The federal law gives insurers the right to add up to 50 percent to the cost of individual health care coverage. The “tobacco surcharge” won’t be offset by federal tax credits, hitting smokers with a double whammy.
Come Jan. 1, smoking is one of the few allowable factors insurers can use in determining individual policy premiums, along with age and location. That doesn’t apply in California, which in May 2013 removed smoking as a factor in determining premiums.
States, which have control over many elements of the Affordable Care Act, can accept or reject the smokers penalty. Several other states already have rejected the surcharges, as well as the District of Columbia, which calls smoking a “pre-existing condition.”
Regardless of what individual states decide on smoking premiums, all insurers are barred from turning away smokers, as they can and do now. And, current premium increases for smokers often top that 50 percent, the U.S. Department of Health and Human Services points out.
In California, the health-care legislation that eliminated the smoker surcharge sailed through the General Assembly and was signed into law by the governor. (The state already has eliminated the smoker fee for employees of small businesses.)
Assemblyman Richard Pan says the provision in his successful health-care bill was designed to keep smokers from being shut out of the health insurance market.
“They’ll be uninsured,” Pan says of smokers hit by the tobacco surcharge. “They’re not getting any health care.”
California isn’t entirely soft on smoking. A bill that would hike the state tobacco tax by $2 a pack is making its way through the legislature. Proceeds would be used to offset the costs of smoking-related diseases now partly absorbed by taxpayers.
The UCLA Center for Health Policy Research envisions worse-case scenarios in which smokers could be charged more than 10 times more than non-smokers.
The Associated Press calculated the additional health-insurance costs to a 60-year-old smoker at $5,100 in states where the smoking premium is allowed.
The tobacco fee’s impact on poor individuals and families could defeat the Affordable Care Act’s goal of near-universal health coverage. Many low-income earners work in jobs not providing health care, making them likely seekers of insurance via the state insurance marketplaces (exchanges).
The American Cancer Society and the American Lung Association are on the record against the tobacco surcharge, along with their strange bedfellows, the tobacco companies.
“We’re anti-smoking, not anti-smoker,” one Cancer Society staffer said.
The tobacco surcharge has its backers.
John Banzhaf, a professor of public interest law who lobbied for the surcharges, says: “The end result is to finally begin to impose some personal responsibility upon smokers for their own behavior and, in doing so, helping them to quit. …(It could) restore to the American economy more than the total cost of Obamacare.” The Centers for Disease Control says smoking costs the U.S. more than $190 billion annually.
Public support for the tobacco surcharge also appears solid:
A 2011 health-care survey found almost 59 percent of respondents were in favor of charging smokers more for insurance. Approval increased with age of respondent, topping out at 64 percent for the 65-plus crowd, the Thompson Reuters phone survey of more than 3,000 Americans said. The same was true of income and education.
Not surprisingly, almost twice as many non-smokers liked the idea (64 percent) as smokers (33 percent).
The percentage of smokers in California is significantly lower than the national average, but that isn’t true of its low-income residents.