalties for unhealthy living. Remember, we are talking about insurance companies! A really healthy person should not be required to subsidize an unhealthy person’s lifestyle, and this is exactly what happens when they pay the same in premiums!

As far as the genetic argument, I have the same questions as Curt. How much of what we see is truly genetic – especially when some of these problems have only exploded recently?

I think that with healthcare, if everyone is entitled to care no matter if they can afford it or not, then they must be penalized for maintaining an unhealthy lifestyle at the expense of others!

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11 David Damron June 8, 2010 at 11:33 am

Hey dude……

Let’s look at it from a different angle…..

Let’s say your bank charges fees for overdrafts and loan interests and pretty much every transaction. Now, lets say they decide to just spread that cost evenly throughout everyone. Why would they do that? Well, the bank doesn’t want to penalize those who don’t properly address their finances so they think it is better to share the penalty among all its clients/members. But wait…you saved for that house to buy it with cash so you wouldn’t get the interest hit so why are you paying for other peoples decisions to forgo personal financial responsibility?

Now….re-read that paragraph replace financial vocab with health terms. Is it very different?

My point is that most (not all) health and fitness levels strictly come from personal choice. I don’t like that it costs me more for health care because others bring the average health for a 26/white/male to poor levels because they decide to drink and smoke and never workout. When people claim that it doesn’t affect my health care costs, they don’t realize all of the factors that do contribute to Health Care companies deciding how much to charge.

If I was forced to not say ‘Yes’ in this survey than I would go with your answer of ‘No, but they should offer incentives’.

David Damron
RunningSomewhere & The Minimalist Path

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12 Everyday Tips June 8, 2010 at 11:52 am

Well, I am very biased against smoking. There is absolutely no reason to ever start smoking, and it just hurts you and those around you that have to inhale the smoke.

I don’t know how it should be handled, but I just watched my father die from a long bout of emphysema that I am still recovering from watching, I wouldn’t want anyone to ever have to either experience that or witness it. I can’t imagine that his premiums even came close to what his care cost over the years.

I don’t judge smokers, I just wish people would stop. You don’t know if you will be one of the unlucky ones that dies from smoking. I don’t mean to be such a bummer, but this is an incredibly sensitive topic for me.

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13 Investing Newbie June 8, 2010 at 1:25 pm

Pause. Isn’t the question, “Should doctors penalize people for unhealthy behavior?”

Where on earth does “Genes” have anything to do with this discussion?

I’d like to think by 2010 we have some technological gadget that can determine within a small margin of error whether someone is genetically obese or obese becuase of their poor eating/exercise habits.

AND even if we don’t have that gadget, the population of Americans that are genetically predisposed to “look like” they are unhealthy (i.e genetically obese, I guess) is so small that I’d be less inclined to worry about whether we are unfairly punishing people.

So, yes, I think those who are unhealthy and make unhealthy decisions (especially smokers, because their actions invariably hurt others), should be penalized with exhorbitant surcharges on their medical bills.

I would love to be rewarded for being healthy, but I know the goverment would never do that. So, here’s to punishment!

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14 Emily June 8, 2010 at 1:47 pm

I think you need to make clear that the poll is talking about punishing people for unhealthy BEHAVIORS not just being unhealthy. If people are voluntarily choosing to smoke, eat high fat processed food all the time, and choosing to be inactive then that is behavior that we can and should seek to modify by either punishment or rewards. Insurance is a risk management game – the rest of the insured in the pool are being penalized with higher costs because of the few that choose to make poor decisions. It’s fine if you don’t want to take care of yourself, but why should those of us who do have to pay higher premiums, deductibles and co-pays to make up for that risk? Shift the costs for risky behavior to where it belongs.

I don’t think we have to worry too much about punishments or rewards coming about that are based on people’s genetic pre-dispositions. That kind of action would face major legal challenges for discrimination.

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15 Dawn June 8, 2010 at 2:47 pm

I don’t see a difference in “penalizing the unhealthy” v. “rewarding the healthy” other than language semantics.

Either way, the healthy would pay less and the unhealthy would pay more.

Incidentally, I don’t have a problem with penalizing the unhealthy for their lifestyle choices. I just think to say “OH, we won’t penalize the unhealthy… we’ll just lower the rates for healthy people,” is essentially the same thing, conveyed in such a way as to not piss people off as much.

It happens with car insurance — get into accidents (unsafe behavior), you pay more. Have a safe driving record, you may get discounts. Why NOT health insurance?

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16 Jenni June 8, 2010 at 3:06 pm

My question is, where do you draw the line? I don’t eat organic food because it’s too expensive, even though I know my regular apples have pesticides on the skin. It’s unhealthy, should I get charged for it?

I guess it would negate my ‘organic is more expensive’ reasoning.

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17 Khaleef @ KNS Financial June 8, 2010 at 4:08 pm

@ Dawn, I think the car insurance analogy is a perfect one!

@ Jenni, that’s a good question because it could get out of hand pretty quickly. I would assume that some insurers would be more strict with their healthy vs. unhealthy requirements. But I think it would be better to penalize unhealthy behavior in this respect – not the absence of “ultra-healthy” behavior. But it is difficult to draw the line – especially if the government gets involved!

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18 Yana June 8, 2010 at 4:13 pm

I like the idea of incentives based on realities (health), not punishment for chosen behavior. That way lucky people could get a bonus. Sometimes behaviors affect health, but more often there are other factors, including genetics. I also think it would be great if there were incentives for not going to the doctor very often, and not using prescription drugs. That would help reform the health care system better than many ideas I’ve seen. There would be a great reduction in harm done by unnecessary and wrong medical care, as well.

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19 Stella June 8, 2010 at 4:23 pm

As Emily said, penalizing people for unhealthy BEHAVIOR (such as smoking) is a lot different from penalizing people who are unhealthy (which is what many insurers have been doing, pre-health care reform what with “pre-existing conditions” and “rescission,” etc.). I have type 1 diabetes–an immune system disorder–through no fault of my own. It would be wrong for insurers to punish me by charging more or denying coverage for insulin, etc.–but I would end up costing them more money if I didn’t manage my health properly. Despite having diabetes, I’m pretty healthy: good weight, excellent cholesterol levels, etc. But there are many people who have type 2 diabetes which for most could be eliminated or controlled entirely through a healthy, low carb diet and exercise. So I’d have to agree with Dawn–it is like car insurance in that way.

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20 Jersey Mom June 8, 2010 at 4:45 pm

Absolutely not!!! We are loosing our freedom in this country left and right. Soon, we’ll have no choices left! Plus, I believe people have the right to be stupid & do stupid things if that’s their wish.

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21 Lindsay June 8, 2010 at 6:02 pm

I agree with Dawn. I’m not sure if giving rewards vs. penalizing is very different. It sounds better but it feels like looking at the glass half full instead of half empty. Rewarding one group kind of is penalizing the other in the sense that their rates would still be higher than a healthy person’s.

And I really think some kind of tiered payment system is the only way to shift the focus from “sick care” to actual prevention and promoting healthy behaviors. In the end it’ll save the country money, so I don’t know why people are so opposed to it.

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22 James June 8, 2010 at 6:05 pm

besides smokers vs. non smokers. i would think it would be hard to determine if you are “healthy” or not.

maybe they could do something about exercising 30 minutes a day or eating fast food.

it would be awesome if you got a break on insurance like you do for not smoking if you could get a discount for exercising and eating healthy.

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23 Khaleef @ KNS Financial June 8, 2010 at 6:28 pm

@ Jersey Mom, I would agree with you that we are losing our various freedoms (especially with the government taking control of every area of life), however, when our terrible choices affect others, we MUST pay a price!

Not penalizing people who are consistently and intentionally participating in unhealthy behaviors because they know that they are insured (or that the government will provide free/subsidized healthcare) is the very definition of moral hazard and is a huge problem in this country. We are appalled at banks taking great risk and then getting government bailouts, but when someone is morbidly obese and refuses to seek help, we see nothing wrong with it – we call it their “right”!

If your actions are affecting others negatively, then their must be a way to discourage your behavior AND to help lessen the impact! Again, unhealthy behaviors is what I’m talking about, and not unhealthy people (as Stella mentioned above).

…This is coming from a man who gained over 100lbs and has lost 25lbs so far on my way to about 90, so I understand both sides.

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24 Curt June 8, 2010 at 6:37 pm

A few commenters seem to think that penalizing individuals for poor health decisions is somehow taking away their freedom. I don’t see the logic in this way of thinking. No one is telling anyone that they can’t do anything. All they are saying is that there are positive and negative consequences to every action, and insurance companies in particular have been able to (somewhat) identify and quantify the costs of those behaviors. Because of that, the insurance companies are making the decision to try and make things more “fair”.

All that is being discussed is that an actual consequence to ones actions be imposed. Every action we take in any aspect of our life has a consequence, some negative, some positive. Insurance is intended to protect us from things that we can’t plan for or avoid. Insurance is inherently going to be ‘unfair’, some people will pay into the system for years and never get ‘their money’s worth’ (unless you try to figure the intangible peace of mind that goes along with being insured, but I’ll ignore that for the moment), and others will benefit more than they put in. If you know which side of the equation someone is on, it only seems right that you would price your services appropriately.

Making one pay for the consequences of their own decisions does not equal individuals losing freedoms no matter how you look at it. While I do see some areas where individual freedom is being jeopardized, this is not one of them.

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25 Early Retirement Extreme June 9, 2010 at 2:42 am

I think this problem somewhat demonstrates that the insurance model does not fit that well with health care. Insurance is pooling resources to deal with rare catastrophic events. Hence, if we stay with the car model …

1) It should not pay for regular maintenance.
2) It can not take into account people who were born with crappy models so to speak.
3) It can not take into account people abusing their cars.

At least I have not seen any policies which do that.

A policy which would work would
1) Have a high deductible.
2) Take into account any and all genetically caused problems to the point where they are not made further problematic by lifestyle problems.

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26 J. Money June 9, 2010 at 1:38 pm

GREAT discussion guys! Every time I start to get convinced one way, you all come back with some other good things to think about ;) So much so that it’s hard to pick sides! Haha…I don’t have anything really to add to this – You guys are some smart mother f’ers…

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27 Aury (Thunderdrake) June 9, 2010 at 3:31 pm

It’s really, really easy to say people should be punished mistakes. But I don’t really believe in the stick discipline for something that. Primarily because I strongly believe in freedom and people should have the right to make mistakes with their personal lives. If they want to be lazy, incompetent and poor, let them be and leave them be! Conversely, I do like your proposition of rewarding those with healthy habits.

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28 Healthy Amelia June 10, 2010 at 4:18 pm

Oh, man, J. This subject gets me fired up. I know I’m late to the game but I have to chime in. I’m am 100% with Jersey Mom (go Jersey!) The problem comes up with who decides what’s healthy and how to incentivize “healthy” behaviors. When you bring up something like smoking, it’s seems easy and kind of clear cut. Smoking is indeed 100% a choice. It’s good to not smoke. However, something like obesity is much more nuanced. How are we going to police that and do we really want to? Do you really want to be turning in food diaries and tally sheets of your exercise to your employer or insurance company? As an individual, do you really want to give that much info and control over so that you can get a fair price for medical coverage? Should we really be penalizing those that need the most help?

This turned into quite a long response so I decided to make a blog post of it instead of leaving a mega-comment!

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29 Curt June 10, 2010 at 8:58 pm

@Jersey Mom & Healthy Amelia

– I’m not opposed to allowing people to make dumb mistakes (heaven knows I’ve made some myself)…but if I’m hearing you two correctly, where we differ is that you are advocating that people be allowed to make stupid choices AND not have to deal with the repercussions of those choices (or conversely, not be rewarded like those who make ‘good’ choices, but same thing)…am I reading that wrong? If that’s the case, would you care to elaborate why you feel this way? I’m just trying to understand this way of thinking.

I just think of this: if your unhealthy behaviors clearly make the overall medical expenses for the pool of insured higher (and they can without a doubt prove that a certain activity causes certain negative health consequences), the insurance company HAS to charge you more if they want to stay in business long-term…if they raise rates for the healthy and unhealthy alike, then the healthier people leave because they are the ‘good risks’ and can get coverage cheaper elsewhere and then it just becomes a downward death spiral for the company stuck with the unhealthy.

Great discussion J$ by the way…

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30 Yana June 10, 2010 at 9:22 pm

@Curt – People who make choices that are wrong for them/their health do not escape the consequences. If the choices are wrong, the consequences are inherent. We don’t need to contrive them or suggest to know what is best for a person. Besides that, results of behaviors depend upon the individual. Statistics and science don’t mean a lick to the 38-year-old clean living neurologist who dropped dead jogging, or the 89-year-old woman who has smoked for 60+ years. You can call them freaks or exceptions, but there are many in both categories. Health is something that is ridiculous to insure at all.

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31 vaalea June 16, 2010 at 6:23 pm

Rather than hit it from the insurance side, a better thing would be to STOP subsidizing unhealthy things, and rather subsidizing healthy foods etc.
“Just 2.3 percent of subsidies go to nuts, legumes, fruits and vegetables while 84.5% goes to meat, dairy, sugar, oil, starch and alcohol. Is it any wonder that a salad often costs you more than a Big Mac?” http://www.naturalnews.com/028817_food_subsidies.html

“‘The Center for Science and Environment in India tried a few years ago to figure out the true cost of a hamburger. Assuming that it was raised on pasture that was once rainforest, the ecological services provided by that rainforest, the loss of diversity, carbon sequestration, water cycling, fuel and tropical product sources, among many other things, the cost would come to $200. The U.S. food industry has huge hidden costs, from the agricultural run-off that causes a dead zone in the Gulf of Mexico to the cultural destruction wrought by the “Western” diet. There are also huge health costs associated with poor diet — in 2007, $174 billion was spent in the U.S. caring for people with diabetes — as well as the public funds that support the industrial food system.

Cheap food is “cheat food.” There are all kinds of costs that are externalized from the price we pay at the checkout. We pay those costs one way or another — but the food companies don’t. Merely having a system of free markets with accurate prices still doesn’t address the underlying issues of poverty and disenfranchisement.’”
http://aharoonakramlodhi.blogspot.com/2010/01/real-cost-of-hamburger.html

I’m vegan and doing my part to save the world ;)
http://www2.macleans.ca/2010/03/30/save-the-planet-stop-eating-meat/

Also to be clear, I’m from Canada – but we still have insurance for costs that aren’t covered… and I vote Green Party because I like what I read including what they say on focusing on preventative health care… and covering proven alternative therapies etc. :)

I’ve only been watching this website for a short time but it’s giving me lots to think about. :)

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32 J. Money June 16, 2010 at 9:17 pm

Well we’re glad to have you here :) You’ve got some hefty opinions in ya which we love! Thanks for sharing my new friend.

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33 Jerry June 24, 2010 at 6:50 am

I agree with Valaa in hitting it from the insurance side. We should subsidize healthy foods instead of junk and I think the should penalize for smoking and drinking and also provide incentives for exercising, etc. If it leads to people making better choices then it’s worth it.

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