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California Moves To Protect Smokers From Higher Obamacare Insurance Costs

Apr 30, 2013

Smoking has its risks – but in California, higher prices for health insurance probably won't be one of them. 

The federal health law allows states to charge smokers up to 50 percent more for a health plan – but legislation is moving forward in the California legislature that will make sure that doesn't happen.

And unlike other efforts around the country to alter the law, this is one coming from a Democrat.

The Affordable Care Act is supposed to remove discrimination in the pricing of health insurance for things like gender and a person’s medical condition. And some say a tobacco surcharge creates a new category of discrimination that singles out smokers.

Furthermore, the surcharge would mean people who smoke would not get the benefit of the federal subsidy that's supposed to make buying insurance more affordable for many, says Karen Pollitz of the Kaiser Family Foundation. (Kaiser Health News is an editorially independent program of the foundation.)

"So if you're a low-income person and you would otherwise be buying a $6,000 policy but qualify for a subsidy that would buy it down to $3,000. Well, the tobacco surcharge would knock it back up to 6,000 again," Pollitz says.

If state opted for the maximum surcharge, health insurance would become unaffordable for those with the lowest incomes, according to Rick Curtis, president of the Institute for Health Policy Solutions in Washington D.C. And, he points out, that is the group that's most likely to smoke: "For somebody who is totally hooked after many years and older...and those kinds of people are more expensive and often do need more medical care - they have two bad choices: go without health insurance and be impoverished that way or get health insurance and be impoverished."

The Centers for Disease Control and Prevention says tobacco use costs the nation about $190 billion in medical care and lost productivity each year.

And that's exactly why health policy analyst Micah Weinberg, with the Bay Area Council in the San Francisco region, thinks higher rates for smokers make sense.

"If we're ultimately interested in bringing down the price of health care for everybody, including low-income folks, then we need to make sure we get a handle on unhealthy behaviors such as smoking."

Weinberg says higher insurance premiums for tobacco users – as long as they're not too high - provide the type of financial penalties that work. Research shows a financial hit causes people to quit smoking. By contrast, he says, banning higher rates because smoking disproportionately affects the poor, reflects paternalistic policy-making that doesn’t fix the problem.

"I think we have to be very careful what types of favors we're doing for people,” Weinberg says. “Because if the end result of this policy is greater numbers of smokers, then that's not actually helping the populations that we're trying to help."

But California Democratic Assemblyman Richard Pan of Sacramento disagrees. He's a pediatrician who wrote the legislation and he believes rate hikes of any amount on smokers’ premiums may dissuade some from buying health insurance all together.

"We want smokers to actually have health care coverage,” Pan says. “And through having health care coverage they will have access to smoking cessation treatment as well as, of course, health care."

And for many – in California, at least – that seems to make sense. Pan's proposed law has so far encountered no formal opposition – be it from anti-smoking groups, cigarette companies, insurance companies or the American Lung Association.

Officials at the American Lung Association’s California branch said in a written statement that because it's so hard to quit smoking, it's essential to provide tobacco users with affordable health insurance. 

It is not the first time the California legislature has tackled the issue. According to the Ventura County Star, the surcharge has already been eliminated for people who work for small businesses, and a bill similar to Pan's passed both chambers last year only to be vetoed by Gov. Jerry Brown, who was reluctant to establish rules for the new exchange too early. The new bill appears to be on track. "I expect it to pass," Dylan Roby of the UCLA Center for Health Policy Research told the Star.

If it does, California will join Massachusetts, Vermont, Rhode Island and the District of Columbia in making sure smokers aren't charged more under the federal law.

This story is part of a partnership that includes NPR, Southern California Public Radio, and Kaiser Health News.

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