(seliaymiwell/flickr)

Reforms to the individual health insurance market passed out of the Assembly and Senate in Sacramento on Thursday. Included in the bills were popular consumer provisions including: guaranteed issue, requiring insurers to cover all who apply; and rate setting rules that will make it illegal to charge people with pre-existing conditions more than anyone else or redline those conditions.

From here, the Assembly bill, AB 1X 2, will be heard in the Senate. The Senate’s bill, SB 1X 2, heads to the Assembly.

The bills are moving through a special session of the legislature. The Legislature is working to pass bills to bring the state in line with the requirements of the federal health care overhaul, the Affordable Care Act.

Assemblymember Richard Pan (D-Sacramento), chair of the Assembly Health committee, authored AB 1X 2. “I’m certainly happy it passed,” Pan said in an interview. “It showed the legislature understands the nature of these historic reforms that we’re putting place for California.”

The ACA permits rate setting on four factors: family size, age, geographic region and tobacco use. But in Pan’s bill tobacco use cannot be a factor in rate setting. Federal rules would have allowed smokers to be charged premiums up to 50 percent higher than others.

Pan opposes this provision. He believes allowing smokers to be charged more would make insurance unaffordable to them and leave smokers uninsured. “Certainly inability to have health insurance is not going to get them to stop smoking,” Pan said. “The way to get them to quit is to get them covered and get them smoking cessation treatment.”

Nicole Evans, with the California Association of Health Plans, is cautious about the bills. The legislation does not “tie back” directly to the ACA, she says. Without this protection, insurance companies worry that if the federal government makes changes in the ACA’s individual mandate requirement, healthy people would be more likely to go without insurance, leaving insurance companies required to insurance the sickest people remaining. Under this scenario, Evans says, insurance premiums would skyrocket.

“Our position is: ‘oppose unless amended,’” Evans said.

Gov. Brown vetoed a similar bill on consumer protections last fall because he did not feel the connection to the ACA was sufficient. Brian O’Hara, a staffer with Assemblymember Pan, says this question is currently “in negotiation.”

The two bills also set just six geographic regions for pricing insurance in the individual market in California. But reforms passed last year to the small group market called for 19 regions. The CoveredCA health exchange also is using 19 regional areas. Evans says it could create tremendous confusion, possibly delaying the timeline to the January 1st rollout of the ACA, if all insurance markets do not use the same number of regions and the same regional lines.

Debi Austin appeared in the ad in 1996. In a raspy voice, she described starting smoking at age 13. Then declaring, “They say nicotine isn’t addictive,” she took a drag from her cigarette through a stoma, a hole in her throat which permitted her to breathe. “How can they say that?” she concluded.

For years, she worked to keep kids from smoking. She died last week after fighting various cancers for more than 20 years.

From a release from the California Department of Public Health:

“We are saddened by Debi’s death. She exemplified the real toll tobacco takes on a person’s body,” said CDPH Director and State Public Health Officer Dr. Ron Chapman. “Debi was a pioneer in the fight against tobacco and showed tremendous courage by sharing her story to educate Californians on the dangers of smoking. She was an inspiration for Californians to quit smoking and also influenced countless others not to start. We trust she will continue to touch those that hear her story, particularly teens and young adults. She will be greatly missed.”

Tobacco Free California says this about Austin on its website (where you can also watch a video about her):

Debi Austin started smoking at the age of 13. She continued to smoke through a stoma in her throat even after being diagnosed with cancer and having her larynx removed at the age of 42. But, Debi fought back. She starred in an iconic television ad for the California Tobacco Control Program, quit smoking and has made anti-tobacco education not only her mission in life, but her passion.

A little-known provision in the Affordable Care Act permits insurers to charge higher premiums to smokers. (Dave Whelan: Flickr)

WASHINGTON (AP) Millions of smokers could be priced out of health insurance because of tobacco penalties in President Barack Obama’s health care law, according to experts who are just now teasing out the potential impact of a little-noted provision in the massive legislation.

The Affordable Care Act — also known as “Obamacare” — allows health insurers to charge smokers buying individual policies up to 50 percent higher premiums starting next Jan. 1.

For a 55-year-old smoker, the penalty could reach nearly $4,250 a year. A 60-year-old could wind up paying nearly $5,100 on top of premiums.

Workers covered on the job would be able to avoid tobacco penalties by joining smoking cessation programs, because employer plans operate under different rules. But experts say that option is not guaranteed to smokers trying to purchase coverage individually.

Nearly one of every five U.S. adults smokes. That share is higher among lower-income people, who also are more likely to work in jobs that don’t come with health insurance and would therefore depend on the new federal health care law. Smoking increases the risk of developing heart disease, lung problems and cancer, contributing to nearly 450,000 deaths a year.

Insurers won’t be allowed to charge more under the overhaul for people who are overweight, or have a health condition like a bad back or a heart that skips beats — but they can charge more if a person smokes.

Starting next Jan. 1, the federal health care law will make it possible for people who can’t get coverage now to buy private policies, providing tax credits to keep the premiums affordable. Although the law prohibits insurance companies from turning away the sick, the penalties for smokers could have the same effect in many cases, keeping out potentially costly patients.

“We don’t want to create barriers for people to get health care coverage,” said California state Assemblyman Richard Pan, who is working on a law in California that would limit insurers’ ability to charge smokers more. The federal law allows states to limit or change the smoking penalty.

“We want people who are smoking to get smoking cessation treatment,” added Pan, a pediatrician who represents the Sacramento area.

Obama administration officials declined to be interviewed for this article, but a former consumer protection regulator for the government is raising questions.

“If you are an insurer and there is a group of smokers you don’t want in your pool, the ones you really don’t want are the ones who have been smoking for 20 or 30 years,” said Karen Pollitz, an expert on individual health insurance markets with the nonpartisan Kaiser Family Foundation. “You would have the flexibility to discourage them.”

Several provisions in the federal health care law work together to leave older smokers with a bleak set of financial options, said Pollitz, formerly deputy director of the Office of Consumer Support in the federal Health and Human Services Department.

First, the law allows insurers to charge older adults up to three times as much as their youngest customers.

Second, the law allows insurers to levy the full 50 percent penalty on older smokers while charging less to younger ones.

And finally, government tax credits that will be available to help pay premiums cannot be used to offset the cost of penalties for smokers.

Here’s how the math would work:

Take a hypothetical 60-year-old smoker making $35,000 a year. Estimated premiums for coverage in the new private health insurance markets under Obama’s law would total $10,172. That person would be eligible for a tax credit that brings the cost down to $3,325.

But the smoking penalty could add $5,086 to the cost. And since federal tax credits can’t be used to offset the penalty, the smoker’s total cost for health insurance would be $8,411, or 24 percent of income. That’s considered unaffordable under the federal law. The numbers were estimated using the online Kaiser Health Reform Subsidy Calculator.

“The effect of the smoking (penalty) allowed under the law would be that lower-income smokers could not afford health insurance,” said Richard Curtis, president of the Institute for Health Policy Solutions, a nonpartisan research group that called attention to the issue with a study about the potential impact in California.

In today’s world, insurers can simply turn down a smoker. Under Obama’s overhaul, would they actually charge the full 50 percent? After all, workplace anti-smoking programs that use penalties usually charge far less, maybe $75 or $100 a month.

Robert Laszewski, a consultant who previously worked in the insurance industry, says there’s a good reason to charge the maximum.

“If you don’t charge the 50 percent, your competitor is going to do it, and you are going to get a disproportionate share of the less-healthy older smokers,” said Laszewski. “They are going to have to play defense.”

(Raul Lieberwirth/Flickr)

Tobacco prevention advocates are calling on California to spend more on anti-smoking programs — especially since the state already has the money for it.

A new report published Thursday titled Broken Promises to Our Children looked nationwide at how states are spending the money from the 1998 master settlement agreement with cigarette companies and from states’ tobacco taxes.

Campaign for Tobacco-Free Kids, which published the analysis, says states spend only a “minuscule portion” or tobacco revenue on cessation and prevention programs. The group estimates California will get $1.6 billion this year in tobacco revenue, but will spend just $62 million on smoking prevention and cessation efforts. Nationwide, states spend just two percent of their total tobacco revenue on prevention and cessation.

“California and other states have shown that these tobacco prevention/cessation programs more than pay for themselves,” said Danny McGoldrick, vice-president for research with the Campaign for Tobacco Free Kids. “When we cut them and reverse our progress in reducing smoking, we’re actually costing the state money, because we’re going to have more costs related to treating tobacco-caused disease.” His group estimates health care costs to treat tobacco-caused diseases total $9 billion in California.

In its best practices recommendations, the Centers for Disease Control says that California should spend about $440 million on cessation and prevention. By contrast, Campaign for Tobacco-Free Kids estimates tobacco companies spend more than $500 million in marketing in the state.

“The decision makers are the people sitting in the legislature and the governor,” McGoldrick said. “They have to decide that 36,000 people dying every year in California from tobacco-caused disease and losing 12-14 years off their lives … are worth doing more about than California has already done and is currently doing. But in order to do that, they need to hear from us — the citizens and tobacco control advocates have to let them know this is important to us.”

Sixteen percent of Californians smoked in 2011, according to the Gallup Healthways Well Being Index, the second lowest rate in the U.S. behind Utah, at 13 percent.