Facing thousands in extra insurance costs, smokers appear to be the Affordable Care Act’s (ACA) biggest losers. Employers are allowed charge smokers up to 50% more for their medical coverage than nonsmokers , starting in 2014.
On November 25, Fox News put it best: “Obamacare Policies Slam Smokers,” , noting that “smokers are the only group with a pre-existing condition that Obamacare penalizes.” THCB itself has headlined: Smokers Face Tough New Rules under Obamacare.
And these headlines are absolutely accurate — meaning that, with the possible exception of the e-cigarette, ACA is the best thing that has happened to employed smokers ever.
Here is how we arrive at this conclusion. The data is mixed on whether smokers incur much higher healthcare costs or just slightly higher healthcare costs during their working ages than non-smokers do. None of the data shows that their costs are lower, but let’s say there is no impact on health spending.
Nonetheless, the following is incontrovertible: smokers take smoking breaks.
Remarkably, there are no laws specifically governing smoking breaks, and like most other quantifiable human resources issues, no one has quantified them. But we all observe these breaks, and about a fifth of us participate in them. They reduce productivity. By definition, if you are outside smoking, you are not inside working.
Sure, some smokers make up the time by working harder when they aren’t smoking…but (1) many non-smokers work hard too and (2) some workplaces, such as inbound call centers, don’t offer the luxury of catching up later because they operate in real time. Lacking quantification, fall back on your imagination…and imagine what you would do if you ran a company in which non-smokers spent as much time mulling around outside as smokers do. That should give you an understanding of the impact of smoking breaks on productivity.
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.
The landmark 2001 document from the Institute of Medicine’s (IOM), Crossing the Quality Chasm, should have guided us out of the healthcare cost-quality crisis. It argued that the root cause of our difficulties has been a failure to meet the needs of patients with chronic disease. We have not solved this crisis because we have almost entirely ignored the recommendations for reform found in that document.
The claim that we have the best healthcare in the world is correct only if you have an acute condition. If you are having an event, such as a heart attack, our system can provide an emergency stent — for as much as $50,000 — that will open the blocked artery, immediately relieving the pain and saving your life. We are really good at rescue medicine-crisis medicine.
But acute conditions generate enormous costs only because we have not addressed the chronic condition earlier, interrupting the disease progression that produces the acute events. Since most healthcare cost growth over the past 2 decades has been related to patients with 4 or more chronic conditions, this should be recognized as the foremost issue in healthcare reform.
In fact, the IOM charged that, despite the central role of chronic disease in most pain, disability, death, and cost, care continues to be designed around the needs of providers and institutions, and most patients with chronic conditions do not receive the care they need. A 17-year lag in implementing new scientific findings results in highly variable care.
That cardiologists favor coronary stenting over optimal medical therapy — that is, managing vascular disease using $4 drugs and recommended lifestyle changes — provides a powerful case in point.
The Washington Post covers a new order by DC district court judge Gladys Kessler, arising out of an old RICO case brought by the federal government, requiring that the tobacco companies publish advertisements to confess publicly that they previously lied about the safety of smoking and manipulated cigarettes to make them more addictive. I have pulled the district court order and posted it, along with this appendix. The order provides the exact language of the mandated advertisements, but no analysis. Below the fold, I trace the convoluted path this case and a related case have taken through the compelled speech doctrine around the First Amendment, all thanks to a single judge on the Court of Appeals.
A. Adverse Health Effects of Smoking
A Federal Court has ruled that the Defendant tobacco companies deliberately deceived the American public about the health effects of smoking, and has ordered those companies to make this statement. Here is the truth:
• Smoking kills, on average, 1200 Americans. Everyday.
• More people die every year from smoking than from murder, AIDS, suicide, drugs, car crashes, and alcohol, combined.
• Smoking causes heart disease, emphysema, acutemyeloid leukemia, and cancer of the mouth, esophagus, larynx, lung, stomach, kidney, bladder,and pancreas.
• Smoking also causes reduced fertility, low birthweight in newborns, and cancer of the cervix and uterus.
Henry David Thoreau said, “There are a thousand hacking at the branches of evil to one who is striking at the root.”
We have hacked at healthcare costs for what seems like thousands of times, with very limited success. It is time to strike at the root. Rather than focus on reducing costs after preventable diseases have taken hold, it is time to focus attention on eliminating the disease.
Let us look at two specific examples.
1. The CDC (Center for Disease Control and Prevention) has estimated that the cost of smoking(estimated cost of smoking-related medical expenses and loss of productivity) exceeds $167 billion annually. The CDC has also estimated that 326 billion cigarettes (combustible tobacco, to be more precise) went up in smoke in 2011. In other words, every cigarette consumed costs the nation about 50 cents; every pack, $10.
Put another way, while the smoker paid approximately $5 a pack up front, there was also an additional $10 secret surcharge — the cost of which is born by all of us (such as taxpayers, anyone who buys health insurance, even private companies who suffer from lower productivity as a result). It is as if we are telling the smoker, “I know you can’t afford to pay $15 for a pack. So we will give you $10 so you can afford to smoke.” We are not this generous even with people who don’t have one square meal a day. We spent $78 billion on food stamps, with constant pressure to bring that down further even if some people will be left without food as a result.
On election night voters in Maryland, Maine and Washington state voted in favor of same-sex marriage, the first time marriage equality has been approved by popular vote. Although same-sex unions have been legalized in six states and the District of Columbia by lawmakers, the voting public have consistently rejected passing approval for same-sex unions. This is clearly a tipping point in the national discourse over the rights of gays and lesbians to marry.
However, although recent estimates suggest that more than half of the American population approves of same-sex marriage, there is still much to be done before equality is achieved. Even with all the good news, more than 30 states have approved constitutional bans on same-sex marriage. To date the debate over same-sex marriage has centered on equality – that my right to marry should be equal to the right of a Kardashian to marry anyone from the NBA. But is this more than a question of equity? Marriage provides legal protections, affords access to services and provides a source of social support – all of which may be protective of health. There is strong evidence that providing everyone with the right to marry is not only a question of equity, it is a pathway to improving the nation’s health.
Data from a range of studies confirm that marriage is good for you: in virtually every category, ranging from violent deaths to cancer, the unmarried are at far higher risk than the married. Marriage provides companionship, a social support system, someone to make you go to the doctor. “Marriage is sort of like a seat belt when it comes to improving your wellbeing,” says Dr. Linda Waite, Professor of Sociology at the University of Chicago and author of The Case for Marriage.
As the next act of the Massachusetts health care drama plays out on Beacon Hill, the same characters return to the stage with a tired script. The ostensible hero of the production, the patient, is left to watch the tragedy from the back row.
Legislation being debated on Beacon Hill ignores patient-centered health plans and health savings accounts, or HSAs, which are lower-premium insurance plans that direct pre-tax dollars into a bank account to cover an individual’s current health care and save money for future medical expenses. An HSA is the most direct way to engage patients in the health system. They cover out-of-pocket medical, dental, and vision expenses, are fully portable, and owned by individuals for their entire lives.
Unlike the self-interested solutions of insurers, providers, and government, HSAs are a proven way to contain the cost of care.
Nationwide, 11.4 million people of all ages and income levels purchase patient-centered plans, up over 250 percent from 2006, when they were created. Among HSA account holders, fully half earn less than $60,000; almost three-quarters have children; and about half are over 40.
Safeway, one of America’s largest supermarket chains, rolled out a patient-centered plan in 2006; per capita health care spending shrank 13 percent, and costs remained flat for four consecutive years.
Safeway’s plans have reduced employee obesity and smoking rates to roughly 30 percent below national averages. This health dividend is priceless as 70 percent of health care costs are directly related to lifestyle decisions.
What could be more pressing than ending suffering and death from cancer — a disease that kills 155 people every day in California?
A yes vote on Proposition 29 on June 5 to increase the tobacco tax by $1 will save lives from cancer and other lethal diseases caused by tobacco, protect kids from the tobacco industry’s predatory marketing, ease the enormous economic burden of tobacco use on the state and fund groundbreaking medical research on the leading killer diseases.
Yes on 29 is an opportunity to tell Big Tobacco that enough is enough. That we’re tired of the industry’s relentless assault on our children, our health and our economy. Proposition 29 was written by the state’s leading public health groups – the American Cancer Society, American Heart Association and American Lung Association – to empower Californians to fight back against Big Tobacco’s ongoing campaign of addiction and death. Proposition 29 will also help reverse tobacco’s debilitating drag on California’s economy, saving the state billions of dollars in health costs.
The tobacco industry spends every minute of every day surreptitiously recruiting new customers: our kids. During the past decade, Big Tobacco invested 10 times more on marketing its deadly products in California than the state spent on educating the public about its harmful effects. The tobacco industry spends more than $650 million each year targeting our state with deceptive marketing designed to recruit their next generation of customers – and has already spent nearly $40 million to distort the truth on Proposition 29.
The industry’s efforts are devastatingly proficient: California’s kids buy or smoke more than 78 million packs of cigarettes each year. Nearly 90 percent of the smokers in California started smoking before their 18th birthday.
I saw a gentleman in my office recently. He was having severe pain radiating from his lower back, down to his calf.
I was about to describe my plan to him when he interrupted me saying, “I know, Doc, I am overweight. I know that this would just get better if I lost the weight.” He hung his head down as he spoke and fought off tears.
He was clearly morbidly obese, so in one sense he was right on; his health would be much better if he would lose the pounds. On the other hand, I don’t know of any studies that say obesity is a risk factor to ruptured vertebral discs. Besides, he was in significant pain, and a lecture about his weight was not in my agenda. I wanted to make sure he did not need surgery, and make him stop hurting.
This whole episode really bothered me. He was so used to being lectured about his obesity that he wanted to get to the guilt trip before I brought it to him. He was living in shame. Everything was due to his obesity, and his obesity was due to his lack of self-control and poor character. After all, losing weight is as simple as exercise and dietary restraint, right?
Perhaps I am too easy on people, but I don’t like to lecture people on things they already know. I don’t like to say the obvious: “You need to lose weight.” Obese people are rarely under the impression that it is perfectly fine that they are overweight. They rarely are surprised to hear a person saying that their weight is at the root of many of their problems. Obese people are the new pariahs in our culture; it used to be smokers, but now it is the overweight.