Monday, September 9, 2013

State health-insurance exchange plans to make smokers pay 40 percent more for coverage; varied interests, observers object

By Molly Burchett
Kentucky Health News

Supporters of the Patient Protection and Affordable Care Act have touted its goal to provide health insurance to all Americans without discrimination, such as prohibiting insurers from denying coverage due to pre-existing conditions. But it allows them to charge smokers more for it, and the officials running Kentucky's health-insurance exchange plan to do just that.

When Kynect, the state's online insurance exchange, opens Oct. 1, smokers can expect to pay up to a 40 percent surcharge, not far from the 50 percent limit in the law. That has brought objections from a wide range of observers, including tobacco companies and anti-cancer activists, saying it may be well-intended but is unfair and may backfire.

"Ranked No. 1 in adult smoking and cancer deaths, Kentucky should be doing all it can to bring tobacco users under the care of medical professionals. Yet some Kentucky smokers — perhaps many — will still be unable to afford health insurance, even after historic reforms take effect next year," says a recent Lexington Herald-Leader editorial. In 2011, the last year for which figures are available, 29 percent of adult Kentuckians smoked, and that does not include those who use smokeless tobacco.

UPDATE, Sept. 11: The state Department of Insurance says the 40 percent is a ceiling, and some companies are charging less, but 40 percent is the most common tobacco surcharge on health insurance policies sold in Kentucky. "There are health care costs associated with tobacco use," spokeswoman Ronda Sloan said. "With no tobacco use surcharge, insurers would have raised rates for everyone to offset those costs. . . . Plans will provide benefits for tobacco use cessation."

Seven states (California, Connecticut, Massachusetts, New Jersey, New York, Rhode Island and Vermont) and the District of Columbia will not charge smokers higher premiums. Connecticut voted against a smoking surcharge for individual policies, saying higher individual rates would disproportionately penalize poor people who tend to smoke.

Surchage critics in Kentucky agree. "This penalty is being applied to the working poor and medically indigent," writes Dr. Kevin Kavanagh, chairman of Health Watch USA, in a Herald-Leader op-ed. "Tobacco use is inversely related to education and income. In Kentucky, 48 percent of adults without a high school diploma smoke. These are the working poor."

Since most smokers tend to have lower incomes, the surcharge could discourage them from signing up for coverage at all because they can't afford it, restricting health care access for those that need it most, critics say. Although people with incomes up to four times the federal poverty level will get premium subsidies on the exchanges, the tobacco surcharge will be added to the final rate, reports Sarah Kliff of The Washington Post.

"The smoker's premium alone will account for 24 percent to 29 percent of his salary not counting deductibles and co-pays," Kavanagh writes. "This policy clearly blocks insurability for the low-income worker." Cigarette makers say the policy amounts to discrimination against smokers, reports Kliff.

The surcharge makes sense from a strictly actuarial perspective, and is supported by the insurance industry because smokers have much higher health costs, reports WebMD Health News. Kentucky's health costs attributable to smoking add up to about $1.5 billion a year, and smoking-caused productivity losses total $2.3 billion a year, says the Centers for Disease Control and Prevention.

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However, punitive measures like higher premiums have not been proven to reduce smoking, say health organizations opposing the surcharge, such as the American Cancer Society and American Lung Associaton. In addition to being ineffective, higher premiums for smokers could make health insurance coverage unaffordable, leaving tobacco users without coverage for smoking-cessation programs, or any other type of coverage that Obamacare has sought to provide.

"From the longer-term perspective on how to improve people's health and contain medical costs, the tobacco penalty is a policy disaster," says the Sept. 8 Herald-Leader editorial. The Cancer Society says states would see greater public health and economic benefits from increased tobacco taxes, implementation of strong smoke-free laws and the funding prevention efforts, rather than penalizing smokers.

In closing, Kavanagh poses an important question: "Wouldn't it be better to provide these individuals access to the health care system where tobacco withdrawal could be encouraged and assisted and preventative care for other ailments can be provided?" (Read more)

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