By Jane Hoback
As with most aspects of insurance, it’s a calculated risk.
Do you lie to save a few bucks? Do you admit to that pack-a-day habit and just accept the possibility you could pay higher health insurance premiums? Or do you tell the truth so you can access free stop-smoking treatment – and save those extra bucks anyway when the surcharge is eliminated once you do?
That’s the prospect smokers face as they sign up for health insurance under the new regulations created by the Affordable Care Act.
Depending on the plans they choose, smokers and other tobacco users who enroll in health insurance plans in Colorado could pay up to 15 percent more in premiums than nonsmokers. But questions remain about whether they will be truthful when they sign up for plans and how they’ll know about the benefits their insurance offers if they want to quit.
The federal law allows health insurance companies to charge tobacco users up to 50 percent more in premiums. But the law also requires that the surcharge be eliminated if tobacco users sign up for cessation counseling. Counseling programs and medications such as patches, gum and other nicotine replacement therapies are covered at no charge.
Colorado limits the tobacco surcharge to 15 percent and allows carriers to charge less. The 15 percent was permitted for small groups before the passage of the bill that aligns the state health insurance law with federal requirements.
Carriers whose Colorado insurance plans have been approved for 2014 run the gamut in surcharges from 0 to 15 percent. Supporters of the surcharge say it’s necessary due to the cost of treating medical conditions associated with tobacco use.
In Colorado, medical expenditures attributed to smoking totaled $1.6 billion a year, according to a 2010 study by Pennsylvania State University. That’s about $2,385 per smoker a year.
Plan could backfire
The surcharge has come under fire from critics who say there’s no evidence that penalties help prevent smoking and that higher premiums will hurt those who may need coverage the most: low-income residents who can’t afford higher premiums and might have health problems associated with smoking. And because they’ll remain uninsured they won’t be able to take advantage of free treatment to help them stop smoking and they will lose access to medical care for smoking-related health issues.
Christian Stumpf with the Colorado office of the American Lung Association, which opposes the surcharge, also points out that families of tobacco users also will be affected if they remain uninsured.
“We think the surcharge will discourage tobacco users from getting insurance – and getting help — because it’s more expensive,” Stumpf said, adding, “there are several proven methods that reduce tobacco use, like increasing tobacco taxes and smoke free laws.”
The American Cancer Society also opposes a surcharge, and the group’s Cancer Action Network has been working to get the rule changed.
R.J. Ours, government relations director with the American Cancer Society in Colorado, worked with the governor’s office and the insurance commissioner last year to limit Colorado’s surcharge to 15 percent.
“That’s not totally where we’d like to be, but the governor and the insurance commissioner were very receptive to our way of thinking,” Ours said.
“We don’t want to see anything that would deter people from getting insurance coverage. Even if it’s an extra $15 on every $100 they spend in premiums, that’s very unfortunate.”
“We don’t see any evidence that penalties work,” Ours said. “We support no surcharge so that you’ve got the maximum opportunity to have insurance.”
Smokers often uninsured
An estimated 18 percent of Colorado adults smoke, according to a 2008 Colorado Tobacco Attitudes and Behaviors Survey, the most recent data available. The rate increases to 29 percent for low-income residents. Nearly 34 percent of adult smokers in Colorado are uninsured. Tobacco use among Colorado Medicaid recipients is 38 percent.
Colorado HealthOp, a new health insurance co-operative, will charge tobacco users the full 15 percent.
“That’s not so significant a deterrent that it will stop people from getting insurance,” said Colorado HealthOp CEO Julia Hutchins. “And combined with the elimination of the surcharge with enrollment in a cessation program, we decided that would be fair.”
An average Colorado HealthOp premium for a 40-year-old nonsmoker in Denver would be $270 a month. For a smoker, the average monthly premium would be $310, or nearly $500 more a year.
That could be a deal-breaker for somebody whose income is at or below the poverty level.
But Hutchins, pointing to the Penn State study, argues that “smoking does lead to conditions that are very expensive. You want people to get insurance and you want people to take responsibility for their health.”
Rocky Mountain Health Plans, on the other hand, will forego a tobacco surcharge in 2014. The company’s previous individual insurance plans had a 20 percent surcharge for tobacco users.
Michelle Walker, director of sales administration and product development for Rocky Mountain, said the company decided to eliminate the surcharge in part because of the expense of administration of the provision that requires companies to eliminate the surcharge if the insured signs up for cessation counseling.
“We’d have to monitor the rate-up — make sure all the consumers let us know they’re in a cessation program and then back (the surcharge) out,” Walker said. “So we just made the decision to forgo it.”
Walker said the company will collect enrollment data on tobacco users and then decide what it will charge in 2015.
Neither Walker nor Hutchins would predict the number of tobacco users who might enroll in their plans, partly because they don’t know whether tobacco users will admit it when they sign up.
The law only allows carriers to ask people if they use tobacco.
“You have to rely on people to tell the truth,” Hutchins said. “You want to encourage them to do the right thing by self-reporting and then couple that with the cessation program to avoid the extra cost by engaging in activities that will help them quit.”
That’s a sort of Catch-22 of the rule. People who don’t report they use tobacco won’t be able to take advantage of the free counseling and medication provided by the insurance plan.
But whether avoiding the financial penalty is enough motivation to get somebody to quit using tobacco is unclear.
Stop-smoking programs gearing up
Robin Daigh, president of Health Initiatives at National Jewish Health, which runs the QuitLine cessation program in Colorado as well as other states, said she’s getting questions from health plans about the program in anticipation of the law.
Colorado Quitline provides telephone counseling as well as up to eight weeks of nicotine replacement therapy using patches, gum or lozenges. The average cost is about $220.
Daigh said the program, which served 13,600 Coloradans in 2012, is well-prepared for increases in calls.
But she’s not sure that a higher premium is the best way to persuade tobacco users to quit.
“Normally people call when they’ve made the decision that they want to try to quit,” Daigh said. “We could see some ambivalence among people who call just to have the surcharge eliminated.”
That’s a question Hutchins has, too. “I suspect we’ll get disclosure among people who are really ready to quit.”
Whatever the method, helping tobacco users quit and getting them the heath care they need is the ultimate goal, said Bob Doyle, executive director of the Colorado Tobacco Education and Prevention Alliance.
“Health care reform hopefully will create greater awareness of the health care costs and health issues associated with tobacco use,” he said. “Now that the plans are in place, it will be important for us to learn how the rule is going to be implemented and what opportunities or barriers exist for tobacco users. In time, we’ll learn what things are working well and where there are barriers.”
In Doyle’s view, the key now for everybody working in tobacco prevention is to “get the message out, make sure tobacco users get good information, correct information about what’s available to them. It’s critical that they are aware that the plans won’t charge them more if they seek help in quitting and they’ll get free help to quit. That’s going to mitigate some anxiety.”