Will California Smokers Pay More Under the Health Care Overhaul?

By Stephanie O’Neill, KPCC

(Dale M. Moore/Flickr)

(Dale M. Moore/Flickr)

Perhaps the most popular provision of President Obama’s federal health law is that people cannot be turned down or charged a lot more because they are sick. Obamacare also reduces how much more older people can be charged for insurance.

But the president’s health law permits one group to be charged more — a lot more: smokers. States can allow health plans to charge tobacco users up to 50 percent more for their health insurance premiums.

The provision allowing for a “tobacco surcharge” was designed in part to encourage smokers to quit a habit that often leads to major illness.

The Centers for Disease Control puts the nation’s annual price tag for smoking at more than $190 billion in both medical care and lost productivity.

It’s that price tag that prompts some to support higher health care premiums for smokers. Micah Weinberg is a senior fellow with the Bay Area Council, which researches public policy issues that affect businesses and the local economy. While he says caution is needed to avoid premiums so high that they are unaffordable to smokers, “I think that we need to make sure that there is a strong financial disincentive for people to smoke.”

But critics say the smokers’ surcharge is discriminatory and goes against the spirit of federal health reform.

It can also negate the benefits of subsidies offered under the federal health care law, says Karen Pollitz, a senior fellow with the Kaiser Family Foundation .

For example, a low-income person buying a $6,000 policy who qualified for a subsidy might see the price of the annual policy drop to $3,000, Pollitz says. But “the tobacco surcharge would knock it back up to $6,000 again.”

That was the finding of a study published last summer by the Institute for Health Policy Solutions in Washington, D.C. Smoking rates both in California and nationally are highest among lower-income people –- who often must juggle several jobs to support themselves and their families. The resulting stress, Rick Curtis, president of IHPS says, makes breaking the tobacco addiction even harder.

“For somebody who is totally hooked after many years, and older – and those kinds of people often do need more medical care, they have emphysema and so forth – they have two bad choices: go without health insurance and be impoverished that way, or get health insurance and be impoverished,” he said.

That argument resonates in Sacramento where Assemblyman Richard Pan (D-Sacramento) has written legislation that would make California among the first states to ban higher premiums for smokers under the Affordable Care Act. He believes providing smokers with affordable health insurance is a better way to help them kick the habit.

“It does not make sense to have smokers being uninsured,” says Pan, who is also a practicing pediatrician. “We want smokers to actually have health care coverage. … [T]hrough having health care coverage they’ll have access to smoking cessation treatment” as well as health care in general.

Weinberg calls effort by California to ban higher premiums for smokers misguided, especially when based on findings that those smokers are disproportionately poor.

“We have this very paternalistic attitude about lower-income folks that I think is inappropriate and particularly inappropriate in this context,” he says. “Because if we eliminate the financial incentive not to smoke we’re going to create an environment in which more people do smoke.“

Weinberg’s concerns aside, Pan’s bill faces little opposition –- not from cigarette companies, anti-smoking groups or anti-cancer advocates.

Officials at the American Lung Association’s California branch said in a statement that because smoking is so hard to quit, it’s essential to provide tobacco users with affordable health insurance, rather than make them pay more for it.

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