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Companies Moving to Charge Smokers 50% More Under Affordable Care Act
More companies are moving to charge smokers up to 50% more for health insurance under the ACA, even if the employers can't afford the expense of having a qualified "wellness program" as they must with regard to other health factors such as obesity.
It was recently called "a trend that is expected to grow by 2014 because of a provision in the federal Affordable Care Act that will allow insurance plans to increase penalties for habits such as smoking."
Smoker surcharges could mean that both employers and nonsmoking workers will no longer have to bear the huge medical costs smokers impose on the health system.
Surcharges are also a very effective no-cost method of discouraging smoking – and thereby slashing those unnecessary expenses – by providing a very powerful and effective additional incentive for the great majority of smoking employees who already want to quit, says public interest law professor John Banzhaf, who first developed the concept, used legal action to twice obtain government approval for it, and helped it find support in the new legislation.
Every employee who smokes, even if only off the job, can cost his employer well over $10,000 a year in unnecessary additional expenses, so that prohibiting smoking while on the job goes only so far, says Banzhaf. Providing financial or other incentives only to those who quit is seen as unfair to the overwhelming majority of workers who already do not smoke, and such policies are opposed by most members of the public.
Moreover, financial incentives for quitting – or for being a nonsmoker – can't be very large because the money must come out of the bottom line, and thus rewards aren't a very effective way of changing behavior. But increasing the cost for a smoker's health insurance by several thousand dollars a year – the equivalent of more than $2 a pack for a 2-pack-a-day smoker – will have an enormous impact, says Banzhaf, noting that very substantial declines in smoking have occurred whenever the costs of being a smoker increased because of higher cigarette taxes or for other reasons.
Those most likely to quit because of the higher costs are younger workers, the group least likely to be persuaded by the prospect of a heart attack or lung cancer much later in their lives. As a alternative to charging smokers more for their health insurance, a growing number of companies are simply refusing to hire smokers.
Although so-called "smokers' rights" laws in effect in about half the states purport to limit this practice, they are almost never enforced, and are so full of loopholes and exceptions that they provide little protection, says Banzhaf, who has prepared a paper on how companies can decline to hire smokers despite the laws.
Companies desiring to save money and discourage other unhealthy lifestyles such as obesity by charging higher health insurance rates can do so only if they are willing to expend the time and money needed to establish a bona fide "wellness program," and even then obesity surcharges are limited to only 30%.
In sharp contrast, smokers can be charged up to 50% more for their health insurance, even if there is no wellness program in place. This makes it especially easy for the great majority of companies which may be too small to establish and maintain qualifying wellness programs.
The difference in treatment between obesity (where workers can be charged only 30% more, and then only as part of a qualifying wellness program) and smoking (where surcharges of 50% can be imposed even if no wellness plan is in place) is simple, explains Banzhaf. The federal government classifies obesity as a “health status” or as a “disease,”
Furthermore, a worker can cease being a smoker almost immediately – e.g. to meet a deadline date to avoid paying more for insurance – and without any significant health risks, whereas it will ordinarily take obese people months if not years to cease being obese; a process which frequently cannot be rushed without causing significant health problems.
Requiring smokers to pay more of their share of the huge costs their own behavior now imposes on others is simply a form of "personal responsibility,"
Prof. Banzhaf has been called the "Man Behind the Ban on Cigarette Commercials,"
In 2011, according to an annual survey by the Kaiser Family Foundation, premiums for employer-sponsored health insurance averaged $5,430 a year for single coverage and $15,070 for family coverage.
JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D.
Professor of Public Interest Law
George Washington University Law School,
FAMRI Dr. William Cahan Distinguished Professor,
Fellow, World Technology Network,
Founder, Action on Smoking and Health (ASH)
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