Obamacare - It's gonna cost a lot more if you smoke

[shotgunner]

The Obamacare (ACA) subsidy calculator on the Kaiser Foundation web site has been changed. It now asks if you use Tobacco.

Using a single male, non smoker, at 57 yrs with a MAGI of $40,000 the projected cost of a Silver HI plan is $7355 with subsidy (tax credit) of $3555.

Checking yes for tobacco use increases the cost of the policy to $11,333 but the subsidy remains $3555. It more than doubles the out of pocket cost with an increase in the out of pocket cost of $3978. ($3800 vs. $7778).

This may encourage smokers to pay the penalty rather than buy the insurance.

Funny how smokers are the one group the government allows to be discriminated against.

I wonder when a BMI surcharge will kick in.

If your MAGI is low enough to qualify for expanded Medicaid you can continue smoke and receive the same insurance coverage at the same cost (none) as someone who doesn't smoke. This only applies to those folks who earn enough to qualify for a subsidy.

http://kff.org/interactive/subsidy-calculator/

 

[samclem]

Funny how smokers are the one group the government allows to be discriminated against.

Well, it is "discrimination", but that word has acquired an undeserved negative connotation. In the insurance biz of course they call it "underwriting" and it is done all the time.
But, along with your point, PPACA also varies rates along with the age of the insured (discrimination? Sure. Proper? That's a judgement call). And should the librarian who walks to work and stays fit be paying the same health insurance rates as a fat steelworker who rides a motorcycle to work (without a helmet), hang glides on the weekend, and drinks a fifth of bourbon every night?

 

[mpeirce]

Funny how they outlaw underwriting, then start layering it back in. Now tobacco use, soon weight I expect, next?

 

[shotgunner]

Well, it is "discrimination", but that word has acquired an undeserved negative connotation. In the insurance biz of course they call it "underwriting" and it is done all the time.
But, along with your point, PPACA also varies rates along with the age of the insured (discrimination? Sure. Proper? That's a judgement call).

Yes but the big difference is when the cost of a policy increases for age the out of pocket cost to the insured stays the same.

 

[shotgunner]

OK this is weird, since the time of my first post the Kaiser site removed the tobacco use Yes/No check which affected the estimated cost of insurance. It was there less than an hour ago.

They have also eliminated the ability to select age of policy holder.

Subsidy Calculator | The Henry J. Kaiser Family Foundation

 

[Tadpole]

OK this is weird, since the time of my first post the Kaiser site removed the tobacco use Yes/No check which affected the estimated cost of insurance. It was there less than an hour ago.

Subsidy Calculator | The Henry J. Kaiser Family Foundation

It doesn't appear until you chose the number of adults.

 

[rodi]

FWIW - this kind of thing has been happening for a while. Including government plans. A friend works in HR for a state university in North Carolina. She had the uncomfortable experience of being in HR Benefits when notification to employees that the state was tiering rates based on smoking, BMI, etc. It did not go over well with overweight folks and smokers. The state legislature is the responsible actor in this NC case - not the HR department.
New health requirements for NC State employees | OIT Website

My private employer has done surveys (required to qualify for lowest health care rates) including asking BMI and smoking information. So far the only price difference is in taking the survey or not - not based on the information provided in the survey.

 

[Mulligan]

The smokers definitely lose in this situation. But if they all quit, then we all are losers. We will have a tremendous shortage in local/state governments budgets due to no cigarette tax revenue. So taxes will then go up for everyone. Plus Medicare costs will go up because ex smokers will now live longer and nursing home populations will explode. Cost of "healthy" people growing old isn't cheap!

 

[Htown Harry]

Keep in mind that the KFF calculates the maximum 50% tobacco use surcharge allowed under the PPACA. In Oregon, the 2014 plans they have posted there have surcharges ranging from 0 to 20%. See post #127 an #162 here:
http://www.early-retirement.org/forums/f38/ppaca-obamacare-and-general-comments-66593-7.html

On the insurance company side of the exchanges, this must an issue that drives the actuaries nuts. Smokers are skewed toward the lower end of the economic spectrum, yet the same demographic represents many of the potential new customers.

I can foresee weird adverse selection effects in the first year or two.

Say Company A offers Mr. Avg. Joe a Silver plan policy at $400 or $600, depending in tobacco use. The Silver plan at Company B offers the same policy at $500 regardless of tobacco use. The math may well work out that Company B will draw Joe and a lot of his fellow smokers.

 

[hsv_climber]

What if a smoker checks "No"? How can an insurance company (or anyone else) check if a person is a smoker or not? (I am not a smoker, just a thought).
Obesity is probably easier to measure than smoking.

 

[Texas Proud]

What if a smoker checks "No"? How can an insurance company (or anyone else) check if a person is a smoker or not? (I am not a smoker, just a thought).
Obesity is probably easier to measure than smoking.

It is usually kind of easy to determine if someone is a smoker.... from what I have heard....

 

[MichaelB]

The PPACA allows the premium to be increased by up to 50% for a smoker but each state is free to implement as they wish, or not implement at all. The insurers are still subject to the same MLRs so the additional premium could end up being returned to all policyholders.

 

[samclem]

Smokers are skewed toward the lower end of the economic spectrum, yet the same demographic represents many of the potential new customers.

Potential new high-cost customers. Since the legislation generally precludes the normal underwriting that helps the insurers price the products according to expected expenses, and since the population of smokers also includes a disproportionate number of people who have made other lifestyle choices that increase their health costs, I think the insurers will definitely take this opportunity to charge higher rates, if that opportunity is available.

The PPACA allows the premium to be increased by up to 50% for a smoker but each state is free to implement as they wish, or not implement at all. The insurers are still subject to the same MLRs so the additional premium could end up being returned to all policyholders.

Another way in which tobacco users will be supporting others through their habit?

 

[BLS53]

Sounds like we're getting to the point where the government will require all citizens to pass an annual PFT and weigh-in. Military fitness standards for all.

 

[Throwdownmyaceinthehole]

So hubby's occasional cigar is going to cost us $4,000 a year?

 

[haha]

What if a smoker checks "No"? How can an insurance company (or anyone else) check if a person is a smoker or not? (I am not a smoker, just a thought).
Obesity is probably easier to measure than smoking.

Insurance companies test for this all the time. A nicotine by-product can be found in blood, saliva, urine and likely for longer time, hair clippings.

Ha

 

[obgyn65]

I agree that smokers should pay more and also agree that morbidly obese people (not due to a medical condition) should pay more. I know this topic is highly controversial and many will disagree with me.

 

[MooreBonds]

Insurance companies test for this all the time. A nicotine by-product can be found in blood, saliva, urine and likely for longer time, hair clippings.

Ha

But then you get into a tricky situation - since it's a 'guaranteed issue' policy, if you lied about tobacco use and the insurance company later found out you are a tobacco user, would they be able to cancel your policy? Or would they just charge you the difference in premiums for as long as you've had your policy? And how would they determine how long you've been lying?

Sounds to me like many smokers who don't often go to the doctor would simply lie about it and take their chances that they'll never get caught - after all, would the gov't allow all of those people to suddenly lose their policies because some big, bad, mean insurance company wants to hold them accountable for lying on the underwriting? Looks like many aspects of healthcare are now slanted heavily in favor of some individuals acting in ways that I don't agree with (going without insurance since the tax penalty is cheaper than the premium, possible lack of penalty for tobacco use, etc.), at the expense the masses who try to do the right thing.

 

[Tadpole]

Insurance companies test for this all the time. A nicotine by-product can be found in blood, saliva, urine and likely for longer time, hair clippings.

Ha

If that is the case then the calculator is asking the wrong question. The question should be - Do you use nicotine containing products?

obgyn65:
that morbidly obese people (not due to a medical condition) should pay more.

I hope I live long enough to find out what "morbidly" obese means and how they intend to determine if it is a "medical" problem. Will they reimburse for overpayment as a new "medical" problem emerges from research? You are the doctor - what is obese and who is justified in their obesity. (What about a crippled person with low thyroid or something?)

Let's march for equal rights of all citizens to healthy diet choices and neighborhood stores that sell them. It does occur to me that people whose drug of choice is tobacco and whose diet is not nutritional but calorie laden tend to be poor than the alternative.

 

[obgyn65]

Agree it is very tricky. However, have you noticed that obese people are more likely to lose weight when they are offered money ? http://www.webmd.com/diet/news/20130508/money-motivates-weight-loss----one-step-at-a-time

I hope I live long enough to find out what "morbidly" obese means and how they intend to determine if it is a "medical" problem. Will they reimburse for overpayment as a new "medical" problem emerges from research? You are the doctor - what is obese and who is justified in their obesity. (What about a crippled person with low thyroid or something?)

Let's march for equal rights of all citizens to healthy diet choices and neighborhood stores that sell them. It does occur to me that people whose drug of choice is tobacco and whose diet is not nutritional but calorie laden tend to be poor than the alternative.

 

[Mulligan]

If that is the case then the calculator is asking the wrong question. The question should be - Do you use nicotine containing products?

I hope I live long enough to find out what "morbidly" obese means and how they intend to determine if it is a "medical" problem. Will they reimburse for overpayment as a new "medical" problem emerges from research? You are the doctor - what is obese and who is justified in their obesity. (What about a crippled person with low thyroid or something?)

Let's march for equal rights of all citizens to healthy diet choices and neighborhood stores that sell them. It does occur to me that people whose drug of choice is tobacco and whose diet is not nutritional but calorie laden tend to be poor than the alternative.

You bring up a good point Tadpole. I have noticed that recently the term "nicotine use" being used more instead of smoking or tobacco use. Which I find interesting because just recently the FDA said it was safe to be on nicotine replacement lozenges or gum long term instead of the 6 weeks or so originally determined. My doctor has said for a normal healthy person these products cause no harm, so I speculate the reason they mention nicotine specifically is they believe these people will eventually slide back into their old smoking/chewing habits.

 

[sheehs1]

Funny how they outlaw underwriting, then start layering it back in. Now tobacco use, soon weight I expect, next?

I'm just surprised they did not include Alcohol as in alcohol addiction, illegal drug use, pain medication use not prescribed by a doctor...etc. I suppose i don't like the targeting of one segment of lifestyle choices. Why leave any of them out?

 

[sheehs1]

What if a smoker checks "No"? How can an insurance company (or anyone else) check if a person is a smoker or not? (I am not a smoker, just a thought).
Obesity is probably easier to measure than smoking.

Well...there is that little thing happening like electronic medical records. It will be in your file at your general practitioner, probably a box checked and probably a report sent to the IRS and insurance companies eventually that can be cross scanned and checked.

 

[harley]

I think they're going to have to clarify a lot of this information. For example, if someone uses e-cigarettes they aren't doing themself any significant harm as opposed to a cigarette smoker. Same if you're smoking pot, assuming you are an occasional user and not a daily veg-head. Overweight people live longer than underweight people. Drinking (not to excess) is good for your heart, and it's going to be hard to prove excess. There are a lot of variables, and if the government is going to use science instead of moral judgements they are going to be changing requirements and parameters every few months as the science changes.

Also, I can't see charging smokers or heavy drinkers or obese people more for insurance when most studies show they cost less for health care over their lives than slender, non-smoking, non-drinking boring people. They die younger, faster, and cheaper. There may be some costs of treatment while they are alive, but over a life time they cost less.

I suspect there's going to be a lot of pressure to "steer" people into behavior that the government approves of as opposed to responding to the science of the day. And I also expect pretty much constant lawsuits being brought by the various groups that are being discriminated against.

 

[MichaelB]

Charging higher rates for smokers, obese people and others with specific poor lifestyle or living habits has been practiced in the workplace for over a decade and now is not uncommon. Employers are encouraging employees to enroll in wellness programs and monitoring weight, and giving premium discounts for these things. Any group plan that gives a discount for smoking cessation, weit loss or wellness enrollment had the higher rate built into the premium.