Obamacare – Smoker Surcharge, Super Savings

WASHINGTON - Oct. 1, 2013 - PRLog -- WASHINGTON, D.C. (October 1, 2013):  As reported in the Wall Street Journal, the British Medical Journal, and elsewhere, imposing a smoker surcharge by requiring smokers to pay more for their health insurance – as the new Affordable Care Act [ACA] provides – can slash smoking rates among employees by 50%.

        Since each smoking worker can cost his employer more than $12,000/yr in totally unnecessary medical care, disability, lost productivity and other expenses, and smokers collectively impose additional costs of over $300 billion/yr on the U.S. economy, the savings in dollars –  not to mention in lives, disability, and disease – can be enormous, both for the employer and for the overwhelming majority of taxpayers who are nonsmokers, but who now are nevertheless required to bear most of these costs, says Prof. John Banzhaf.

        Public interest law professor John Banzhaf first developed the strategy of charging smokers substantially more for their health insurance in the mid 1980s, convinced the impartial National Association of Insurance Commissioners [NAIC] to adopt and recommend the concept, brought two legal actions to get the federal government to rule that it was legal, and helped persuade Congress to include it under Obamacare.

         He was gratified to see that smoker surcharges are now supported by a majority, who also overwhelmingly approve of higher taxes on tobacco products, and that tobacco companies are strongly opposed to it.

        Strangely, some health organizations also oppose the Obamacare’s 50% smoker surcharge, but Banzhaf suggests that they may simply be concerned that their own funding for antismoking-education and smoking-cessation programs might be cut when legislators begin to realize that both are very expensive, and not very effective or efficient when compared with something like a smoker surcharge.

        Over 100 studies have shown that one of the most effective methods for helping people quit smoking – which more than 90% of smokers already want to do, but many lack a strong, concrete, here-and-now incentive to actually go through with it  –  is to make smoking significantly more expensive; e.g., by raising the excise tax on cigarettes, and/or by requiring smokers to pay more for their health insurance, just as they have long been required to pay more for their life insurance.

        The ACA also authorizes surcharges based upon age and residence.  Although these can be much higher (300% each), the factors are either immutable (age) or very difficult and expensive to change (residence), and neither reduces medical care costs at all, no one seems to find them unfair or otherwise objectionable.

        So a much smaller surcharge – which can, unlike the other two, save billions of dollars and millions of lives, and which for the first time requires smokers to accept some personal responsibility for their own choices – can hardly be unfair; indeed, it’s really no different than the higher premiums smokers pay for life insurance.

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
(202) 994-7229 // (703) 527-8418
http://banzhaf.net/ @profbanzhaf