State policies limiting premium surcharges for tobacco and their impact on health insurance enrollment

Tobacco Surcharges Associated With Reduced ACA Marketplace Enrollment

The Affordable Care Act (ACA) allows insurers to charge tobacco users who have nongroup coverage up to 50 percent more than nonusers of tobacco. In this study we used 2014-19 administrative data on enrollees in the federally facilitated ACA Marketplace, HealthCare.gov, to examine the relationships among surcharge rates, total Marketplace enrollment, and enrollment by tobacco users. We found that the tobacco surcharge rate averaged approximately 14 percent and that it was associated with lower total enrollment as well as a reduced share of total enrollees who reported any tobacco use. Our analysis also found that tobacco surcharges have a significantly larger effect on tobacco users' share of enrollment in rural areas than in urban areas, which may in turn contribute to urban-rural health disparities. Given that tobacco surcharges may decrease Marketplace enrollment overall and shift the composition of enrollment away from tobacco users, our findings suggest that reducing tobacco surcharges may increase total Marketplace enrollment.

State policies limiting premium surcharges for tobacco and their impact on health insurance enrollment

OBJECTIVE

The Affordable Care Act allows insurers to charge up to 50% higher premiums to tobacco users, making tobacco use the only behavioral factor that can be used to rate premiums in the nongroup insurance market. Some states have set more restrictive limits on rating for tobacco use, and several states have outlawed tobacco premium surcharges altogether. We examined the impact of state level tobacco surcharge policy on health insurance enrollment decisions among smokers.

STUDY DESIGN

We compared insurance enrollment in states that did and did not allow tobacco surcharges, using a difference-in-difference approach to compare the policy effects among smokers and nonsmokers. We also used geographic variation in tobacco surcharges to examine how the size of the surcharge affects insurance coverage, again comparing smokers to nonsmokers.

DATA COLLECTION

We linked data from two components of the Current Population Survey-the 2015 and 2019 Annual Social and Economic Supplement and the Tobacco Use Supplement, which we combined with data on marketplace plan premiums. We also collected qualitative data from a survey of smokers who did not have insurance through an employer or public program.

PRINCIPAL FINDINGS

Allowing a tobacco surcharge reduced insurance enrollment among smokers by 4.0 percentage points (P = .01). Further, smokers without insurance through an employer or public program were 9.0 percentage points less likely (P < .01) to enroll in a nongroup plan if they were subject to a tobacco surcharge. In states with surcharges, enrollment among smokers was 3.4 percentage points lower (P < .01) for every 10 percentage point increase in the tobacco surcharge.

CONCLUSIONS

Tobacco use is the largest cause of preventable illness in the United States. State tobacco surcharge policy may have a substantial impact on whether tobacco users choose to remain insured and consequently their ability to receive care critical for preventing and treating tobacco-related disease.