Photographer: Kiyoshi Ota/Bloomberg

Obamacare’s Tobacco Surcharges Slowed Universal Health Care in Study

Charges curbed rate of insurance enrollment for smokers and didn't cut down on smoking, Yale researchers say.

The Affordable Care Act was meant to have a particular impact on smokers when it was enacted: It would shift the burden of high health-care costs from smoking ailments to the smokers themselves—17 percent of American adults in 2014. At the same time, the ACA would keep making progress toward the goal of universal health care, even for smokers.

It fell short on both goals in its first year, a study released Wednesday by the Yale School of Public Health found.

The ACA lets insurance companies charge tobacco users up to 50 percent more for premiums, depending on state regulations. The Yale researchers found that smokers facing surcharges were slower to enroll in health-care plans.

If surcharges had been removed for smokers, the study found, smokers with insurance coverage in the sample would have risen from 70 percent in 2013 to 80 percent in 2014. With surcharges, the share of insured smokers rose to 76 percent. For people under the age of 40, 65 percent of smokers had coverage in 2014, a figure that would have been closer to 75 percent with no additional charges.

Without a bigger jump in enrollment, smokers did not ease the burden of smoking-related health-care costs on nonsmokers, as intended. Previous research suggests many smokers lack affordable coverage

“You can’t shift the cost to [smokers] if they don’t take up and then pay,” said Abigail Friedman, the study’s first author and an assistant professor of public health at Yale. “I would think the policy makers didn’t realize the surcharges were going to have this substantial effect in terms of reduced take-up."

As an incentive to quit smoking, surcharges had no effect, researchers found, because those in the zero-surcharge group were as likely to quit smoking as those facing extra charges.

The researchers combined data from the Centers for Disease Control and Prevention with premium and surcharge information for each state. They focused on adults in child-free households who would be eligible for tax credits to help cover the cost of health insurance plans under the ACA. To measure how insurance plans related to quitting smoking, the study considered people who had smoked at some point in the six months before they were surveyed by the CDC.

Using the CDC survey to collect self-reported data allowed researchers to avoid the potential pitfall that many smokers deny the habit when purchasing federal health insurance plans to avoid hefty surcharges. Even if smokers had under-reported their habits on the survey, the study’s findings about lower insurance enrollment for smokers would have been dramatic, Friedman said.

The finding about people under the age of 40 was particularly striking because of the potential for major health care savings if that demographic quits smoking, said Dr. Benjamin Toll, chief of tobacco cessation and health behaviors at the Hollings Cancer Center and the Medical University of South Carolina, who was not involved with the study. Toll said he hopes that states and insurance companies reconsider how they implement tobacco surcharges.

“It’s a shame because that’s the exact population that would really, really benefit from quitting smoking and drive down the amount of health problems they have,” Toll said. “If you can get those people to quit, then they don’t have cancer, heart attacks, and strokes and things that cause a lot of downstream costs.”

Smokers under 40 might have been less likely to get health insurance because they are particularly price-sensitive and have lower health-care costs than the older group, regardless of tobacco use, Friedman said.

Tobacco surcharges are just one way the government has tried to fight smoking, including advertising campaigns, raising the federal tax on a pack of cigarettes from 39 cents in 2008 to $1.01 in 2009, and hikes in state taxes. The average state cigarette excise tax (PDF) was $1.63 as of June 21. Regulations on electronic cigarette use have also been implemented.

Friedman said states should consider adjusting their surcharge guidelines for insurance plans. Several states, including California, New York, New Jersey, and Massachusetts, have eliminated the surcharges, and others have capped them at 15 percent to 40 percent of the original premium cost.

“I think it’s a very real possibility that other states will follow this example,” Friedman said. “In particular, if the goal of the state is to achieve universal coverage, then it makes sense for them to think about either restricting the surcharge to a lower level or prohibiting it.”

(Corrects Friedman's remark on the states in the second-to-last paragraph.)
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