2013-09-30 14:56:06 - WASHINGTON, D.C. (September 30, 2013): Beginning Oct. 1st, smokers may have to pay up to 50% more than nonsmokers for health insurance. This has raised many questions about why, and whether it’s fair.
Now the public interest lawyer who first developed the concept, brought two legal actions to legalize it, and helped get it incorporated into the ACA provides some answers to these questions.
Law professor John Banzhaf has been called "Mr. Anti-Smoking," “The Man Behind the Ban on Cigarette Commercials,” and "a Driving Force Behind the Lawsuits That Have Cost Tobacco Companies Billions of Dollars."
# Q: WHY SHOULD SMOKERS PAY MORE FOR THEIR HEALTH INSURANCE?
A: The basis of all insurance is to charge premiums based on average risk. Drivers who are young pay more for auto insurance, and smokers have always paid more for life insurance. Since smokers on average impose much higher medical costs on insurers as well as on others, they should bear at least some of those added costs.
# Q: HOW MUCH DOES THE AVERAGE SMOKING WORKER COST HIS EMPLOYER?
A: A judge – after hearing all evidence under oath and
subject to cross examination – determined that each smoking employee imposes over $12,000/yr in additional costs; money which is then not available to provide better or less expensive health insurance to nonsmokers, higher salaries or other benefits, etc.
# Q: WILL THE SURCHARGE THEN DO NOTHING MORE THAN SHIFT SOME OF THESE UNNECESSARY COSTS BACK TO SMOKERS?
A: Actually, this is virtually the only provision in the ACA designed to significantly lower total costs, rather than simply shift them to others. Raising the cost of smoking is one of the most effective ways to help smokers to quit, thereby slashing the incidents of many diseases, and saving everyone billions of dollars a year.
# Q: HOW MUST DOES SMOKING COST US ANNUALLY IN THE U.S., AND WHO NOW PAYS MOST OF THAT COST?
A: The ALA reports that smoking costs the economy over $301 billion every year. Most of this cost is borne by nonsmokers in the form of higher taxes (e.g. for Medicare, Medicaid, etc.) and in higher premiums.
# Q: WHY NOT, FOR THE SAME REASONS, IMPOSE A SURCHARGE ON PEOPLE WHO ARE OBESE?
A: Obesity has been classified as a “health status” or “disease,” and the obese may in some cases also be protected under the Americans With Disabilities Act [ACA]. But the government ruled, in legal proceedings brought by Prof. Banzhaf, that smoking is only a “behavior” not entitled to any legal protection.
# Q: WILL A SMOKER SURCHARGE REALLY HELP PERSUADE SMOKERS TO QUIT?
A: The overwhelming majority of smokers already want to quit, but most lack a strong concrete incentive. More than 100 studies found that making smoking more expensive helps people to quit. The Wall Street Journal reported that smoking surcharges often slash a company’s smoking rates by about 50%.
# Q: HOW WILL THE SMOKER SURCHARGE AFFECT THE POOR?
A: A larger percentage will be affected, because smoking is more prevalent among lower income people. It is also more likely to help them quit smoking since it will have a bigger impact on their disposable income.
# Q: WHY IS THE SMOKER SURCHARGE PARTICULARLY BENEFICIAL TO SMOKERS AND THEIR FAMILIES?
A: The poor are less likely to be persuaded by conventional antismoking messages, so this will help them to quit, save money, live longer healthier lives, and protect their own families from deadly secondhand smoke.
# Q: WHY IS THE IMPACT OF THE SURCHARGE ON THE POOR PARTICULARLY BENEFICIAL TO SOCIETY AS A WHOLE?
A: Taxpayers are forced to pay all (or at least a much higher percentage) of the medical costs of the poor, so the savings to taxpayers will be greater for every poor smoker who is persuaded to quit.
# Q: COULD THE SURCHARGE MAKE IT IMPOSSIBLE FOR THE POOR TO AFFORD HEALTH INSURANCE?
A: No. Under the ACA, everyone will be required to have health insurance, and the government assists the poor to obtain it. Moreover, unlike even the higher surcharges based upon age (which cannot be changed) and on place of residence (difficult and expensive to change), smokers can avoid the surcharge just by quitting.
# Q: BUT ISN’T THERE A CONCERN THAT THE SURCHARGE MAY MAKE IT MORE DIFFICULT FOR THE POOR TO AFFORD INSURANCE?
A: Surcharges based upon age and residence are much higher, but no one complains. Without a smoker surcharge, more nonsmokers will find it difficult to afford coverage because smoking diseases cost us so much.
# Q: WHY DO SO MANY MEMBERS OF THE PUBLIC SUPPORT CHARGING SMOKERS MORE?
A: It is the most effective way to significantly reduce expensive and unnecessary death, disability, and disease for millions. It’s also fairer than forcing nonsmokers to absorb those huge costs as they have for years.
# Q: WHY SHOULD CONSERVATIVES AND LIBERTARIANS SUPPORT THIS ACA PROVISION?
A: The ACA only permits (but doesn’t require) companies to set their own prices based upon their actuarial data. Unlike educational and cessation programs which cost taxpayers hundreds of millions, this costs nothing, and is far more effective. It also imposes “personal responsibility” on smokers for their own choices.
# Q: SINCE SOME SMOKERS ARE ADDICTED, IS IT REALLY FAIR FOR COMPANIES TO IMPOSE A SMOKER SURCHARGE?
A: Yes. Not all smokers are addicted, and tens of millions of smokers have quit, given sufficient motivation. In any event, those who are addicted are addicted to the drug nicotine, and not to smoking itself. They can obtain their nicotine without smoking by using safe FDA-approved nicotine patches, gums, inhalers, etc.
JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D.
Professor of Public Interest Law
George Washington University Law School,
FAMRI Dr. William Cahan Distinguished Professor,
Fellow, World Technology Network,
Founder, Action on Smoking and Health (ASH)
2000 H Street, NW
Washington, DC 20052, USA
(202) 994-7229 // (703) 527-8418