Two Burning Questions re. the ACA and Smokers
A couple of days ago, Andrew Sprung (aka Xpostfactoid) posed an interesting question:
Do any ACA marketplace enrollees (or off-exchange enrollees for that matter) actually confess to being smokers? Why would you?
— xpostfactoid (@xpostfactoid1) November 13, 2015
Before the Affordable Care Act, insurance companies could use medical underwriting, along with the threat of rescission, to tell whether a new policy applicant was being truthful or not about their smoking status. Under the ACA, of course, it's illegal for insurance companies to ask any questions about your medical history or pre-existing conditions which you might have...with a few exceptions, the main ones being a) whether anyone on the policy is pregnant and b) whether anyone on the policy is a smoker (hopefully not the same people!).
Although insurers can’t charge more for health status, they can charge up to 50% more for smoking status. On the flip side of this ObamaCare includes smoking cessation therapy (including medication) as a free preventive service on all non-grandfathered plans sold since September 23, 2010.
ObamaCare makes it so you can’t be denied coverage for being a smoker now or in the past.
Small group plans offered by small employers must also cover smoking cessation. Typically Medicaid, Medicare, and large group plans also offer smoking cessation therapy.
Short term plans and other plans not considered major medical coverage don’t have to follow the same rules in regards to smoking. As such you can be denied short term coverage for being a smoker and don’t have to be given free cessation therapy.
Extra specialized cessation therapy is offered to pregnant women.
In general you count as a smoker if you use tobacco four or more days a week for the past 6 months. If you are quitting, or smoke once in a while, or use tobacco for ceremonies, you may not qualify as a smoker.
You must report whether or not you are a smoker. Giving the information is based on the honor system, however you can be denied coverage due to fraud or misrepresentation, so answer honestly.
ObamaCare says smokers can be charged up to 50% more for their premiums. This is due to a “tobacco surcharge”.
Those on employer health plans can avoid the surcharge by joining an employer based tobacco cessation program.
The tobacco premium surcharge is calculated after cost assistance, not before.
Statistically, lower-income Americans are the most likely group to smoke.
The first "burning question" is the one Sprung asked: How many smokers signing up for individual coverage--whether on or off the ACA exchanges--are actually being honest about their response? I don't recall seeing any information about this in any of the official HHS Dept. ASPE reports, and even at the state exchange level, I don't think the percentage/number of smokers has been included even in highly detailed enrollment reports like this one from Washington State.
The discussion in response to his question ranged from "I dunno" to "I think you just have to pay the back tobacco surcharge if they find out". It'd be interesting to learn the answer.
Anyway, this brings me to the second question: How much is the "smoker" issue going to impact 2016 Open Enrollment numbers (and the corresponding 2017 premium rates)?
This issue is highly relevant because of a new report from the Centers for Disease Control:
Smoking rates in the US have hit a record low, according to a new study from the Centers for Disease Control and Prevention, though the findings reveal smoking rates remain high for American adults who are uninsured or on Medicaid.
Cigarette smoking is the leading cause of preventable death in the US, responsible for more than 480,000 - or 1 in 5 - deaths annually. What is more, over 17 million Americans are living with a smoking-related disease.
In recent years, however, smoking rates in the US have been in decline, and it seems this trend may be set to continue.
Published in this week's Morbidity and Mortality Weekly Report (MMWR), the new study revealed that overall smoking rates among adults in the US have fallen from 20.9% in 2005 to 16.8% in 2014 - the lowest rate on record. Between 2013-14, smoking rates fell by 1% alone.
That's the good news. However...
The study found smoking rates among these two groups [uninsured & on Medicaid] remain high, at 27.9% and 29.1%, respectively. These rates are almost double those of people with Medicare, at 12.5%, and those with private insurance, at 12.9%.
I'm not quite sure why they say "almost double" for the Medicare rate, since both groups are well over double 12.5%, but the larger point is that around 28% of the remaining uninsured population consists of smokers...versus just 13% of those with private coverage.
This is a problem for two reasons. First, because that "up to 50% surcharge" is going to be a hell of a disincentive for smokers considering signing up (assuming they're honest about reporting their status, of course). Secondly, because assuming a substantial number of smokers do sign up and lie about their status, that's going to have a disproportionate impact on rates in future years for everyone, since those smokers-who-don't-report-smoking will have much higher medical expenses than the rest of the population.