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Obamacare's smoker penalty dampened insurance enrollment, didn't help quitting

Suzanne Kreiter | The Boston Globe | Getty Images

Higher charges imposed on tobacco users who buy Obamacare health plans led to reduced enrollment among users who otherwise would have purchased that coverage, a study released Wednesday reveals.

At the same time, the surcharges for tobacco users did not lead to overall reduced smoking among people who actually ended up enrolling in Obamacare coverage during the first year of the plans, according to the study by researchers at the Yale School of Public Health.

And, oddly, tobacco users who faced lower surcharges than the maximum allowed actually "showed significantly less smoking cessation," according to the study.

"Our findings suggest that high tobacco surcharges undermine attempts to achieve universal coverage, a key goal of the Affordable Care Act," said Abigail Friedman, a Yale professor and co-author of the study, published in the journal Health Affairs.

"Moreover, they do not appear to increase smoking cessation, at least in the first year after the marketplaces' implementation," Friedman said.

Under the ACA, insurance plans sold on government-run Obamacare marketplaces are allowed to charge tobacco users up to 50 percent more in monthly premiums than what non-tobacco users are charged.

Some states banned the surcharges, while some others capped the surcharges at a lower level, or between 10 percent and 40 percent.

Where they were implemented, "surcharges increased the out-of-pocket premiums substantially for many tobacco users," the authors of the study wrote. That was because tax credits, or subsidies that most Obamacare customers get by having low and moderate incomes, are calculated based on the premiums charged non-tobacco users, meaning that the credits did not offset any surcharge costs.

The study, which was based on behavioral risk factor data from the federal government, looked at the experience of tobacco users in the first year of Obamacare enrollment, 2014.

"On average, 49-year-old smokers living in one of the 43 states that allowed surcharges in 2014 faced a median tobacco surcharge of $70 per month," the authors wrote.

"Smokers were 7.3 percentage points less likely than nonsmokers to have coverage," the study found.

The study also found that as surcharges increased they had a bigger effect on dampening enrollment among tobacco users.

After Obamacare took effect, smokers facing the higher surcharges had increases in their insurance coverage that was about 12 percentage points lower than smokers who faced no surcharges.

And, "an analysis of the sample younger than age forty showed a 20-percentage-point reduction," the authors wrote.

Smokers facing medium surcharges had increases in their health coverage that was 4.3 percentage points lower than smokers who faced no surcharges.

Yale professor Susan Busch, the study's senior author, said that the larger effects of the higher surcharges seen on younger smokers "are particularly concerning."

Busch noted that because this group "has lower health-care costs than older individuals... their exclusion may reduce the" long-term stability of Obamacare marketplaces "by limiting risk-pooling." Risk-pooling refers to insurance plans combining individuals with low health costs with others with higher health costs, so that the premiums paid by the healthier people offset the benefits paid out to the sicker people.

The study also found that there was "neither substantive nor statistically different" effects on smoking cessation among groups of people who had either no surcharge, or who had medium or high surcharges on their Obamacare premiums.

But "those facing low (but nonzero) surcharges were significantly less likely to quit smoking," the authors wrote.

The authors suggested that one possible explanation for that phenomenon is that "putting a price on bad behaviors can alleviate the guilt of engaging in the them, which has the unexpected effect: The behaviors increase."

"Low surcharges might dampen smoking cessation if some smokers felt that the surcharge compensates society for their behavior, and if the fine is not high enough to incentivize quitting," the authors wrote.

If increasing insurance coverage and tobacco cessation are the most important goals of the surcharges, the authors wrote, "having no surcharge is preferable to having a low, medium or high surcharge."