Kentucky’s 40% surcharge for smokers on Obamacare plans probably scared some away, hasn’t encouraged them to quit

Allowing insurers to charge smokers extra for Obamacare health insurance appears to have discouraged them from getting it, “undercutting a major goal of the law,” Carolyn Y. Johnson reports for The Washington Post. “The surcharges, of up to 50 percent over nonsmokers’ premiums, also showed no sign of encouraging people to quit.” That’s according to a study at the Yale School of Public Health, published in Health Affairs.

“To explain how the surcharge works, Friedman and colleagues provided this example: Take the case of a 49-year-old with an income at 150 percent of the poverty level. If that person were a nonsmoker, he would pay only $60 per month for a particular health plan, because the tax credit would pay the rest,” Johnson writes. “But the premium surcharges that smokers face are not eligible for tax credits. So a smoker would — based on an analysis of 43 states that allowed surcharges in 2014 — pay a median $70 surcharge on top of that premium, doubling their out-of-pocket costs of insurance.”

26.5 percent of Kentuckians smoke, second only to West Virginia.

Kentucky was one of those states, allowing surcharges of up to 40 percent. It has the nation’s second-highest smoking rate, 26.5 percent.

The researchers found that in 2014, the number of U.S. smokers with insurance rose to 76 percent, from 70 percent in 2013, but “estimated that if the surcharges did not exist, that number would have risen to 80 percent,” Johnson reports. “The effects were especially noticeable for smokers under 40 years old. In 2014, 65 percent of the smokers in the sample had health insurance, but 75 percent would have enrolled if the surcharges were eliminated, the researchers estimated.”

Scaring away younger smokers backfired. “Younger smokers tend to have health-care costs similar to other young nonsmokers, so their participation in the marketplaces helps balance the risk and makes insurance work,” Johnson notes. “Second, stopping smoking when people are younger can have big, long-term health benefits for individuals and in helping to prevent costly chronic conditions.”

A spokeswoman for the Centers for Medicare and Medicaid Services noted that before the health-reform law, insurance companies could refuse to cover smokers. And the law required insurance plans to pay for smoking-cessation programs and medications.

The authors of the study said states could reduce or eliminate the surcharges, or (and this would be harder to administer) eliminate them for people who enroll in smoking-cessation programs. “A separate concern that Friedman raised was that the rules could lead people to lie about whether they smoke, to avoid the surcharge,” Johnson reports. “If that also led to patients lying to their doctors, it could have real public-health consequences.”