The federal health reform law known as the Affordable Care Act prevents insurers from considering pre-existing health conditions when setting premiums for consumers. But they are able to consider age, location and tobacco use.
And that means some Kansans who smoke are charged higher insurance rates, which may discourage low-income smokers from getting health coverage, according to a new issue brief from the Kansas Health Institute.
“The surcharge was meant to more fairly distribute tobacco-related health care costs to the tobacco users themselves, rather than to all enrollees in health insurance plans,” said Linda Sheppard, KHI strategy team leader and senior analyst.
The ACA allows states to set a surcharge for tobacco users of up to 50 percent of health insurance premiums. For 2015, insurers offering coverage to Kansans through healthcare.gov are applying tobacco use surcharges from 0 percent to 44 percent. A 2013 report showed that 20 percent of Kansas adults are smokers.
“As allowed by the federal rules, the surcharge is higher for older enrollees in Kansas who smoke than for younger ones,” according to the brief.
People seeking insurance must self-report their tobacco use — defined as four or more times a week for the last six months — although insurers can’t rescind coverage for those who submit false reports. They can, however, retroactively apply the surcharge for people who don’t report their tobacco use.
Because of the self-reporting system, insurers are concerned that some consumers are under-reporting their tobacco use. But, according to the brief, the Kansas insurers said “reviewing claims and medical records was cost-prohibitive and not a good use of their time and resources.”
Some consumer groups, such as the American Lung Association, and health policy experts had concerns that the surcharge would discourage low-income tobacco users from buying health insurance. Because of those concerns, a few states limited the maximum surcharge or prohibited it. But Kansas defaulted to the federal limit of 50 percent of premium cost.
The Kansas Health Institute is the parent organization of the editorially independent KHI News Service.