Cheaters are smoking, but not paying surcharge on health insurance exchanges
Health Headlines
http://www.dispatch.com/content/stories/insight/2016/05/15/01-cheaters-are-smoking-but-not-paying-surcharge-on-health-insurance-exchanges.html Elise Amendola | The Associated Press file photo
Smokers who buy insurance on the health insurance exchanges aren't coming clean, and that's most likely to avoid monthly surcharges.
Barred from restaurants, banned on airplanes and unwelcome in workplaces across America, smokers have become accustomed to hiding their habits. So it’s no surprise many also deny they smoke when buying health coverage from the federal health law’s insurance exchanges.
Insurers — who can charge higher rates to admitted smokers in most states — are steamed.
They say when smokers cheat to escape tobacco surcharges on their monthly premiums, everyone else pays higher rates. Signs of smokers' deceit:
In Ohio, 23 percent of adults smoke regularly, according to a federal survey, but only 9 percent of those who bought coverage this year on the insurance exchange paid the tobacco surcharge.
In Idaho, 17 percent of adults smoke, but less than 3 percent paid the tobacco surcharge.
In Kentucky, more than a quarter of adults smoke regularly, but just 11 percent paid the tobacco surcharge.
In Minnesota, 18 percent of adults smoke, but less than 5 percent paid the tobacco surcharge.
Wide discrepancies such as those exist in virtually all states, federal data show.
Insurers say they’re disappointed but not surprised. They can’t independently check who is a smoker because, per the Obamacare law, they rely on the honor system.
"Given how low these numbers are, it’s hard to believe there is not some misrepresentation or lying going on,” said Cameron Kaplan, assistant professor of health economics at the University of Tennessee. “It makes sense given the way the law was designed."
The Affordable Care Act allows insurers to impose surcharges retroactively if they catch people hiding that they're smokers, but it specifically forbids dropping coverage for those caught lying.
“It’s bothersome and a concern,” said Josh Jordan, a spokesman for Blue Cross of Idaho. “It means nonsmokers will pay more because smokers generally have higher health care costs that were supposed to be partly offset through the surcharge. … A lack of people paying it means everyone else may pay more.”
Age, county of residence and smoking are the only factors that insurers can consider in setting rates. Only eight states, including California and New York, plus the District of Columbia, prohibit insurers from charging a tobacco surcharge on the individual market.
In the 37 states that use the federal insurance exchange, HealthCare.gov, the tobacco surcharge was paid by about 7 percent of 5.1 million consumers who enrolled, according to federal data. The health law defines smoking as “using any tobacco product on average four or more times per week in the past six months.”
About 17 percent of U.S. adults smoke cigarettes, which is down from 21 percent a decade ago, other federal data show. Smoking rates are believed to be considerably higher among lower-income Americans and the uninsured — including those most likely to buy coverage on the exchanges, experts say.
It’s not only Obamacare that’s asking smokers to pay more for health coverage.
Large employers increasingly do it, too. About 40 percent of employers with more than 1,000 workers had a tobacco surcharge last year, nearly twice the level of a decade ago, according to benefits consulting firm Willis Towers Watson. Enforcement typically relies on the honor system, said Jeff Levin-Scherz, national leader at the company, although some companies use blood or saliva tests to identify smokers.
The main reason for the surcharge is not to penalize smokers but to identify those who could benefit from smoking cessation programs, he said.
Clare Krusing, a spokeswoman for America’s Health Insurance Plans, the industry’s trade group, said it’s clear not all smokers are paying the surcharge, but it is needed to help cover smokers’ high health risks. The health law allows states to charge as much as 50 percent more to smokers than nonsmokers, but a handful of states have lower limits, including Kentucky and Colorado.
A study by researchers at University of Tennessee, published in Health Affairs in 2014, found the median insurer surcharge was 10 percent in 2014. Insurers don’t have to impose a surcharge where states allow one, but most do. In Idaho and Kentucky, all the insurers on the state exchanges have it. In Minnesota, about 60 percent of plans have it.
The low rate of admission to tobacco use hampers insurers in setting adequate premiums for everyone, said Scott Streator, a senior vice president with CareSource, an Obamacare health plan with 120,000 members in Ohio, Kentucky, Indiana and West Virginia.
He wants the Obama administration to consider changes to better validate whether smokers are fessing up. Yet, he doesn’t want to make validation so onerous that it deters sign-ups.
That might only discourage smokers from getting health insurance.
