Big tobacco companies and anti-cancer activists are standing in opposition to a part of the Affordable Care Act that allows insurance companies to charge smokers 50 percent more than patients who do not use tobacco.
Cigarette makers such as Altria say the policy amounts to discrimination against smokers.
The American Cancer Society, meanwhile, worries that the high surcharges could make health insurance unaffordable to cigarette smokers, who are disproportionately low income.
“We’re anti-smoking, not anti-smoker,” said David Woodmansee, the cancer society’s associate director for state and local campaigns.
Unlike other groups that have failed to get a divided Congress to kill parts of President Obama’s signature legislative accomplishment, these unusual partners could have a shot at success: They can take the battle to individual states, which have the authority to bar health insurers from considering tobacco use in setting subscriber premiums.
Health insurance plans have typically set premiums higher for patients who they expect to have higher health costs. They tend to charge women more, for example, because pregnancies can be costly. Older patients, too, usually face higher premiums, because they use the health-care system more.
Starting in 2014, the Affordable Care Act will curtail this practice. Health insurance plans are barred from charging women higher premiums than men. They can charge older patients only three times as much as the youngest members. Smokers, meanwhile, could face a 50 percent surcharge on their premiums.
Although low- and middle-income tobacco users will get premium subsidies meant to make health insurance more affordable, that government assistance would not apply to the tobacco surcharge, leaving the smoker to foot the bill.
One analysis, prepared by the nonpartisan Institute for Health Policy Solutions, estimated that the tobacco surcharge could cause a low-income individual’s annual premiums to jump from $708 to $3,308.
“Our concern is that a tobacco use surcharge carries a risk of rendering health insurance unaffordable for many people,” Campaign for Tobacco-Free Kids president Matthew Myers said.
Health insurance companies tend to support the provision, which they argue allows them to adequately charge tobacco users for the additional health-care costs they incur.
“If issuers are not allowed to adjust rates for tobacco use for these individuals, they will have to increase standard rates for all individuals,” the Blue Cross Blue Shield Association wrote in comments to the Department of Health and Human Services last month.
The American Cancer Society opposed the tobacco rating provision during the congressional debate about the health-care law. It is now looking at a state-by-state approach to work on rolling back the provision.
Members of the group’s policy team are working on a template for testimony they could provide at the legislative hearings that they expect to occur.
“It is the law of the land, but we will be supportive of states that try to restrict the surtax,” policy director Steve Finan said. “We are engaging on the state level.”
Altria, which owns cigarette company Philip Morris, is monitoring the states for similar developments. The group spent more than $10 million on federal lobbying in 2012, according to the Center for Responsive Politics, but has not yet engaged on the issue at the state level.
“It is something that we’ll be monitoring as state legislatures come into session,” spokesman David Sutton said. “It’s something that we’re monitoring and looking at what’s being discussed, what might move at the state level.”
Five states already barred insurance companies from charging tobacco users more prior to the Affordable Care Act. Now, others are weighing the issue and are coming to disparate conclusions on the best path forward.
California is weighing legislation that would bar health-insurance companies from charging tobacco users more than non-smokers. It already has implemented such restrictions within its health exchange, the new marketplace that will launch in 2014, but has no such restrictions for carriers who sell in the outside market.
“We know that people who are smokers tend to be lower-income,” California Assemblyman Richard Pan, who sponsored the legislation, said. “The fact that the subsidies won’t cover the increase is problematic for this group of people. They are going to be unlikely to get insured.”
New Hampshire may take a different approach: A bill introduced there by the state insurance department would codify the Affordable Care Act provision allowing health insurance companies to charge the tobacco surcharge.
If states do not alter the health law’s rule, there is at least one industry that sees promise in this provision: manufacturers of electronic cigarettes. Since these products use nicotine, but not tobacco, their users could dodge the tobacco rating requirements.
“We definitely see there will be a potential for this law to drive current tobacco smokers to an alternative, and the most likely product is electronic cigarettes,” White Cloud Electronic Cigarettes co-founder Matthew Steingraber said.
His company plans to launch a direct mail campaign targeting demographics with high rates of smoking sometime this spring.