Does it Make Sense to Charge Smokers More?

cigaretteHealth insurance companies tend to charge a higher premium for people who smoke. Employers may impose a higher premium on workers who are smokers than they do for workers who are non-smokers. Does this make sense? This is a question many are asking right now.

It is a rather controversial concept. Should people who smoke, or people who are obese, pay more for their health insurance premium than people who are healthier? Is it fair to impose a higher rate on a group of people who are less healthy than the others? Does the penalty really influence people to change their habits in favor or healthier choices?

These questions started being asked a few years ago, when employers began offering workers who smoked, or who were obese, a higher premium on their health insurance. In some cases, it was more like they “reverse-engineered” it. They offered lower premiums to workers who were non-smokers, who lost a certain amount of weight, or who completed a smoking cessation program.

In 2014, a portion of the Affordable Care Act will begin that relates directly to this topic. It will allow health insurers to charge smokers who purchase an individual health insurance policy up to 50% higher premiums than non-smokers would be charged. It does not allow insurers to charge a higher premium to people who are obese, or overweight, though.

Does it make sense to charge smokers more for health insurance? The question can be answered in two ways: yes, and no. No, it doesn’t make sense, because many smokers are going to continue to smoke even if they are charged the higher rate. The extra charge is not a deterrent. No, it doesn’t make sense because the higher cost could be the difference between being able to afford health insurance and being uninsured.

There are also reasons why it does make sense to charges smokers more for health insurance. Have you ever heard the phrase “no man is an island”? Health insurance is a situation where that is proven to be true. Smokers require 25% more care than non-smokers. This means smokers are more expensive for insurers to cover. The insurer could raise everyone’s rates to cover for that extra cost. Or, the insurer could just charge the smokers more for premiums, and make up the cost that way.

The answer to the question also depends on who you ask. NPR-Thomson Reuters Health Poll conducted a survey in 2011 asking people if smokers should pay more for health insurance than non-smokers. The results showed that people are ok with this idea – unless they smoke or use tobacco products themselves.

Image by Fried Dough on Flickr