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Money April 2013

Aid for Age

Huge Penalties Possible for Older Smokers

By Tait Trussell

“If you are an insurer and there is a group of smokers you don’t want in your pool, the ones you really don’t want are the ones who have been smoking for 20 or 30 years,” according to Karen Pollitz, now a health insurance expert with the Kaiser Family Foundation.

You’re 60 years old. You’ve been puffing on your pipe for years. Did you know that next January 1, you could start paying $5,100 on top of your present health insurance payments because you smoke.

One in five American adults smokes. Among lower income folks, the smoking rate is even higher. The Affordable Care Act (Obamacare) lets insurers charge smokers buying individual policies up to 50 percent higher premiums if they smoke.

Most people see this as a great idea. We know smoking can kill. My first wife died of cancer. She smoked for many years, even though I begged her to stop. She finally did — for her last five years. But cancer already was in her lungs. It then went to her brain. That was the end.

Like most grownups many years ago, my father smoked and enjoyed it immensely. A newspaper reporter, he used to say he wrote some of his best leads — the start of an article — while staring at the burn marks on the edge of his desk. He could hardly wait until I was old enough to smoke and enjoy it with him.

Of course that was many years before science discovered the perils of smoking. I began smoking surreptitiously at age 15. But I stopped when the dangers became known.

It’s not easy to quit. All sorts of advertised medications now promise results. But side effects include mood changes, even thoughts of suicide.

The penalty for a 55-year-old smoker could reach $4,250 a year. Younger smokers could be destined for lower penalties. On-the-job workers would be able to skirt penalties by joining smoking cessation programs. But that option is not available to smokers trying to buy coverage individually.

As you likely know, smoking raises the risk of developing heart disease and lung problems as well as cancer, contributing to about 450,000 deaths annually.

Beginning next January, the health care law will enable people who can’t get coverage now to buy private health insurance to get tax credits to keep insurance premiums affordable.

Obamacare prohibits health insurance companies from turning away the sick. The penalties for smokers could have a similar effect, keeping out costly patients. There’s the possibility that some smokers won’t ‘fess up to their bad habit.

A physician, Dr. Richard Pan, who is also a state assemblyman in California representing Sacramento, said, “We want people who are smoking to get smoking cessation treatment.” The health law allows states to limit the federal smoking penalty.

A former consumer protection regulator for the government is bringing up such issues as this: “If you are an insurer and there is a group of smokers you don’t want in your pool, the ones you really don’t want are the ones who have been smoking for 20 or 30 years,” according to Karen Pollitz, now a health insurance expert with the Kaiser Family Foundation. Several provisions in the health care law work to leave older adults with a “bleak set of financial options.” Pollitz was formerly with the Department of Health and Human Services.

For example, the law allows insurers to charge seniors up to three times as much as their youngest customers. Also, government tax credits that will be available to help pay premiums can’t be used to offset the cost of penalties for smokers.

Let’s say that 60-year-old pipe smoker is making $35,000 a year. Estimated premiums for coverage in the new private health insurer markets under the Obama law would total $10,172. That senior would be eligible for a tax credit that would bring the premium cost down to $3,325. But the smoking penalty would add $5,086 to his costs. And because federal tax credits can’t be used to reduce the penalty, the man’s health insurance cost would be $8,411.According to the Kaiser Health Reform Subsidy Calculator, that’s considered unaffordable under federal law.

“The effect of the smokers penalty, would be that lower-income smokers could not afford health insurance,” explained Richard Curtis, president of the Institute for Health Policy Solutions, a non-partisan research organization.

 

Tait Trussell is an old guy and fourth-generation professional journalist who writes extensively about aging issues among a myriad of diverse topics.

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