Tobacco Surcharge May Limit Affordable Care Act Enrollment

The Affordable Care Act marketplace’s tobacco surcharge might decrease enrollment and dissuade tobacco users from entering the marketplace, according to a Health Affairs article.

Health plans on the Affordable Care Act marketplace can increase tobacco users’ costs by 50 percent over non-user enrollees.

The researchers leveraged HealthCare.gov administrative data from 2014 through 2019, including overall enrollment, tobacco user enrollment, and surcharge rates. The study examined whether the tobacco surcharge effectively accomplished its goal of incentivizing enrollees to quit smoking and how the surcharge might impact enrollment.

“As with total enrollment, tobacco surcharges have relatively modest changes on tobacco user enrollment share,” the researchers found.

During the study’s timeframe, the surcharge rates were about 14 percent across both silver and bronze plans.

The study found that bumping the silver surcharge by one percentage point lowered overall enrollment by approximately 0.025 percentage points. One percentage point of change in the silver surcharge equals around $0.65.

Controlling for factors such as marijuana laws, a $65 surcharge for a silver plan could lead to a 2.51 percentage point drop in overall enrollment. Meanwhile, in the bronze plans, a surcharge increase of one percentage point or approximately $0.52 could lower overall enrollment by 0.033 percentage points. 

The difference between a silver surcharge’s impact on enrollment and a bronze surcharge’s impact on enrollment was not significant.

An increased surcharge had a higher impact on tobacco users’ enrollment than it did on overall enrollment. 

Bumping the silver plan surcharge by one percentage point led to a 0.058 percentage point drop in tobacco user Affordable Care Act marketplace enrollment. Similarly, in bronze plans, the same surcharge increase led to a 0.053 percentage point decline in tobacco users’ enrollment.

A one percentage point increase in the silver plan tobacco surcharge for a federally facilitated, nongroup Affordable Care Act marketplace plan in 2019 led to 137 fewer tobacco user enrollees on all plans. It could also lead to a decrease in non-tobacco user enrollment by 40 enrollees.

The fact that the silver surcharge could influence non-tobacco users might indicate that enrollees are not being honest about their tobacco use initially and are motivated to disenroll and avoid higher penalties when the surcharge increases. 

Alternatively, it could indicate confusion among some families with mixed tobacco usage about enrolling non-tobacco users in the family. Family members who do not use tobacco can pay the lower non-tobacco user premium, even if others in the family do smoke.

Living in a rural location may influence whether a surcharge increase would stymie enrollment. Over six in ten of the study’s counties were rural counties.

In rural counties, where 23 percent of tobacco-using enrollees reside, a one percentage point increase in silver plan surcharge rates equaled a 0.0245 percentage point decline in overall enrollment and a 0.0782 percentage point drop in tobacco user enrollment share. 

Meanwhile, in urban counties, the surcharge increase led to a 0.0278 percentage point decrease in tobacco user enrollment and barely impacted overall enrollment.

The researchers noted that this trend fits into a broader narrative of care disparities between rural and urban areas.

Age, sex, and household income did not appear to impact the surcharge’s effect.

“Reducing surcharges may increase total enrollment, perhaps even among people who do not use tobacco but are in families with tobacco users,” the researchers concluded.

The study’s results sync with a separate study which found that tobacco surcharges might particularly impact access to coverage for low-income seniors on the Affordable Care Act marketplace.

Outside of the Affordable Care Act, some public payer attempts at influencing smoking cessation have fallen short of their intended goals. Given the prevalence of smoking in the Medicaid population, Medicaid programs can offer a wide variety of cessation programs. But studies found that enrollees were unlikely to access cessation medication or cessation counseling.