With all the arguing about whether the Affordable Care Act is good or bad, or a success or a failure, there’s another argument that hasn’t been settled yet: What to do about smokers.
Nationally, the act, commonly known as Obamacare, will allow insurers to impose on smokers penalties of up to 50 percent of the cost of a policy, starting in 2015.
Potentially, that could cost smokers thousands of dollars a year in extra insurance premiums.
But that’s not true in New York, five other states and the District of Columbia, who all prohibit those penalties that the law oddly describes as “incentives.”
Still, New Yorkers who work for companies based in other states may continue to face out-of-state insurance policies that include smoking penalties.
Part of the reason for different takes on insurance for smokers is the varied ways health insurance rates are set. But another factor is differences of opinion — mostly political and social rather than scientific — about whether penalties actually discourage smokers from smoking.
On the one hand, “we want everyone to have coverage no matter what,” said Karen Pollitz, senior fellow at Kaiser Family Foundation, headquartered in Menlo Park, Calif. “New York’s been leading the nation in doing that for a long time.” New York’s version of the ACA figures rates based on typical community costs rather than individual histories or demographics.
On the other hand, Pollitz said, some in society feel higher insurance premiums for smokers “could encourage people to take more responsibility and not create a moral hazard: ‘I can go ahead and smoke because everyone will pay.’ ”
That may be why smoking penalties are included in the ACA, despite the law’s general premise that people’s existing health conditions should not affect the cost of health insurance.
A penalty for smokers — who typically end up racking up bigger health care costs in the long run than non-smokers — seems logical on its face. Health experts, though, say that logic is flawed.
The flaws begin with when people start smoking: as teens, long before they pay for their own health insurance.
“It’s very hard to believe that kids who are thinking about smoking are going to be paying attention to the fact that five or 10 years from now when they pay for insurance, it’s going to be more expensive,” said Donald Kenkel, professor of policy analysis and management at Cornell University.
Secondly, research on the reaction to taxes heaped on cigarettes shows that people who are already addicted to smoking aren’t so price sensitive. Kenkel said a 10 percent increase in the cost of cigarettes doesn’t cause a 10 percent drop in cigarette usage. It might cause just a 1 percent drop.
And premium penalties might not work even that well, he suggested, because they’re not as noticeable to consumers, coming as they do in the form of payroll deductions for insurance rather than in daily doses.
“A tax you pay every time you buy cigarettes is going to be more salient,” he said.
Pollitz said research has shown insurance penalties don’t make smokers stop smoking, but they do make them avoid getting costly insurance.
Dr. Geoffrey Williams is director of the University of Rochester Medical Center’s Healthy Living Center. He has done research on rewards used to encourage people to adopt better health behaviors. The research found that as with other behaviors, such as earning good grades, motivation to quit smoking must come internally for it to stick.
A survey of studies on incentives — the reward kind, not the punishment kind — given to discourage smoking showed most subjects failed to change their smoking behavior in the long run, except for one study that gave rewards of up to $750.
Williams says offering rewards to give up harmful behavior is also problematic, not the least for the people who aren’t engaging in harmful behaviors.
“The problem is they can’t reward people in certain groups that have high risk, because everyone’s going to want the reward. If you can punish people, that’s more acceptable” to the others, he said, adding, “It really is a punishment, because they don’t use that money to offer treatment to those people.”
Indeed, Pollitz said, smokers’ penalties may simply be a result of shifting the cost for insurance from employers or insurance companies to individuals.
Both Williams and Kenkel called smoking penalties a regressive tax because the prevalence of smoking is highest among the poor and poorly educated.
Regardless, companies may be loathe to charge the full smoker’s penalty, despite the allure of making someone else pay, Pollitz said. Typically companies pay about 80 percent of the cost of health insurance and employees pay the other 20 percent, she said.
If companies add the entire allowable smoker’s penalty, the proportions switch to about 30 percent paid by the company and 70 percent by the employee.
That proposition is no longer an affordable health care plan for the individual, Pollitz said, so companies might be fined by the federal government.
Additionally, health insurance is still considered a benefit. If that benefit comes with potential penalties, it ceases to be a marketing tool to attract workers.
Further, Pollitz said, there’s some question that singling out a group for high penalties or negative incentives could open up a company to discrimination lawsuits.
Where will this all shake out for smokers?
“It really is going back and forth. It’s a little like watching a tennis match,” Pollitz said.
“Whether this really does help reduce smoking or promote greater health, and not just shifting cost — there isn’t a lot of evidence,” she said.