Want to Save Health Care Costs? Then Subsidize Smoking

I was provoked to bring up this topic one more time by a report in today's Washington Post that describes various ways in which the Obama administration is fiddling with health insurance as the age of Obamacare dawns. In particular, the Post reported:

...the law permits insurers to set their premiums for tobacco users 1.5 times higher than those for non-smokers.

It is well established that, on average, the amount spent on smokers' health care is less than that spent on people who watch their weight and regularly visit the gym. For example, back in 2008 the New York Times reported the results of a Dutch study in PLoS Medicine:

The [lifetime] cost of care for obese people was $371,000, and for smokers, about $326,000....Ultimately, the thin and healthy group cost the most, about $417,000, from age 20 on.

Basically, the smokers and the fatties died much younger and saved both private and government insurers a lot of money.

OK. Higher premiums might be justified on the grounds that before the smokers and the hefties shuffle off this mortal coil, they may increase the costs of an individual health insurer in advance of enjoying the delights of Medicare. But for those folks who are forever insisting that the whole country adopt a single payer (government) plan because it will allegedly save money, the evidence suggests that they really might want to look into subsidizing cigarettes and carbs.

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  • Rich||

    they really might want to look into subsidizing cigarettes and carbs.

    My Friend, this is actually a part of PPACA. Can you prove it isn't?

    /The Amazing Criswell

  • ||

    The whole smoking surcharge thing isn't actually intended to adjust costs for the risk of smoking. It's actually a policy tool designed to discourage smoking.

    Recall that rates are no longer set according to risk anyway, but are regulated to be uniform across an age group. Uniform except for smoking. So you'll have two people who are identical in health and risk, and the only difference will be that one of them smokes, and that person will have to pay up to 50% more for his mandatory health fee.

    It really is just a fine for smoking.

  • Rhywun||

    And since the question they ask you is "Have you used tobacco in the last 12 months?" you might as well just smoke as much as possible to make it worth the fine.

  • nicole||

    That's fucking pathetic. Seriously.

  • Ken Shultz||

    "Basically, the smokers and the fatties died much younger and saved both private and government insurers a lot of money."

    Talk about perverse incentives!

  • Rich||

    Oh, yes -- perverts died much younger also.

  • AlmightyJB||

    goddammit!

  • Natural Remedy||

    lol...

  • The Late P Brooks||

    they really might want to look into subsidizing cigarettes and carbs.

    I thought they were already taking care of the "carbs" part pretty effectively.

  • Ron Bailey||

    TLPB: HFCS?

  • The Late P Brooks||

    Yes.

  • 0x90||

    And how much does the penaltax go up for smokers?

  • John Thacker||

    Another stupid thing:

    Specifically, the legislation prohibits plans sold to small businesses from setting deductibles higher than $2,000 for individuals and $4,000 for families.

    The size of an HSA can easily be larger than that. I don't understand the point of this rule, other than the Democrats hate consumer driven health plans and HSAs.

  • John Thacker||

    By which I mean, the annual contribution to an HSA is allowed to be larger than those values. I'd rather have a $1,000 higher deductible and put $1,000 in my HSA to cover it under most situations (considering how it affects premiums.)

  • nicole||

    I don't understand the point of this rule, other than the Democrats hate consumer driven health plans and HSAs.

    Pretty sure you have discovered the exact point of this rule.

  • ||

    Precisely. Democrats don't think that people should HAVE TO think about their health care costs. They think the pain of having to make decisions based on price is too much for a sick person to have to bear. Therefore, all plans should shield people as much as possible from the true costs of what they are spending. Ergo, high-deductible plans must not be allowed.

  • nicole||

    I mean, it would be just wrong for someone who needs something to think about how much it costs.

  • The Late P Brooks||

    I don't understand the point of this rule, other than the Democrats hate consumer driven health plans and HSAs.

    Patients with cash in hand might get to jump the line.

    NOT FAIR!

  • Sevo||

    The Late P Brooks| 11.21.12 @ 7:40PM |#
    "Patients with cash in hand might get to jump the line."

    Without I hope giving out too much info:
    Acquaintance is Canadian MD. Relative needed/wanted surgery (there isn't much difference in the abstract, except this condition wasn't "life-threatening" in the sort term). Relative was told "X months" (where X is more than a single digit).
    MD showed quite clearly how you get quick treatment under 'socialized medicine'; you know someone. No wait.
    Lesson: Get REAL friendly with your MD. Nice Christmas gifts would be indicated, some tickets to playoff games, you get the point.
    Guangi, I believe it's called in China.

  • Robert Jordan||

    That's what I'm talking about!

    And while we're at it, I say we it's time we gave every Obama voter in a America a brand new Hayabusa and case of Four Loko. We'd have the country nearly idiot-free in no time.

  • ||

    Another thing that is interesting.

    Although obesity is known to be at least as problematic in terms of health as tobacco use, the bill does not allow a similar rate adjustment (fine) for obesity. Even though, arguably, we could discourage people from overeating if we just levied an annual fat fine, in the exact same way that the tobacco surcharges work.

    The reason for this difference, at least to me, pretty clearly has to do with the way anti-smoking campaigners have been harnessing the forces of social exclusion to penalize and discourage smoking. It's socially acceptable today to ostracize smokers, but it's not acceptable to ostracize fatties. For example, you frequently see people rudely asking smokers to put out their cigarettes because they don't like the smell in a public place, but you would never see someone go tell a fat person that they look like a slob and should stop eating that ice-cream cone.

    This kind of psychology obviousl trickles up through our political process and results in this sort of legislation where smokers, and ONLY smokers, are effectively charged a fine on their mandatory health insurance payment because, basically, people don't like them.

  • nicole||

    Yes, "people" are always saying that fatness is the last thing it's acceptable to make fun of, or whatever, but that's complete bullshit: smokers are the remaining acceptable-to-ostracize group, and we massively codify it.

    If smokers are a higher risk, I'm more than happy for insurers to charge premiums based on that. But what kills me about this is that not only do we have to give people a break on their "immutable" characteristics to avoid risk-based pricing (unfair! waaah!), we don't seem to have any problem subsidizing lifestyle choices with unfairly low premiums--except smoking. Childbearing? Covered, and they can't charge you more, because it's not your fault you're a woman! No, but it is your fault you are having a kid...

  • ||

    Right. Drug addict? We've for rehab covered for you.
    Race-car driver? No problem.
    Infertile? Free IVF for you.

    But smoker? Fuck you. Pay me.

  • SIV||

    If it is more expensive for you to be a woman than for me to be a man who smokes an insurance company should be able to charge you more. Hell, if it is much cheaper to insure a woman than a man who smokes, shoots heroin, has unsafe sex and engages in extreme sports it should be perfectly OK for them to charge healthy, risk-averse women more if they want to.

  • Fluhdoten1||

    it should be legal to categorize drivers by gender and charge young men higher insurance premiums.

    oh wait, this kind of gender discrimination is already the norm and legal.

    discrimination is only wrong if PC classes are disadvantaged by rational thought.

  • The Derider||

    The law sets a cap on the premium that companies may charge a smoker. It doesn't mandate that they do so. If companies charge smokers a premium, it must be because they view the policy as profit-maximizing.

    Indeed, they did so before the law had anything to say about it. http://blog.ehealthinsurance.c.....d-smokers/

  • ||

    Is there a midget surcharge? Underheight people don't live as long either. I'm sorry, btw.

  • nicole||

    Yes, they did, and it was perfectly fair. But when the ACA removes all sorts of other ways insurers can implement risk-based premium pricing, and smokers are the only group to make up the difference, it becomes much less so.

  • ||

    Exactly.

    Given that smoking is the ONLY thing insurers can charge extra for, you can be pretty sure they'll be charging smokers as much as they legally can. So, effectively it amounts to an extra fee levied specifically upon smokers alone.

  • LarryA||

    Love the graphic of the guy wearing a helmet, and lighting up.

  • nicole||

    Smoking bicyclists are some of my favorite people. And yes, the first thing I did on reading this post was have a cigarette.

  • ENDelt260||

    He might not be a cyclist. Perhaps he's just extremely uncoordinated.

  • ||

    It's not the fact that he's a bicyclist. It's the fact that he's wearing a helmet.

  • Pope Jimbo||

    I used to mock helmet wearers. Until I broke a rib in a bike (me) van collision because I was using my arms to protect my head.

    In fairness, I don't make my kids wear them. According to them only nerds wear helmets and I get that (I'm a nerd).

    Hopefully they will have a minor brush like I did and learn to embrace their inner nerd.

  • AlmightyJB||

    "Basically, the smokers and the fatties died much younger and saved both private and government insurers a lot of money......the evidence suggests that they really might want to look into subsidizing cigarettes and carbs."

    I've been saying this for ever.

  • ||

    Also, how much to people who are heavily into sports cost the system? Surely anyone who runs marathons, plays rugby or even soccer is going to have a lot more injuries compared to the fattie who just watches reality TV.

  • Fluhdoten1||

    omitting cost of first 20 years of life, and life expectancy, and years of productivity is just fail.

    its puts a toll on society to create a baby and turn it into a functioning member of society.

    once cancer treatment is a rich-only luxury, USA budget balancers would be fools to not encourage unhealthy things.

    having ppl spend their entire adult life in working years is genius. bad health guarantees that.

  • Rick Santorum||

    Basically, the smokers and the fatties died much younger and saved both private and government insurers a lot of money.

    TRIGGER WARNING: Fat shaming, body policing, food judgmentalism.

  • 0x90||

    However often it is said -- "smoking is a lifestyle choice" -- it never becomes any less insulting.

    I was BORN THIS WAY.

    Just look it up. The discrimination, ostracization, and oppression has got to stop. We are human beings too, and deserve to be respected, accommodated, and celebrated -- not reeducated.

  • ||

    That's the thing. You can say 'born that way' about anything. One you decide that nobody should pay more in insurance rates because of their genetic makeup, people will start looking for underlying genetic causes for lifestyle choices that make them less healthy. I.e. Being fat, smoking, drug addiction risk taking.
    If you made a social decision that all variations caused by "luck" are to be leveled, then making an exception for only smokers is just discriminatory. Some people are just born with addictive personalities.

  • Pope Jimbo||

    Why don't we kill an entire flock of birds with one stone? Instead of paying out social security benefits in cash, let's just give them that amount of smokes and hooch.

    The old codgers can either take up hard core drinking and smoking or they can go down to the local Jr. High and sell them off for cash. I'm betting that the punk 8th graders will rough enough of the geezers up to make that almost as dangerous as smoking and drinking.

    The end result is less geezers.

  • Nihixul||

    The proper metrics to compare are:

    expected average benefits cost per month

    versus

    expected average premiums per month

    Yes, yes, unhealthy folk might die sooner, causing a smaller amount of total money spent on them, but they stop paying into the system sooner, too.

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