Study: Premium surcharge discourages health plan enrollment, not smoking

Cigarette in an ashtray

The Affordable Care Act provision that allows health plans to charge tobacco users higher premiums appears to have suppressed insurance enrollment rather than encouraged smoking cessation, according to a new study published by Health Affairs.

Researchers reviewed data from 2011-2014 from the Behavioral Risk Factor Surveillance System to gauge the effect of the surcharges on insurance status and smoking cessation in the first year of the ACA exchanges. They found that medium and high surcharges reduced insurance coverage for smokers by 4.3 percentage points and 11.6 percentage points, respectively, compared to no surcharge.

The surcharges have a significant financial impact on many smokers, as the low-income tax credits for marketplace coverage are calculated based on premiums for non-tobacco users. Consequently, the credits do not offset any of the surcharge--and the surcharges can boost smokers’ premiums up to 150 percent of non-tobacco users’ costs.

Several states prohibit the surcharges altogether, and a number cap the maximum at 10 percent to 40 percent of the non-tobacco use premium, the study points out.

The amount of the surcharge appears to do little to improve smoking cessation rates. Smokers in states that have no surcharge are slightly more likely to participate in smoking cessation programs. In states with low surcharges, the likelihood of quitting smoking fell 5.6 percentage points compared to those with no surcharges. Smokers who paid medium and high surcharges were about as likely to quit as those with no surcharge.

In addition, health insurers are frustrated by the fact that many consumers apparently avoid the surcharge by lying about their tobacco use, FierceHealthPayer previously reported.

- here's the study (subscription required)