Patient Protection and Affordable Care Act: Smoking Surcharges Could Cost You

        After strong opposition from multiple states which culminated in the Supreme Court case National Federation of Independent Business v. Sebelius, health insurance exchanges of the Patient Protection and Affordable Care Act (PPACA) began implementation on October 1, 2013.  Though not without website glitches and continuing opposition from House and Senate Republicans, the White House has claimed that many people have signed up and have begun to take advantage of the benefits the PPACA has to offer. (White House)  To be clear, the PPACA is a federal law with state components, including specific state insurance exchanges.  Following the NFIB v. Sebelius, several states with legislatures controlled by Republicans opted to reject the expanded Medicaid coverage provided for by the Act.  As of September 2013, 25 states and the District of Columbia have adopted the Medicaid expansion.  (Advisory.com)  States that have not yet expanded their Medicaid programs can choose to opt in at a later time.  (CNN Money)

            What has come to light since the PPACA has been implemented is the significant impact it will have for smokers.  (Journal Times)  While one of the purposes of the PPACA exchanges is to reduce the cost of insurance across the board, not enrolling without a penalty (or having an alternate source of health insurance) is currently not an option for smokers and non-smokers alike.

            In fact, smokers in some states may have to pay as much 50% more in premiums than non-smokers if they sign up for insurance through the PPACA. (USA Today)  In some cases, the premium that smokers will pay might completely negate the subsidy for which some smoking health plan enrollees would qualify for in the marketplace. (Chicago Sun Times)  For example, if someone would qualify for a $6,000 subsidy on an insurance policy costing $8,000, his out-of-pocket cost would be $2,000.  Under the PPACA, factoring in the 50% surcharge on the original $8,000 sticker price, the same plan might cost $12,000.  However, he would still only get a $6,000 subsidy, because the subsidy cannot be applied to the smokers’ penalty.  That means he would ultimately pay $6,000 out of pocket, instead of $2,000. (Reuters)

            Smokers tend to be overrepresented in the lower income demographic, who currently rank high among the uninsured.  Incidentally, those who fall in the relatively lower income bracket are the people who would be most likely to want to buy insurance through the PPACA because they are currently uninsured.  If the goal of the Affordable Care Act is to protect the most vulnerable by offering them affordable insurance, then it seems paradoxical to dissuade smokers — who make up a fifth or more of the population — from signing up.  (Reuters)

            Organizations such as the American Lung Association favor the 50% premium surcharge, as they see it potentially providing the impetus smokers need to quit their habit.  They have characterized the premium as providing a focus on prevention in healthcare, especially as related to tobacco cessation.  (Lung.org)  It seems as though the purpose of the higher premium charges are to penalize the people who put not only themselves but others at risk by smoking, and incentivize ceases such behvarior. (USA Today)

            Regardless of the purpose of the PPACA’s treatment of smokers, Washington, D.C. and states including California, Massachusetts, Rhode Island, Connecticut, New Jersey, New York and Vermont have already taken the steps to prohibit insurers from applying a tobacco surcharge.  Many other states have lowered the maximum surcharge allowed.  (Web MD)  How this premium will impact the popularity of the PPACA with the 20% of the population comprised of smokers is yet to be seen.

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