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60% Will Kill Health Care, But There's an Alternative
"60% of Firms to Kill Health Insurance, Charge More under Obamacare," says a headline designed to dramatize the impact the Affordable Care Act [ACA] may have on small business owners -- but there's an alternative even for small business owners
But rather than dropping health insurance for their workers (21%) - or planning to make all employees pay more (38%) - because of anticipated jumps in health care costs, there is an alternative built into the legislation which could prevent these dire consequence, says public interest law professor John Banzhaf, who lobbied for the inclusion of a key provision providing for surcharges on smokers.
Under the law, small business owners can charge smokers up to 50% more for their health insurance [42 USCS § 300gg] beginning in 2014. More specifically, the law authorizes a 50% surcharge which, when applied to a average total health care premium per employee for large companies of $10,475, results in a smoker surcharge of $5,237. This surcharge, when added to the typical portion of the premium assessed against the individual employee of $2,306, could more than triple a smoker's premium.
The result, suggests Banzhaf, will provide a powerful incentive to help smoking employees to quit, something the great majority of smokers already want to do, but often lack a direct and immediate incentive - in contrast to concerns about cancer many years in the future. For those who do not quit, there are many other highly qualified persons seeking positions who would not only quit smoking if necessary, but also take additional training and even uproot their families, to find employment.
"The great advantage of this provision to small business owners is that they can utilize the surcharge without the need to establish and maintain a qualified 'wellness plan' under the statute, a requirement which could be burdensome and/or expensive for small businesses,"
In contrast, businesses which might wish to impose a surcharge on obese employees - in a similar effort to avoid passing alone preventable health care costs to employees who practice a healthy lifestyle - can do so only as part of a wellness plan which meets various requirements, and then the size of the surcharge is more limited.
The reason for the difference in treatment between smoking and obesity, says Banzhaf, is simple: in a legal proceeding he brought, the government classified obesity as a "health status," whereas smoking is simply a "behavior." Moreover, obese people may sometimes be protected under the American With Disabilities Act [ADA], a protection which does not apply to smokers, even those addicted to nicotine.
In short, rather than denying its workers health insurance, or forcing all workers to pay far more for their coverage, even small businesses can require their smoking employees to bear more of the huge costs their smoking is now imposing on others. If, as a result, they quit, or simply pay the added surcharge, the cost to the small business owner should be substantially reduced, suggests Banzhaf.
He notes that something like a dozen of our states are already charge smoking employees higher health insurance premiums, and several states are planning to (or already do) impose differential insurance rates for smokers.
Also, a number of recent studies show that growing majorities of citizens support the concept of charging smokers (but not the obese) more for their health insurance, that many companies are already doing so, and that an even larger number of companies are planning to do so in the near future as health care costs continue to rise.
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)
2000 H Street, NW
Washington, DC 20052, USA
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