Should smokers and the obese pay extra for health insurance?

By , Posted on 15 August 2013

smoking and health insurance ratesWhen it comes to health insurance, more than half of Americans believe smokers should be charged more for coverage. But they're more forgiving when it comes to overweight people -- less than half taking part in a recently released Gallup poll said the obese should pay extra.

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The Gallup poll, which surveyed more than 2,000 adults nationwide and is part of its annual Consumption Habits survey, found that 58 percent think the health dangers justify charging smokers more for medical care. Only 41 percent say those who are overweight should be similarly affected, despite the many medical problems and care costs linked to obesity.

The poll provides insight into how Americans may feel about a significant provision of the Patient Protection and Affordable Care Act, which allows insurers to charge smokers up to 50 percent more on their premiums when purchasing coverage through a health insurance exchange.

However, the provision isn't required under the ACA, and some states -- including California, Massachusetts, New Jersey, New York, Rhode Island, Vermont and the District of Columbia -- won't impose a smoker surcharge, according to the Department of Health and Human Services (DHSS).

The surcharge, criticized by some as discriminating against low-income tobacco users, was included in the health reform law to discourage unhealthy behavior and give insurers a way to help control costs associated with this risky -- but voluntary -- habit, explains Karen Pollitz, a senior fellow with the Henry J. Kaiser Family Foundation.

There isn't a similar provision allowing insurers to charge overweight individuals more for coverage.

Smokers apparently will get a reprieve from costlier premiums, at least for a year, because of a computer glitch in the system that administers provisions under health reform.

According to the DHSS, the glitch occurs when government computers try to process a regulation that prohibits insurers from charging older customers more than three times what they charge younger adults in the health insurance pool. The system, says the agency, can't accommodate the two groups. A fix could take up to a year, says department spokesperson Joanne Peters.

The view from Gallup

Some of the poll's findings were fairly predictable, as when smokers came out strongly against higher premiums tied to their habit. Only 28 percent of smokers think a surcharge is a good idea, in contrast with 65 percent of non-smokers.

Other details gleaned from the survey include:

  • The results have changed little since the poll began in 2003. Back then, 65 percent of all people agreed with a smoker surcharge, compared to the current 58 percent.
  • The same holds for higher charges for the overweight. In 2003, 43 percent said it was justified, compared to the 41 percent today.
  • Only 34 percent of those who see themselves as overweight said larger insurance payments are justified. The number rises slightly, to 38 percent, for those who think they're underweight. A surcharge was seen as a good idea by 47 percent of respondents who believe their weight is "about right."

The Centers for Disease Control and Prevention (CDC) notes that more than 440,000 people die each year because of tobacco use, which also costs about $96 billion in health care.

The CDC also points out that Americans are getting heavier -- more than one-third of U.S. adults are considered obese. Further, about 17 percent of children and adolescents, aged 2 to 12, also fit the category. And a recent Cornell University obesity study found that medical costs tied to obesity are nearly double previous estimates. The report points out that an obese person incurs medical costs $2,741 higher than someone with a normal weight.

Is the smoking surcharge unfair to the poor?

While the surcharge may, indeed, help insurers trim costs and cause a drop in tobacco use, it could also eliminate subsidies for low-income smokers who can't afford to buy health insurance on their own, contends Pollitz.

She gave the example of someone who can pay only $3,000 for a health plan that costs $6,000, but qualifies under the federal health law for a $3,000 subsidy to cover the difference. After the premium hike, "the tobacco surcharge would knock it back up to $6,000 again," a full out-of-pocket expense for the smoker, Pollitz says.

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Des Toups

Des Toups

Managing editor

dtoups@quinstreet.com

Des Toups is a writer, editor and expert on insurance, cars and personal finance. He has written extensively about all three for national publications such as MSN and major newspapers such as the Seattle Times. He has been quoted about insurance issues in The New York Times, USA Today and Kiplinger's. Follow him on Twitter @destoups.

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