Under the Senate Finance Committee version of the health-care bill, health insurance companies would be allowed to charge tobacco users premiums up to 50 percent higher than those of non-users, while marijuana and crack cocaine smokers could not be penalized with higher premiums.
According to provisions spelled out in the Senate Finance Committee's summary of the bill--the so-called "chairman's mark"--insurance issuers selling policies to individuals could only vary premiums based on three characteristics: tobacco use, age and family composition.
Specifically, it says premiums could vary “by no more than the ratio specified” for each characteristic:
-- Tobacco use: 1.5 to 1
-- Age: 4 to 1
-- Family composition:
1) Single: 1 to 1
2) Adult with child: 1.8 to 1
3) Two adults: 2 to 1
4) Family: 3 to 1
This means, for example, that for every $100 in premium that a non-tobacco user pays, a tobacco user could be charged $150. A family could be charged three times as much as a single person, and an older person could be charged four times as much as a younger person.
Premiums could also vary among, but not within, geographical rating areas to be defined by the states.
The bill doesn’t specify premium differentials for any other conditions. Pot smokers would suffer no penalty--at least in terms of premiums.
Economist Earl Grinols of Baylor University questioned why the bill is singling out tobacco users as opposed to people who engage in other habits that carry health risks.
“Why are they talking about tobacco use only, not drug abusers?” asked Grinols. “What about people who choose to do hang gliding and technical rock climbing without ropes? They’re going to have higher medical expenses as well.”
“To the extent that cocaine users and drug abusers also have higher costs, there’s no question that it’s favoring those types of medical abusers with respect to tobacco,” told CNSNews.com.
Grinols said that generally, a goal of premiums is to spur people to choose healthy behaviors.
“To the extent that tobacco use is known to be an unhealthy behavior and to lead to higher medical expenses on average in the future, you would definitely want individuals to be able to be charged more because if they’re going to be taking more out of the health care insurance, then they should pay more,” he told CNSNews.com.
Allen St. Pierre, director of the National Organization for Reform of Marijuana Laws agreed that the Senate Finance Committee was being “rather selective” in singling out tobacco users over users of cocaine and marijuana. But St. Pierre said the government is attempting to further a social trend.
“It certainly doesn’t get away too far from an existing 20-year trend of government taxing tobacco at every-increasing rates and users of tobacco, so by extension, taxing the health plans or making them less available to people who use tobacco would be consistent with that 20-year trend,” he added.
Tobacco has become “politically incorrect,” St. Pierre said.
When asked by CNSNew.com why he thought tobacco was specifically targeted by senators but marijuana wasn’t, St. Pierre cited tobacco’s “killing capacity.”
“As much as other drugs are problematic, tobacco kills--according to the (federal) CDC (Centers for Disease Control and Prevention)--anywhere between 350,000 and 450,000 people a year. So at least from a public health point of view, if there was going to be one single drug that people were going to interact less with, one could make the argument that tobacco would be that drug,” he said.
“As tobacco use becomes more vilified, more demonized, it’s not too surprising that what come with it (are) great taxation, greater restrictions, and to a degree, criminality,” he said.
But Grinols, a former Treasury Department senior economist, wondered why the Senate Finance Committee was spending its time “paying attention to this level of detail” in health insurance.
“It seems to me like this is (congressional) micro-managing to the detriment of our system, not to the advantage of it,” Grinols said.
Insurance rating is something the market can best determine, not government, he said.
“This is not the kind of thing you want your government to be doing,” he said. “You want these things to be done within the setting of free underwriting by insurance companies who know what they’re doing and can check what the rates ought to be.”
Grinols added: “If the bill set up a proper structure so that insurance companies can rate on the things that people have choices over and life-style elements, there wouldn’t be any need for the government to put in these ratios.”
By Karen Schuberg
October 28, 2009