Smokers Skipping Out On Tobacco Surcharge

May 12, 2016

Enrollees in health plans on public exchanges are “underreporting” that they are smokers to avoid a tobacco surcharge being levied on their plans. This is bad news for all public exchange participants, including non-smokers. The tobacco surcharge–estimated to be 10% on average in 2014–is meant to offset the high cost of diseases associated with smoking such as lung cancer.

Unfortunately, the current system does not have the ability to verify if someone who claims to be a non-smoker is telling the truth. Said Jeff Levin-Scherz, senior consultant for Willis Towers Watson, “Enforcement typically relies on the honor system.”

The same is true for employer-sponsored insurance as well, although not all companies rely exclusively on the honor system. According to Levin-Scherz, some companies require lab tests for employees, which can help them identify smokers. In 2015, about 40% of large employers had a tobacco surcharge.

Even when smokers do self-report, it’s not clear that the surcharges are effective at getting smokers to quit, which would be better for their health and for reducing health care spending generally. According to the American Lung Association, while the surcharges may help offset the cost of smoking-related diseases, such punitive measures “have not been proven effective in encouraging smokers to quit or reducing tobacco use.”

Wellness programs that include smoking cessation may be a better alternative to punitive measures like tobacco surcharges.

For the complete article in USA Today, click here.

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