Should smokers pay more for health insurance?
The issue was one of several that California lawmakers considered this week as they sent Gov. Jerry Brown bills that carry out the federal health care overhaul by 2014.
Health organizations successfully won provisions that prohibit insurers from charging tobacco users higher premiums on the individual market.
Anti-smoking advocates say they do not believe in charging smokers more for health care despite the cost of tobacco-related illnesses. They said they don't want to discourage smokers from seeking cessation programs and medical care and would rather combat smoking by raising taxes on cigarettes.
"You put the higher price on cigarettes because that's what you're trying to discourage," said Anthony Wright, executive director of Health Access California. "You don't put a higher price on treatment, which is what you're trying to encourage."
President Barack Obama and federal lawmakers determined the scope of health care changes in the 2010 Patient Protection and Affordable Care Act. But California legislators passed bills this week enabling state oversight of those provisions and installing state-specific requirements, such as the ban on higher rates for smokers.
The main proposals exist in Senate Bills 951 and 961 by Sen. Ed Hernandez, D-West Covina, and Assembly Bills 1453 and 1461 by Assemblyman Bill Monning, D-Carmel. The Hernandez bills give oversight powers to the Department of Insurance, while the Monning bills give similar authority to the Department of Managed Health Care. Lawmakers had sent all but AB 1461 to Gov. Jerry Brown as of late Thursday.
"2014 is essentially here, and we need to prepare for implementation" of the federal act, said Hernandez, chairman of the Senate Health Committee. "It is the most important piece of health care legislation this country has seen since the 1960s. California needs to play an important role in ensuring as many people have health care as possible."
California was the first state to launch its health care exchange, a marketplace where individuals and small businesses can shop for subsidized private insurance in 2014. The exchange is expected to connect about 2 million Californians with health insurance by 2019, many of whom would otherwise lack coverage.
The new legislation would allow state regulators to ensure that key provisions of the federal act are carried out. One requires insurers to cover all individuals regardless of their health, a key component of the federal program.
Another specifies that an existing Kaiser Permanente plan for small groups will serve as a minimum standard for the 10 services that all health insurers must provide. Those include maternity care, prescription drugs and hospitalization. Advocates say many consumers now have bare-bones plans that do not cover essential services.
"It really takes away the fear of the fine print people have," Wright said.
Insurers say all individuals must seek coverage in order for the federal overhaul to work. They are relying on the larger pool of consumers, particularly the most healthy, to help pay for patients who require expensive treatment.
Much of the state legislation is designed to mirror the federal act. But insurers are worried about being stuck with a California requirement to cover sick individuals even if federal leaders eliminate penalties for healthy people who do not obtain coverage, said Patrick Johnston, president and CEO of the California Association of Health Plans.
Republicans have said they would repeal Obama's health care program if they win the White House and Congress in November.
Insurers also want to be able to charge higher rates for smokers.
"By eliminating tobacco rating, the state would force nonsmokers to subsidize smokers' tobacco-related health costs," Johnston said. "There are different premium rates for smokers and nonsmokers now. It's analogous to drivers with a lot of accidents or speeding tickets paying more for the risk associated with their history compared to good drivers."
Jim Knox, a Sacramento-based lobbyist for the American Cancer Society, has argued many times for higher cigarette taxes, most recently during the spring campaign for Proposition 29. But he said applying the same cost deterrent to health care leads to unintended consequences.
"This reverts to policies that allow insurers to discriminate against people with pre-existing conditions, and it's a huge problem for people with cancer," Knox said. "It's counter to the priority for us, which is that insurers should not discriminate."
The federal law allows higher premiums for smokers on a state-by-state basis, but Knox said it was one element of the law "we're not happy with."
Lawmakers still have more federal health care issues to tackle, such as whether to create a low-cost "Basic Health Program" that provides coverage for residents up to twice the federal poverty rate rather than have them find coverage through the health care exchange.
Gov. Jerry Brown has announced he will call a special session after the next two-year legislative cycle begins in December. That will allow Democratic lawmakers to pass federal health care-related changes quickly with a majority, rather than a two-thirds, vote.