Is There ANYTHING On EARTH That Doesn’t Eventually Turn Out to Be TOO Complicated For the SUPER GENIUS and His EE-VILLE Toadies in the White House

…to implement “on time and as written”?

A Break For Smokers? Glitch May Limit Penalties

WASHINGTON (AP) — They huddle outside office buildings and they can’t satisfy their nicotine cravings by lighting up on planes and trains, but now smokers could be getting a break from an unlikely source.

A glitch involving President Barack Obama’s health care law means smokers may get at least some relief next year from tobacco-use penalties that could have made their premiums unaffordable.

In yet another health care overhaul delay, the administration has quietly notified insurers that a computer system problem will limit penalties that the law says the companies may charge smokers. A fix will take at least a year.

Older smokers are more likely to benefit from the glitch, experts say. But depending on how insurers respond to it, it’s also possible that younger smokers could wind up facing higher penalties than they otherwise would have.

Some see an emerging pattern of last-minute switches and delays as the administration scrambles to prepare the Oct. 1 launch of new health insurance markets for people who don’t have job-based insurance. Last week, the White House unexpectedly announced a one-year postponement of a major provision in the law that requires larger employers to offer coverage or face fines.

The smokers’ glitch is “a temporary circumstance that in no way impacts our ability to open the marketplaces on Oct. 1,” Health and Human Services spokeswoman Joanne Peters said in a statement.

A June 28 HHS document couched the problem in technical language:

Because of a system limitation … the system currently cannot process a premium for a 65-year-old smoker that is … more than three times the premium of a 21-year-old smoker,” the industry guidance said.

Penalty, schmenalty. So, what KINDA MONEY we talkin’ hee-yah?

…For an older smoker, the cost of the full penalty could be prohibitive.

Premiums for a standard “silver” insurance plan would be about $9,000 a year for a 64-year-old non-smoker, according to the online Kaiser Health Reform Subsidy Calculator. That’s before any tax credits, available on a sliding scale based on income.

For a smoker of the same age, the full 50 percent penalty would add more than $4,500 to the cost of the policy, bringing it to nearly $13,600. And new tax credits available to help pay premiums cannot be used to offset the penalty.

The underlying reason for the glitch is another provision in the health care law that says insurers can’t charge older customers more than three times what they charge the youngest adults in the pool. The government’s computer system has been unable to accommodate the two.

The administration is suggesting that insurers limit the penalties across all age groups. The HHS guidance document used the example of a 20 percent penalty for young and old alike.

In that case the premium for a 64-year-old would be about $10,900, a significant cut from the $13,600 if insurers charged the full penalty.

Younger smokers and older smokers can still be charged different penalties, but if the total of premiums and penalties is more than three times greater for older smokers, the system will kick it out.


10 Responses to “Is There ANYTHING On EARTH That Doesn’t Eventually Turn Out to Be TOO Complicated For the SUPER GENIUS and His EE-VILLE Toadies in the White House”

  1. aelfheld says:

    Smokers live shorter lives and, on average, put lower demand on Medicare/Medicaid and Social Security. The government should be subsidising smokers, not penalising them.

  2. John says:

    Aelfheld, that was true about 10 – 15 years back, and in fact the Japanese NHS did not cover drugs to quit smoking for just that reason until a few years ago. However, the recent advances in cancer treatments, and their cost, make smoking-induced lung cancer a losing proposition for society even with early death. Similar advances in cardiac care make smoking-induced heart disease a losing proposition as well. Factor in the otnher diseases such as RA and Lupus with a risk factor for smoking, and things don’t look financially viable for smoking anymore.

    Between Social Security and Medicaid, Smokers receive about $8,000 less over their lifetime than non-smokers, but this is offset by the priductivity loss of those who die before retirement (the best case scenario is for a smoker to die at his / her 65th birthday, or at least on the day of retirement) increased healthcare costs to private insurers before they hit the eligibility age:

    Smoking increases overall health care costs in spite of reducing Medicare outlays; private insurers bear the brunt of these increased costs. For male smokers, private insurers experience over $5,000 in increased costs, while Medicaid has costs increased by around $300. For women the corresponding figures are $3,000 and $1,300. There are a variety of states considering policies to either increase premiums or cost share amounts for smokers covered by Medicaid or State Employee insurance programs. Our estimates show that private insurance companies could be seen as justified in adding such surcharges.

    The data that informed that quote are 3 – 4 years old, and the ability to treat (and cost of treating) end-of-life smoking-related diseases continues to increase.

    Morbid obesity, on the other hand, appears to continue to be a winning proposition for society in the long run. For now.

    The alternative, of course, is to make smokers pay for their own care if they get a smoking-related illness. Since the alternative there is likely a nasty, protracted death, I don’t see any appetite for that alternative – a couple of sob stories in the press will turn all but the most hardened Randian towards subsidizing that care, and then we are right back where we started.

  3. John says:

    Arrgh, screwed up the tag. The italics should end after “surcharges”, the rest are my words.

  4. AliceH says:

    Individual Insurance (i.e. not Medicare or Employer-provided) already can and does impose higher premiums for smokers – presumably based on actual cost/risk calculations. Employer-sponsored packages can do this but they don’t because it’s more efficient and cost effective to just average and standardize their fixed pool of employees.

    The only reason the exchanges have these smoker penalties imposed is because they’ve removed the ability of the Ins co’s to decide who will be in the risk pool in the first place.

    I think.

  5. aelfheld says:

    John, you’re not figuring in the taxes levied on tobacco both at the state and federal level, not to mention the cost recovery made necessary by that exercise in legalistic extortion known as the Tobacco Master Settlement Agreement. Government profits from smokers.

  6. JTS says:

    The only reason the exchanges have these smoker penalties imposed is because they’ve removed the ability of the Ins co’s to decide who will be in the risk pool in the first place.

    That is correct. And any savings for smoking in an individual case is largely gained by Medicare / Medicaid, as the deaths usually occur one someone has hit disability and is off the private capitation lists. Smoking is a huge losing proposition for the insurers of the working age population.

    I was working in Strategic Planning / Health Econ for a pharma company in 2000 when we tried to introduce a smoking cessation product in Japan. The difference with them is that the NHS is cradle to grave over there, so any lifetime savings accrues to the same insurer that cover the working age population. Their response in 2000 was “sorry, it’s better for us if the smoker dies early”. By 2006, the cost of care had so shifted the equation that they paid for smoking cessation, and by 2010 they were actively encouraging it.

  7. JTS says:

    Aelfheld, the taxes come close to break even, but there is about a $1.50 per pack excess cost, due mostly to society from the cohort that dies a messy, expensive death while still of working age. While I agree the settlement was supposed to go to healthcare and prevention programs for smokers / potential smokers and in fact goes into the general revenue of the states (making it outright extortion in my opinion), even if it did go straight to medical expenses, we’d still come up short on taxes. The greatest beneficiary from smoking is Social Security. There is no downside for them. If SS payments were ever to increase, the total balance might shift to the postive for smoking. Unless newer and more expensive treatments for cancer and heart disease come out.

    The worst case scenario is that we can save smokers’ lives, but in doing so we make a cohort of people unable to work and on disability who otherwise would have dies. It puts us in the paradoxical position of hoping that medical science doesn’t advance in the next decade or so (until the largest cohort of smokers dies off).

  8. John says:

    Sorry, JTS is me, it’s a handle I use at a discussion baord, and I left it in the Reply box.

  9. OregonGuy says:

    For years I’ve been told that I have to pay higher taxes on tobacco in order to pay for the increased costs of health care being forced on the government by smokers.

    When does that money kick in?

  10. John says:

    OregonGuy – never, they use that money for the general revenue fund so they can claim a deficit in the health budgets. That, at least, is a scam.

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