Whitesburg KY

Making smokers pay 40% more for health insurance is wrong

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.

That’s because of how the state has chosen to implement a provision of the Affordable Care Act allowing up to a 40 percent surcharge on smokers’ premiums.

The Department of Insurance had the option of allowing no tobacco surcharge, as at least six states and the District of Columbia are doing.

The surcharge makes sense from a strictly actuarial perspective. The higher cost of caring for smokers won’t be built into everyone’s rates. Thus, non-smokers should be able to afford a policy through the health insurance exchange (kynect.ky.gov) which opens Oct. 1 to help individuals and small businesses obtain affordable coverage.

From the longer-term perspective on how to improve people’s health and contain medical costs, the tobacco penalty is a policy disaster.

People who have insurance eventually pay, through cost-shifting, to care for the uninsured. This reality undergirds the 2010 reform law: Better to pay for prevention than for emergency-room visits and intensive care. A dollar spent treating tobacco dependence produces $3 in savings, according to a landmark Massachusetts study.

Under the new law, insurance companies can no longer increase premiums because someone is a woman or has a pre-existing medical condition. The only considerations for setting rates in the exchange are age, where you live, family composition and tobacco use.

The ACA allows up to a 50 percent surcharge on tobacco users’ premiums; Kentucky opted for 40 percent.

The government will provide aid in the form of tax credits to help individuals not insured by an employer or public program and whose incomes fall below 400 percent of the poverty level — $45,960 for an individual.

But there is no subsidy to help pay the tobacco penalty.

Individuals who fall below 138 percent of poverty will be eligible for no-cost Medicaid, regardless of their tobacco use.

The American Cancer Society opposes the penalty on tobacco users, fearing it will price them out of coverage. As the society’s David Woodmansee told The Washington Post, “We’re anti-smoking, not anti-smoker.”

The insurers that have expressed an interest in being part of Kentucky’s exchange — Anthem, Bluegrass Family Health, Humana, Kentucky Health Co-op and United HealthCare — have not yet announced their rates.

So it’s too early to know the penalty’s exact effect.

Based on the Kaiser Family Foundation’s calculator (kff.org/ interactive/subsidy-calculator/), and accounting for the 40 percent surcharge, a 40-year-old smoker with an annual income of $16,086 in Kentucky would have to pay $1,756 for a policy a non-smoker could get for $549.

That’s more than 11 percent of the smoker’s income, well above the 8 percent at which the ACA waives the penalty for not having insurance.

State officials say the tobacco surcharge can be revisited in two years. Here’s hoping the actuarial approach enables a smooth startup for the exchange.

But, as soon as possible, Kentucky should end the penalty on tobacco users and encourage them into the health care fold. Research has shown that medical professionals could be especially effective in decreasing the 29 percent of Kentuckians who smoke and the huge economic burden tobacco addiction puts on the state.

— The Lexington Herald-Leader

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