Why Charging Smokers Higher Premiums Doesn’t Pay – Kathleen King
During the recent Congressional debates leading up to the passage of the 2010 Patient Protection and Affordable Care Act, a multitude of strategies were identified to help address two serious and related health care challenges facing the United States. First, how do we improve health outcomes through prevention and wellness initiatives that promote healthy behaviors? Second, how do we reduce or stabilize health care costs? One such strategy identified was to charge people who use tobacco products a higher health insurance premium than people who do not use tobacco. Under the Affordable Care Act, premiums can vary for tobacco users by up to 1.5 to 1. In other words, smokers can be charged up to 50% higher premiums than non-smokers (1). In 2010, the average annual premium for employer-sponsored insurance was $5,049 for an individual plan and $13,770 for a family plan (2). If these rates varied by smoking status, tobacco users could pay an additional $2,525 for a total premium of $7,574 for an individual plan and $6,885 more for family coverage costing $20,655. The rationale behind this policy is two-fold. Smokers incur more direct health care costs than non-smokers so they should pay more into the system. Also, having to pay a higher premium should motivate those who smoke to quit, in order to save money. If smokers quit, they would get the benefit of reduced premiums and improved health, while the system overall would see cost reductions because the ex-smoker is healthier.
The idea of charging tobacco users more for health insurance than their non-smoking counterparts is not new. When the Health Insurance Portability and Accountability Act (HIPAA) was signed into law in 1996, it mandated that all beneficiaries of employer-sponsored health insurance pay the same premium regardless of health status. However in 2008, when HIPAA rules were finalized, an exception was created for certain wellness programs. These exemptions allowed employers to offer a financial reward or penalty for up to 20% of the total cost of covering an employee, to encourage healthy behavior changes (3). Employers implemented “smoker surcharges” with the goal of decreasing and shifting health care costs for the company, especially for self-insured entities, and improving worker productivity via a healthier workforce (4).
However, this misguided policy implemented by the government, insurance companies, and employers is ineffective at best and counterproductive at worst. First, charging tobacco users higher premiums stigmatizes and marginalizes this group, which not only undermines smoking cessation efforts but can increase the likelihood that a person will continue to smoke. Second, by focusing on the idea that smokers choose to engage in unhealthy behaviors ignores all social factors that contribute to an individual beginning to smoke and make it difficult to quit. Lastly, this policy issues an ultimatum to smokers to “quit smoking or pay”. This framing will threaten a smoker’s freedom and will likely lead to psychological reactance, where the smoker becomes more intent on smoking to regain control. Ultimately, charging smokers higher health insurance premiums oversimplifies a very complicated behavior (5). This approach will not motivate smokers to quit and will fail to improve health outcomes and reduce health care costs.
The idea of varying health insurance rates based on “voluntary health behaviors” invokes a merit-based system that implies someone is paying what they “deserve or have earned” to pay. While this may work for automobile insurance and driving records, unhealthy behaviors are much more complex (3). Charging higher premiums for people who smoke stigmatizes this group, marginalizing tobacco users and decreasing their motivation to quit smoking.
Stigma Theory was postulated in 1963 by Erving Goffman in Stigma: Notes on the Management of a Spoiled Identity. He defined stigma as “an attribute that links a person to an undesirable stereotype which leads to that person being cut off from society and from himself” (6). The five main components of stigma are as follows: people identify and label human differences, stereotyping follows by linking the labeled person to an undesirable characteristic, the group doing the labeling separates “us” from “them”, the “them” group is now stigmatized and experiences discrimination and loss of status, and this stigma has occurred due to an exercise of power by the “us” group (7,8). Following this model, charging smokers higher insurance premiums can be found to: label smokers as different, stereotype smokers as risk-takers who are responsible for their poor health, lack willpower, choose not to quit, and contribute to everyone’s increased health care costs, divide non-smokers and smokers into two groups within a workplace, and increase the financial burden placed on smokers with additional premiums, which is forced on them by their employer (9).
Internalizing stigma encourages secrecy and discourages seeking cessation support. One study has shown that 8% of smokers concealed their true smoking status to their health care provider. While this is a low percentage, there was a strong association between concealment and perceived stigma. Those who felt that smoking was less socially acceptable were more likely to conceal their behavior (10). Smokers who do not feel comfortable having an honest discussion with their health care provider about their tobacco use would receive no cessation resources, medications, or support to help quit.
Labeling theorists argue that stigma traps people into deviant roles, which deepens and stabilizes their deviant behavior. People begin to withdraw socially and isolate themselves from non-deviants, meaning smokers would predominantly socialize with other smokers. Decreased social networks increases depression, decreases quality of life, and decreases self-esteem. One study has shown that an increase in social withdrawal increases the number of cigarettes smoked per day (9). After being marginalized, smokers also internalize the negative label put on them and begin to identify themselves as a deviant, increasing their ownership over the unhealthy behavior. This can have a large impact on self-esteem and self-efficacy, or the belief that you can successfully quit if you try. All of these consequences of stigmatizing people who use tobacco increases stress and decreases the likelihood that smokers will be motivated to quit (9).
Ignoring Social Context
Policies to charge smokers higher insurance premiums focus on an individual’s personal responsibility for their health. This argument largely ignores all social factors that contribute to a person starting and continuing to smoke. For most, starting and continuing to smoke is not a rational choice based on analyzing the costs and benefits of the unhealthy behavior. The majority of smokers want to quit, but it is difficult to do so (11). Quitting smoking is determined by many mental, physical, and social determinants. Placing the blame entirely on an individual smoker negates the role of tobacco industry tactics, physical addiction, and social factors such as poverty and education levels.
Prevalence of tobacco use is strongly associated with education level and socioeconomic status. According to the Centers for Disease Control and Prevention, in 2009 the smoking rate of adults with a GED diploma was 49.1 percent compared to adults with an undergraduate degree, whose smoking rate was 11.1 percent. For adults living below the poverty level, the population’s smoking rate was 31.1 percent compared to 19.4 percent of adults living above the poverty level who smoke (12). These disparities cannot be attributed solely to individual choice. People of low socioeconomic status experience multiple health threats, such as poor access to healthy foods, increased violence, and unsafe housing. They are more likely to have other chronic diseases, but have fewer resources for health care or to improve their living conditions. The multiple burdens that face people living in poverty in addition to using tobacco can have an additive affect, each increasing the harm of the other, causing and exacerbating poor health (13).
There is a unique relationship between using tobacco and a smoker’s finances. The inability to afford food and clothing has been found to significantly increase the odds an individual uses tobacco and decreases the odds that they will be able to quit smoking. When faced with a limited budget, many people eliminate non-essential spending, but tobacco tends to be an exception because it is an addiction and a stress reliever. Studies have also shown the reverse, that smoking is a predictor of financial hardship and stress (14). The cyclical relationship between a limited income, stress, and smoking would only be made worse by increasing health insurance premiums. Smokers, particularly low income smokers, would face an additional financial pressure and would turn to smoking to help alleviate the related stress.
Social conditions, including race, income, education, gender, stress, and social support can be fundamental causes of disease. An intervention that focuses on changing unhealthy behaviors will not be effective if it does not also address the fundamental underlying causes of disease (15). If a person smokes because they are under severe stress from financial pressure or an unsafe living environment, implementing a “smoker surcharge” to address their unhealthy behavior will do nothing to alleviate the reasons why a person is smoking. Unless these fundamental causes are the target of a public health intervention, health status will not improve.
Inducing Psychological Reactance
The policy at hand assumes that everyone thinks rationally and that smokers have analyzed their unhealthy behavior and decided the benefits of using tobacco outweigh the costs (8). The employer believes that by offering a financial savings for quitting smoking, this will increase the overall benefits (which now include health and fiscal improvement) and the smoker will quit. However, human behavior is not strictly analytical and includes many emotions that make many of our choices irrational (16). Depending on how an intervention is framed, different emotions could influence and determine an individual’s reaction and subsequent behavior.
Making smokers pay higher insurance premiums compared to non-smokers gives them an ultimatum to “quit smoking or pay a penalty”. The framing of this message would likely elicit psychological reactance from tobacco users. The Theory of Psychological Reactance was put forward by John Brehm in 1966, who argued that psychological reactance is a response to a threat to one’s freedom. If an influencer pressures someone to change a behavior, the responder will try to reassert their freedom by ignoring the influencer and will feel an increased ownership over the behavior that was threatened (17). According to this model, if an employee’s choice to use tobacco is threatened with a financial penalty they will experience reactance and not only will they not be motivated to quit, but will actually feel a stronger ownership over smoking and recommit themselves to continuing the behavior.
Three factors that can determine the level of reactance are the strength or extent of the threat, the current presence or perception of freedom regarding the behavior, and the importance of that freedom to the person (18). Reactance has also been found to be greater if the restriction was directed at an individual as opposed to an impersonal pressure towards change (19). For example, an employer pressuring an employee to quit smoking would elicit much stronger psychological reactance compared to a convenience store that sold out of cigarettes, preventing the person from smoking.
Once reactance has been induced, a smoker will likely increase their “ownership” of this behavior. As ownership increases over time, the object or behavior increases in value (20). As value and attachment grow, people become more “loss averse”. This means losses and disadvantages are viewed as greater than potential gains and advantages. Smokers who have ownership over their behavior and are loss averse would put more weight on the consequences of giving up tobacco use than on any benefits derived from quitting. Even if they do not want to be smoking, they put a high value on “losing” that behavior (21). Penalizing smokers financially to motivate quit attempts is built on the assumption that individuals think rationally. Understanding the concepts of psychological reactance, ownership, and loss aversion highlights that this assumption is incorrect and the intervention will be ineffective.
Rethinking Employer Cessation Policies
Setting higher health insurance premium rates for tobacco users to encourage smoking cessation is a fundamentally flawed public health intervention. At best, this policy will not motivate smokers to quit and at worst, may deter tobacco users away from resources and support to help them quit. Instituting “smoker surcharges” places blame on smokers. Tobacco users who are stigmatized and marginalized by this policy will socially withdraw from non-smokers and internalize the deviant label, increasing the likelihood that they will continue the unhealthy behavior. Focusing solely on personal responsibility for an individual’s health defines smoking entirely as a voluntary behavior and ignores the influence of social determinants on the behavior, including poverty and stress. Lastly, by issuing an authoritative policy demanding that smokers quit or face a financial penalty, the intervention will induce psychological reactance, causing smokers to ignore the employer’s demand and continue smoking to reassert their freedom.
Smoking is a physical addiction and quitting can take multiple attempts to be successful. An effective intervention must support and encourage smokers’ efforts to quit and bring people who use tobacco into the health care system, not create barriers to good health as higher premiums would do. As noted by Steven Pearson and Sarah Lieber, “All employees should have equal access to services for behavior change and improved health” (22). One possible alternative intervention would consist of two parts. First, the employer would implement a “wellness program” open to all employees regardless of tobacco use, featuring a workshops series and social support. The program would embrace a broad understanding of what factors would help smokers quit and help all employees engage in healthier behaviors. Second, all employer-sponsored health insurance policies would cover a comprehensive smoking cessation benefit free of any barriers. The benefit would cover all FDA-approved cessation medications and phone and in-person counseling, with no out-of-pocket- costs (e.g. co-pays and deductibles) for employees and no annual caps or limits.
Support Instead of Stigma
The new wellness program would be inclusive and supportive with the goal of increasing self-esteem and self-efficacy in individuals and fostering social support between employees. Self-efficacy is an individual’s own belief in their effectiveness, competence, and ability to accomplish what they set out to do (23). Wellness workshops could be offered to all employees including topics on leadership, communication skills, project management, and how to set personal goals and identify strategies to achieve those goals. As employees discuss these topics as a group, co-workers could begin to view one person’s goal of quitting tobacco use similar to another person’s goal of achieving a better balance between work and their personal life or akin to their own goal of losing 15 pounds. This interaction between smokers and non-smokers would reduce the marginalization of tobacco users, prevent social withdrawal, and foster an understanding of the challenges that face a smoker who is trying to quit, instead of blaming them for the unhealthy behavior.
Studies have shown that social support is a significant predictor of successfully quitting smoking (24,25). As part of the wellness program, an organization could provide group cessation counseling sessions to those who choose to participate and are looking for that kind of interaction with others trying to quit. As Mermelstein concludes, “Most smokers consider quitting to be a difficult and stressful process. Having confidants to whom one could turn to help reappraise stressful situations as nonthreatening or to provide adequate coping resources aided cessation” (25). Group counseling sessions would also be open to spouses and children of employees who are trying to quit, as this would benefit the health of the entire family unit and increase the support of the employer for the entire well-being of its employees.
Lastly, the company could openly promote all the tools it was offering to help people quit smoking. A voluntary “Ex-Smokers Hall of Fame” in the break room could be created, highlighting employees who successfully quit smoking recently or ten years ago to create a supportive and encouraging environment. A wellness newsletter could frame all health-improvement activities in a positive light. The smoking cessation benefit covered under insurance should be highlighted as much as Weight Watchers and gym membership reimbursement benefits are, to encourage employees and their families to take advantage of the resources available to them.
Looking Beyond Tobacco
Understanding that employees face a variety of challenges in life, the employer must focus on addressing the fundamental social causes underlying unhealthy behaviors. Employers must take concrete steps to reduce barriers and increase an individual’s ability to access the resources and support made available to them. Focusing on the broader relationship between the social context each individual lives in and their health can lead to “a realization that actions taken have a marked and positive impact on one’s health while also radiating good effects on other dimensions of life and on other people” (26). As part of the wellness workshop series, the employer should offer financial and debt reduction counseling, stress management and coping skills, time management, and sessions on work/life balance. Time during the workday should be set aside for these programs to make them available to all employees regardless of their commitments outside of work. The company could also offer programs aimed at the employee’s family, like tutoring for children, in addition to a mentorship program to increase professional development opportunities for employees, improving their potential for a promotion or salary increase.
Insurance coverage should be designed to eliminate all employee cost-sharing for the smoking cessation benefit and all preventive/wellness visits to their health care provider. This will encourage use of the benefit by all tobacco users, regardless of their financial situation, and will also help bring people of low socioeconomic status into the health care system and into their doctor’s office where they can address any other health concerns that they might have. In Massachusetts, offering this type of barrier-free, affordable, and comprehensive cessation benefit to Medicaid subscribers was found to drastically reduce smoking rates within this population, which had previously not seen the reductions in smoking prevalence that the state’s higher income population had experienced (27). In addition, the company could offer a free Nicotine Replacement Therapy (or patch) give-away to employees trying to quit. As argued in Helping Smokers Quit: Understanding the Barriers to Utilization of Smoking Cessation Services, “Making cessation services more affordable and widely available would increase access for the subpopulations with the highest current smoking rates, especially people of lower socioeconomic status, Native Americans, and those with psychiatric illnesses” (28).
Eliminate the Ultimatum
Psychological reactance is likely when there are punishments, like “smoker surcharges”, in place as consequences for not changing a behavior. To avoid psychological reactance, employees should be involved in all aspects of the organization’s wellness program design, implementation, and evaluation. There should be an initial survey taken by all employees where they can identify their health needs, but also their highest life-concerns more broadly and support or resources they need. Programs, insurance benefits, and workshops should be shaped by what employees voiced would be most helpful to them (22). As wellness initiatives are implemented, there should be a feedback and evaluation mechanism to allow the program to adapt over time to fit employees’ needs. One study has shown that a strong sense of control is associated with self-initiated preventive care, an increased effort to avoid the harms of smoking, and overall higher self-ratings on individual health status (29). By including employees in the design of the interventions, they are more likely to feel in control of their efforts to lead a healthier life and may decrease ownership of their identity as someone who uses tobacco.
Higher Premiums Do Not Pay, Find a
Charging tobacco users higher health insurance premiums will not achieve the intended goals of motivating cessation, improving employee health, nor reducing health care costs. It is a flawed public health intervention that blames smokers, assumes that tobacco use is solely a volitional behavior, and demands personal responsibility of an individual to quit. This policy stigmatizes smokers and marginalizes them from non-smokers, increases stress, decreases social support, and ignores all social factors that led the person to use tobacco. By demanding smokers quit and charging them a penalty, companies are ensuring that current smokers will experience psychological reactance, not be motivated to quit and may even strengthen their ownership of this unhealthy behavior.
John Braithwaite writes, “Long-term internalization of values like altruism and resistance to temptation are inhibited when people view their action as caused by a reward or punishment” (30). Thus, employers who empower employees to achieve healthier lifestyles, instead of penalizing them, may see greater long-term health improvements in their workforce. Any alternative intervention must focus on providing social support, defining the causes of unhealthy behaviors like smoking more broadly and addressing these underlying factors, and reducing barriers to access resources. Providing barrier-free smoking cessation coverage of medications and counseling and offering diverse topics through a wellness workshop series provides employees with multiple pathways to successfully quit smoking and improve their health. These two alternative approaches will avoid the three flaws discussed above that make charging tobacco users an increased health insurance premium an ineffective, and possibly counterproductive, intervention.
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