Low-Income Smokers May Not Be Able to Afford Health Insurance Coverage in the Marketplace

A new study shows just how tough it can be for low-income smokers in the United States to get adequate, affordable health insurance coverage.

In an analysis looking at the plans offered in the Affordable Care Act marketplace, in a state that did not expand Medicaid coverage, Washington University School of Medicine researchers found that some smokers would need to pay more than they actually earned in a year for health insurance.

Smokers face significant challenges when it comes to purchasing health insurance. Insurers are allowed to charge smokers up to 50 percent higher premiums. This surcharge is not offset by premium subsidies that help make coverage affordable for those at low incomes, below 400 percent of the federal poverty level.

In addition, in states that did not expand Medicaid, low-income smokers (below 100 percent of the federal poverty level), eligible for Medicaid in other states, would have to pay full price for health insurance plans in the marketplace — plus the additional smoking surcharge.

The high cost of plans can keep smokers from purchasing insurance. Yet smokers often have health needs from conditions such as chronic bronchitis, emphysema, and asthma. They use more health care and take more medications than non-smokers. So, while they often need more health care, insurance is often unaffordable.

Researchers Denise Monti and Marie Kuzemchak, led by Mary Politi, studied the intended ACA insurance marketplace choices of 327 people in a state without Medicaid expansion. About a third of people in the study were either smokers or lived with a smoker who would be covered under a plan. Fifty-eight percent of the smokers, and 46 percent of non-smokers had incomes below the federal poverty line – around $12,000 per year for an individual or $24,000 for a family of four.

What they found was that smokers overall in this group would have to spend an average of 14 percent of their annual income on their preferred insurance plans, whereas non-smokers would have to spend just half that – around 7 percent.

Rates, though, varied vastly depending on income. Smokers with incomes above the poverty line would have to spend around 5 – 9 percent of their annual income on premiums for their preferred plans. Those below the poverty line, however, would have to spend 165 percent of their annual income on premiums – more than they actually earn each year. Someone making $5,000 per year, for example, might need to pay $8,250 in premiums annually to be covered.

Rates for non-smokers were generally lower across the board. Non-smokers earning below the poverty line would have had to pay 60 percent of annual income on premiums for coverage for their preferred plans – a prohibitive amount but around two-thirds lower than that for smokers in the same category.

The premiums are even higher for very low-income smokers if they want plans that provide coverage that best meets their health care needs. Because smokers typically have more chronic health conditions than non-smokers, plans that have higher premiums might provide more affordable coverage than plans with lower premiums that often require more out-of-pocket costs for care throughout the year.

Annual premiums for smokers for plans that provide the lowest overall costs each year were an average of 167 percent of their annual income for those below the poverty line, and 3 – 7 percent for those above it.

What these numbers show is that a group already at risk because of income and health status is compromised even further by the inability to afford care. This care can not only help them manage and treat chronic conditions, but also provide resources to help them quit smoking.

One way to alleviate the health insurance burden on smokers – especially low-income smokers – is to do away with premium surcharges. Rather than providing an incentive for smokers to quit smoking (so they can get a lower rate), surcharges may simply make plans unaffordable. And this can take a toll on individuals and their families as well as impose a burden on society to cover the costs of their care.

As the researchers conclude:

“Smokers may forgo health insurance due to the exorbitant costs that are not subject to subsidies for those of low-income. This places an untenable burden on smokers to cover the cost of potentially frequent health care needs. It also leaves other taxpayers and the health care system to bear the health care costs (e.g., procedures, medications, emergency room visits) of smokers who are uninsured. If insured by a marketplace plan, smokers would pay for at least a portion of this care themselves; if uninsured, they would be unlikely to do so. It is more beneficial, both for the health and wellness of the smoker and for the health care system, for smokers to be supported in the process of quitting smoking through coverage of tobacco cessation programs and products…Health insurance costs should not be structured in a way that makes insurance unattainable for smokers.”

Smoking remains the single biggest burden on health to individuals and society. To make meaningful strides against smoking, it’s important that we make it possible for all smokers to get both the health coverage that meets their needs and the support they need to quit smoking for good.

As this new study shows, we are still falling short.

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