About Time? Smokers Face Tough New Rules Under Obamacare

About Time? Smokers Face Tough New Rules Under Obamacare

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The Affordable Care Act contains a number of provisions intended to incent “personal responsibility,” or the notion that health care isn’t just a right — it’s an obligation. None of these measures is more prominent than the law’s individual mandate, designed to ensure that every American obtains health coverage or pays a fine for choosing to go uninsured.

But one provision that’s gotten much less attention — until recently — relates to smoking; specifically, the ACA allows payers to treat tobacco users very differently by opening the door to much higher premiums for this population.

That measure has some health policy analysts cheering, suggesting that higher premiums are necessary to raise revenue for the law and (hopefully) deter smokers’ bad habits. But other observers have warned that the ACA takes a heavy-handed stick to smokers who may be unhappily addicted to tobacco, rather than enticing them with a carrot to quit.

Under proposed rules, HHS would allow insurers to charge a smoker seeking health coverage in the individual market as much as 50% more in premiums than a non-smoker.

That difference in premiums may rapidly add up for smokers, given the expectation that Obamacare’s new medical-loss ratios already will lead to major cost hikes in the individual market. “For many people, in the years after the law, premiums aren’t just going to [go] up a little,” Peter Suderman predicts at Reason. “They’re going to rise a lot.”

Meanwhile, Ann Marie Marciarille, a law professor at the University of Missouri-Kansas City, adds that insurers have “considerable flexibility” in how to set up a potential surcharge for tobacco use. For example, insurers could apply a high surcharge for tobacco use in older smokers — perhaps several hundred dollars per month — further hitting a population that tends to be poorer.

Is this cost-shifting fair? The average American tends to think so.

Nearly 60% of surveyed adults in a 2011 NPR-Thomson Reuters poll thought it was OK to charge smokers more for their health insurance than non-smokers. (That’s nearly twice the number of adults who thought it would be OK to charge the obese more for their health insurance.)

And smoking does lead to health costs that tend to be borne by the broader population. Writing at the Incidental Economist in 2011, Don Taylor noted that “smoking imposes very large social costs” — essentially, about $1.50 per pack — with its increased risk of cancers and other chronic illness. CDC has found that smoking and its effects lead to more than 440,000 premature deaths in the United States per year, with more than $190 billion in annual health costs and productivity loss.

As a result, charging smokers more “makes some actuarial sense,” Marciarille acknowledges. “Tobacco use has a long-term fuse for its most expensive health effects.”

But Louise Norris of Colorado Health Insurance Insider takes issue with the ACA’s treatment of tobacco users.

Noting that smokers represent only about 20% of Americans, Norris argues that “it’s easy to point fingers and call for increased personal responsibility when we’re singling out another group — one in which we are not included.”

As a result, she adds, “it seems very logical to say that smokers should have to pay significantly higher premiums for their health insurance,” whereas we’re less inclined to treat the obese differently because so many of us are overweight.

This approach toward tobacco users also raises the risk that low-income smokers will find the cost of coverage too high and end up uninsured, Norris warns. She notes that tax credits for health coverage will be calculated prior to however insurers choose to set their banding rules, “which means that smokers would be responsible for [an] additional premium on their own.”

Alternate Approach: Focus on Cessation

Nearly 70% of smokers want to quit, and about half attempt to kick the habit at least once per year. But more than 90% are unable to stop smoking, partly because of the lack of assistance; fewer than 5% of smokers appear able to quit without support.

That’s why Norris and others say that if federal officials truly want to improve public health, the law should prioritize anti-smoking efforts like counseling and medication for tobacco users. And the ACA does require new health insurance plans to offer smoking cessation products and therapy.

But as Ankita Rao writes at Kaiser Health News, the coverage of those measures thus far is spotty. Some plans leave out nasal sprays and inhalers; others shift costs to smokers, possibly deterring them from seeking treatment.

Some anti-smoking crusaders hope that states will step into the gap and ramp up cessation opportunities, such as by including cessation therapy as an essential health benefit.

“The federal government has missed several opportunities since the enactment of the ACA to grant smokers access to more cessation treatments,” the American Lung Association warned in November. “Now, as states are beginning implementation of state exchanges and Medicaid expansions, state policymakers have the opportunity to stand up for smokers in their states who want to quit.”

Dan Diamond (@ddiamond) is Managing Editor of the Daily Briefing, a CaliforniaHealthline columnist, and a Forbes contributor. This post originally appeared at CaliforniaHealthline.org.

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105 Comments on "About Time? Smokers Face Tough New Rules Under Obamacare"


Guest
Will
Jan 25, 2013

Smokers absolutely should pay more for health insurance. It’s a disgusting habit and the evidence about its negative effects is overwhelming. Accept the risks, accept the higher premiums.

Guest
zap
Jul 18, 2013

Smokers are disgusting. We should NOT have to pay for obese, drunks, smokers, or anyone that has taken drugs that has stopped, now having mental problems, or TEENS that does bungee cord jumping, dirt bike riding, some of the stupid things they do to get hurt…I have a family to take care of…as with many other people. As tax payers, we already get screwed by this government to pay for a lot of women on welfare that obviously doesn’t know what causes pregnancies……We lost our jobs last year, I have worked all my life, I asked for food stamps, was told NO, because we made to much last year, again we pay for these BIG grocery stores that pays min. wage, having once again the tax payers paying for their food stamps plus!!!

Guest
Carol
Nov 13, 2013

What about people who drink, or use recreational drugs, are obese and have type two diabetes, or engage in risky sex? Why just smokers?

Guest
Jan 25, 2013

Smokers damage their health; alcoholics damage their health; people who drink tap water, who drink sodas, who drink fruit juices damage their health. Those who don’t exercise hurt themselves, as do those who eat potato chips and sugar..The list goes on…..Meanwhile, the finger pointing at smokers has no benefit except to those who need to feel superior, often because that’s the one “sin” they don’t have….Fair is fair:if we are to levy financial burdens on those who damage their health, we must include all things that we can agree on which damage health and punish equitably, the self-righteous churchy ones be damned.

Guest
Shari
Jan 25, 2013

Very well said!!! More of the population are obese and that leads to as many, if not more, health problems than smoking. Obesity leads to diabetes, which causes heart, kidney, eye, and nerve problems. Anyone who eats fast food is not eating healthy. As a nurse, I’d rather take care of a smoker who isn’t overweight, than a fat person who can hurt my back when I try to take care of them.

Guest
Josh
Jan 25, 2013

Could you make mention of the SPECIFIC provision the bill that states this? I’d like to see the wording myself. THe problem is, when searching through the text of the ACA for “smoking” the only sections that come up are related to wellness programs, smoking cessation, nothing that says smokers get charged extra. If you could do that for me, I’d appreciate it, since I’m a smoker and so far all I see with these articles is a bunch of smoke, give me substance (specific section in the bill please).

Guest
Mar 22, 2013

It is not in the law itself but in the reulations promugated by HHS.

Guest
Mar 22, 2013

I can’t spell. It should be “regulated and promulgated”

Guest
Connie
Sep 29, 2013

A smoker in KY will be charged a 40% higher rate than a non smoker. Do a google search for smoking premiums under the ACA. This info is just now coming out and it unfair to single out one particular group/
Hopefully, this will be repealed after things get off the ground.

Member
Jan 25, 2013

Well, you can certainly see why this aspect of the legislation was downplayed during the fight over Obamacare. I get the reasoning, and strongly support the goal, but am a little uncomfortable with the process.

The idea of a democracy is for us to make decisions as a society, with the majority deciding each question before the government. If laws contain laws hidden with laws hidden with laws and questions shielded behind legalistic language, a democracy cannot function.

If we don’t know what we’re voting for, we cannot vote.

Guest
PennyPA
Jan 30, 2013

The majority hasn’t had a say in anything since obama took over. The majority didn’t want obamacare in the first place. No where does it show that only 10% of smokers get copd or have other problems related to their smoking.

John, if we don’t know what we’re voting for, we cannot vote. That certainly didn’t stop Congress from passing obamacare, did it?

Guest
Gene
Jan 25, 2013

That’s not fair, John. The health law had so many complicated parts and processes, and honest efforts to explain things like wellness counseling were willfully misinterpreted as death panels. What should Congress have done here? Called hearings on every provision of the law?

Guest
Shawn
Feb 1, 2013

Yes, yes they should have.

Guest
Jan 25, 2013

Is there penalty to those on medicare who smoke?

Guest
Connie
Sep 29, 2013

No, as Medicare is not under the ACA. Medicaid does not have the smoking clause in it.

Guest
Jan 26, 2013

I found this to be a very interesting issue… it certainly goes against the concept of “universal healthcare” as most understand it…

I applied the Law of Unintended Consequences in my own post about the issues you brought up here… http://strangelydiabetic.com/2013/01/25/the-law-of-unintended-consequences/

Guest
Jan 26, 2013

This interesting comments thread illustrates how incoherent arguments can become.

ACA is as much about insurance as health care. A better name would have been “Health Insurance Regulatory and Reform Act.” In this case it gives permission to (not obligates) insurance companies (NOT government providers — VA, Medicare, Medicaid, Military health services) to financially penalize tobacco users. Even then, there is no obligation for them to do so. Let the free market rejoice.

As usual, risk management (an insurance matter) is being confused with health care (a medical matter). And the issue of costs for both (tax money vs. private money) clouds an already muddy picture.

Guest
Jan 26, 2013

Two observations. First, I am a total anti-smoker but feel that those who turned 16 before the surgeon general’s warning appeared (not many smokers that age are left in the workforce) should get a free ride on this. Or perhaps for the 5 years or so between when the tobacco companies knew and when the warning appeared, the tobacco companies should pick up the extra premium.

Second, in addition to being multifactorial and sometimes not a choice and much more class-drifven, obesity differs from smoking in not being a 0-1 thing. It is much easier to determine if someone smokes than determine gradations of obesity.

Guest
Aurthur
Feb 5, 2013

People with IQ’s over 75 have known smoking was not healthy for close to 200 years. I may be a proponent for charging double premiums for willingly ignorant people. It really should hurt more.

Nicotine was first isolated from the tobacco plant in 1828 by physician Wilhelm Heinrich Posselt and chemist Karl Ludwig Reimann of Germany, who considered it a poison.

Historical use of nicotine as an insecticide…
Tobacco was introduced to Europe in 1559, and by the late 17th century, it was used not only for smoking but also as an insecticide.

Guest
Joanna
Jan 26, 2013

Interesting. I’m for it. But how would this be monitored? Isn’t it dependent on the smoker disclosing to the insurance provider that they smoke? Couldn’t a person just lie?

Guest
Jan 26, 2013

Good question. Here’s a cold-blooded answer.

From an actuarial point of view, the calculus by which insurance premiums are based, it’s a moot question. Recent reports are that those who smoke are statistically predictable as a subset (not individuals) to die ten years sooner than those who do not smoke. That means the insurance industry has less to loose when someone lies about whether or not they smoke. The longer they live the more their health care will cost. So dying sooner saves the insurance company in payouts over time.

Guest
Aurthur
Feb 5, 2013

Will SSI be reducing smoker’s FICA contributions, you know, to be “fair”?

Guest
Feb 5, 2013

Maybe — in the interest of “fairness” of course — if all his dependents agree not to collect anything upon his death. (FICA is the Social Security portion of payroll taxes, capped so higher-income earners don’t pay as much. This thread is about Medicare, a far smaller portion, but with no cap.)

Guest
Jan 26, 2013

It would be much better to keep insurance premiums neutral, but to tax the heck out of the substances like nicotine that cause higher health costs.

This is what is done in places like Germany and Japan, which have egalitarian health insurance charges, also have far more smokers than we do, and have better cost control on health care.

Guest
Jan 26, 2013

A much better alternative, of course, bob. But the US ain’t gonna sit still for any Big Gubmint Healthcare. Free enterprise may have produced the world’s most costly Rube Goldberg health care system on the planet, accessible only by those lucky enough to afford it and covering a footprint in most urban areas as big as an industrial park, but we ain’t gonna let go of that tax-advantaged tit any time soon.

Guest
Stephanie
Jan 26, 2013

So they are going to extort 60 million smokers because of 440 thousand deaths. To keep us safe, not profit. Right! It’s not about health. It’s about pitting us against one another. Left v right, man v woman, gay v straight, fat v skinny, smokers v non-smoker,etc. As long as we are focused on fighting each other, we won’t stand together against an unconstitutional government passing draconian laws taking away our freedoms. Wake up! Especially you fat people. You are next! If you don’t fight for smokers’ rights now, who will fight for your right to eat what you wish? This is a very slippery slope down to the government controlling all aspects of our private lives. Wake up before it’s too late. Please!

Guest
Susan
Jan 28, 2013

Stephanie, I agree. I’m trying to figure out what I can do about this–little ol’ me, individual. Do you have any ideas?

Guest
Aurthur
Feb 5, 2013

What do you expect from an administration willing to ignore the will of over 60% of the population and perhaps mortally wound the best health delivery system in the world for over 300 million people to benefit only about 3 million people (those without health insurance, that actually want it and are maybe willing to pay for it (if an insurance company would sell it to them) combined with the administration’s greedy, corrupt, outlaw, cohorts (e.g. Sebelius, Larsen, et al). So, who are the true 1%ers?

Guest
Connie
Sep 29, 2013

Totally agree with you Stephanie. And I like the ACA. But like they have said before, Medicare & Medicaid had glitches and so will the ACA. We have to be patient.

Guest
Barry Carol
Jan 26, 2013

At the population level, smokers of a given age cost more to insure in a particular year which should, presumably, be reflected in smokers’ health insurance premiums. For the Medicare eligible population, smokers who choose a Medicare Advantage plan most likely have a higher risk score other things equal which translates to a higher premium payment to the insurer. The fact that smokers die sooner on average and save money for Medicare and Social Security over a lifetime is a different issue. Insurers don’t benefit from that savings though taxpayers do.

At the same time, 40% of the U.S. population smoked in the 1960’s and early 1970’s. Now it’s 20% thanks to much higher taxes, publicity about the harmful effects of smoking and more aggressive cessation efforts. That’s the 2nd lowest percentage in the developed world after Canada.

With respect to obesity, if we could design a tax on unhealthy foods that could be fairly applied and efficiently administered, I would support it. If the cost of products reflect the full social cost of producing them, resources and capital will be allocated more efficiently which will, in turn, make the economy more efficient and competitive. Taxes of this sort, including carbon taxes by the way, will raise money to support government in a way that does much less economic harm than high marginal income tax rates.

Guest
Jan 26, 2013

I find it hard to believe that lung cancer alone costs insurers enough to justify a 50% increase in premiums. I may be wrong, perhaps someone can let me know.

I suspect that smoking is symptomatic of bad health in many respects — bad diet, stress, and just poverty. You see far more smokers in low wage workplaces than in corporate offices. The problem is not the cigarettes, it is the whole lifestyle.

A 55-year old smoker working for $12 an hour and getting no employer coverage is not buying health insurance today…………..and since the ACA will not subsidize any smoker surcharges, this person will not be getting health insurance in the future. The premium for an older smoker could be $10,000 a year for individual coverage, and the subsidies might defray only about $4,000 of the cost.

This is a ludicrous example of ‘skin in the game.’ The sun will still come up tomorrow if we subsidize older smokers a little more effectively,

Guest
legacyflyer
Jan 26, 2013

I am not a smoker and never have been. But it seems to me that a lot of what is going on with respect to smokers is just “piling on”

The reality is that the LIFETIME medical costs for smokers is LESS than for nonsmokers. (van Baal et al)

http://www.plosmedicine.org/article/info:doi/10.1371/journal.pmed.0050029

It is probable that YEARLY health care costs for smokers are HIGHER, but this effect is overwhelmed by the reduction in costs due to their shorter life span. So if they are to be charged more for health insurance during their working life, shouldn’t they get a rebated on Medicare?

And if we are going to charge more for smokers, shouldn’t we charge more for overweight people, drinkers, motorcycle riders, etc. etc.

Most smokers know that it is a bad habit that will shorten their lives, just as most obese people know that obesity is unhealthy and will shorten their lives. The problem is that stopping smoking or losing weight is not easy and the failure/relapse rate is high.

Rather than trying to punish smokers, I suggest that we just accept them as imperfect people – people who are helping us with Medicare and Social Security by dying early!