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Obamacare’s Most Regressive Provision Is Still Hurting Poor Americans: The Smoking Penalty

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Nearly a decade after the passage of the Affordable Care Act, millions of Americans still can’t afford health care.

One particularly regressive part of the law, more commonly known as Obamacare, is the smoking penalty, which allows insurers to charge consumers as high as 50 percent more on premiums if they use tobacco regularly. The law allows states to to mandate a lower surcharge, or no surcharge at all if they choose, however, just 10 states have taken such an action, according to healthmarkets.com.

One of the law’s most popular provisions bans insurance companies from discriminating against consumers with pre-existing conditions, the law does allow for some pseudo-exceptions such as age, location, and tobacco use. This penalty disproportionately hits the poor, who smoke at higher rates, making the tobacco penalty the most regressive part of the Affordable Care Act.

Tobacco use is defined as anybody who has used tobacco products four or more times a week at any point within the past six months, according to WebMD.

While it’s not unusual for liberal lawmakers to use the power of the purse to influence behavior, evidence suggests that the tobacco penalty is driving the poor out of the insurance market entirely, meaning it’s exacerbating the very problem Obamacare was passed to prevent.

WASHINGTON, DC - MAY 04: U.S. President Donald Trump (L), stands with House Speaker Paul Ryan (R-WI) (R) and Freedom Caucus Chairman Mark Meadows (R-NC), after Republicans passed legislation aimed at repealing and replacing ObamaCare, during an event in the Rose Garden at the White House, on May 4, 2017 in Washington, DC. The House bill would still need to be passed by the Sebate before being signed into law. (Photo by Mark Wilson/Getty Images)

U.S. President Donald Trump (L), stands with House Speaker Paul Ryan (R-WI) (R) and Freedom Caucus Chairman Mark Meadows (R-NC), after Republicans passed legislation aimed at repealing and replacing ObamaCare, during an event in the Rose Garden at the White House, on May 4, 2017 in Washington, DC.  (Photo by Mark Wilson/Getty Images)

President Barack Obama himself has admitted to having a cigarette habit in the past, and suggested he still might. That nugget makes this little-known provision all the more perplexing, especially since it’s not having its intended effect of reducing tobacco use. A 2016 study published by Health Affairs found that frequent tobacco users saw their coverage reduced by between 4% and 12% after Obamacare’s implementation.

The study also found that it is likely that smokers have forgone health insurance all together, which is dangerous considering that frequent tobacco users are more likely to need health insurance than the rest of the population. The study found that smokers were over 7% less likely to have health insurance than non-smokers, and said that those facing medium or high surcharges were still no more likely to quit smoking. (RELATED: Biden Vows To Reinstate Obamacare’s Individual Mandate)

U.S. President Barack Obama gestures with Vice President Joe Biden after his election night victory speech in Chicago, November 6, 2012. REUTERS/Larry Downing (UNITED STATES - Tags: POLITICS TPX IMAGES OF THE DAY USA PRESIDENTIAL ELECTION ELECTIONS)

U.S. President Barack Obama gestures with Vice President Joe Biden after his election night victory speech in Chicago, November 6, 2012. REUTERS/Larry Downing

“Among the groups with zero, medium, or high surcharges, the exchange implementation’s effects on smoking cessation were neither substantive nor statistically different from each other,” the study said.

“Taken together, these findings suggest that tobacco surcharges conflicted with a major goal of the ACA — increased financial protection — without increasing smoking cessation,” the authors of the study wrote.

The study also found that “surcharges increased the out-of-pocket premiums substantially for many tobacco users,” after the law was implemented, and that the tax credits established under the Obamacare exchanges did little to help offset the costs, as the credits are calculated based on premiums that don’t include the tobacco surcharge, meaning low or medium-income smokers are not getting the Obamacare subsidies that are awarded to most Americans who struggle to afford health insurance. (RELATED: Chuck Schumer: We Shouldn’t Have Passed Obamacare In 2010 [Video])

In sum, this aspect of the law takes aim at the very people Obamacare was supposed to help: the poor.

Low-income, lower educated people use tobacco products at dramatically higher rates than their fellow Americans, especially cigarettes. Adults below the poverty line smoke cigarettes at roughly twice the rate as adults who live at more than twice the poverty line, according to the CDC. Additionally, adults with less than a high school education smoke cigarettes at three times the rate of adults who have at least a college diploma. These are the people Obamacare is currently pricing out of the insurance market.

Unsurprisingly, it appears that many smokers are not being honest about their habits when they buy insurance from the Obamacare exchanges. A 2016 report from MedCity News found large discrepancies between those who admit to smoking and those who are paying the smoking penalty.

The report found that 17% of adults in the state of Idaho smoke regularly, but only 3% paid the tobacco surcharge in the Obamacare exchanges. Same with Kentucky, where more than a quarter of adult residents smoke, but only 11% paid the tobacco surcharge, and Minnesota where 18% of adult residents smoke, but only 5% pay the surcharge. So another flaw in the tobacco penalty is that it discourages people to accurately report their habits to insurance and their doctors. (RELATED: ‘If You Like Health Care Plan’—Biden Is Campaigning On Obamacare’s ‘Lie Of The Year’)

The smoking penalty takes on new relevance as the Affordable Care Act is once again hanging by a thread in the courts. Congress repealed the law’s individual mandate as part of the 2017 “Tax Cuts and Jobs Act,” and conservative states have seized on the opportunity to argue that the rest of the law is unseverable from the mandate, an argument that four Supreme Court justices have already signed on to. (RELATED: Forthcoming Biography Reveals New Details Of Roberts’ Obamacare Vote)

Obamacare has narrowly survived twice at the Supreme Court, and is undoubtedly headed there again. Despite the law having increased taxes on Americans, and decimated the middle class, Democrats are warning of dire consequences if the conservative Supreme Court delivers a fatal blow to Obamacare. Liberals argue that the high costs Obamacare has forced Americans to pay are justified because the law requires insurance companies to cover those with pre-existing conditions. They argue that a repeal of the law will devastate the most vulnerable Americans, leaving them without coverage, and leaving taxpayers to take care of the costs.

But, for the estimated 35 million Americans who enjoy tobacco products, the law has already had the disastrous impact liberals warn a repeal would have. If the Supreme Court does strike down Obamacare in the near future, victory cigars will definitely be passed around.