Cigarette smoking, to say the least, poses serious and well known health risks. Stern public health warnings about the dangers of tobacco have been issued just about everywhere since the late 1960s, tobacco is the most heavily taxed commonly purchased product, and smoking is banned outright in nearly all indoor public places. But nearly 20 percent of American adults (median age, 37) still smoke cigarettes.
Now, as the nation gets ready to swallow sweeping healthcare system changes, the incentives to quit smoking are likely to get even steeper: under the new healthcare system that rolls out on January first of next year, people buying health insurance through individual or small group plans will face steep penalties if they smoke. The way these penalties work out, furthermore, will end up serving as a bellwether about the nature of the healthcare system changes and, indeed, the president's plans success (or failure) in creating a more competitive and consumer-friendly healthcare market.
Some background can explain what's going on. Under the Patient Protection and Affordable Care Act, insurers can't consider conditions and behaviors they previously used to set premiums for small group and individual health plans; every adult of the same age in the same area will pay the same amount for insurance from the same company. Furthermore, many lower-income people will get subsidies or become eligible for government programs. But tobacco users will get singled out from the new system of flatter (if not necessarily lower) health insurance rates. They might pay as much as $5,000 more a year and won't get any subsidies to offset it. In isolation, there's nothing wrong with this: Since smoking is very unhealthy itself and correlates with other risky behavior, charging smokers more makes sense.
But the policy also will produce some unusual results. While any tobacco use is quite harmful to health, even a pack-a-day cigarette habit is almost certainly less unhealthy than, say, being 150 pounds overweight or smoking crack daily. Indeed, even heavy drinking is very probably more dangerous than smoking. Thousands die from alcohol related car crashes and alcohol-related accidents each year and it's possible for severe alcoholics to die from drink before age 40. On the other hand, smoking doesn't cause many accidental deaths (a handful of fires at most) and the big, expensive-to-treat tobacco-related killers -- lung cancer, heart disease, and emphysema -- strike only after years of regular smoking. But super-obese people, crack addicts, and drunks will pay the same insurance premiums as everyone else while smokers will get dinged.
But the unfairness is something that smokers will have to live with. Given that smoking remains so widespread -- declines in the smoking rate have essentially stopped -- health insurers that want to compete will very likely have to look for ways to discriminate (legally) between groups of tobacco users since that's about the only way they can vary price to impact consumer behavior. (The law does allow a few discounts for wellness plans too but it's unclear how these will be used -- if at all.) If every insurer charges the same increased price to every tobacco user, it will show a large lack of creativity and, essentially, a failure of the heavily regulated market Obamacare sets up.
On the other hand, a decently functioning health insurance market in the new "exchanges" will probably do more than this. Among other things, a large and growing body of research shows that some smokeless tobacco products and e-cigarettes deliver the same addictive substance (nicotine) but pose lower health risks. While it's certainly the best -- health wise -- for people to quit tobacco use altogether, doing so is very hard (even the "best" drugs fail more than 90 percent of the time), it may be possible that switching to some of these things should get lower insurance rates. (The case isn't open and shut -- smoking correlates with other risky behaviors, people who "switch" may suffer long-term health consequences of smoking and, because e-cigarettes and other things are new, there isn't much data on them.) Likewise, promising evidence that supported "cold turkey" quitting--no medicine but plenty of counseling and support -- works better than drugs may end up getting a lot more attention than it has gotten to date and saving more money for everyone. Because it's one of the few ways they'll be allowed to differentiate on price, a lot of market competition will happen around tobacco users -- if there's much real competition at all.
Obamacare has lots of flaws but, insofar as it works the way the president and Democrats hope it will, we'll be able to tell by the way insurance companies treat tobacco users.
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