Bay State's nonsmokers could save
Health law can reward lifestyle gains
Many Massachusetts residents who live healthy lives by exercising and not smoking could enjoy lower insurance premiums under one of several provisions of the landmark new healthcare law designed to discourage risky behavior and help control medical costs.
In one of the most significant changes, the law allows private health insurers to charge higher premiums for smokers than for nonsmokers. In addition, the state will spend $7 million annually for the next two years to offer smoking-cessation classes for enrollees in Medicaid, the state and federal program for the poor and disabled.
The new law also allows private insurers to provide larger discounts for residents who complete weight-loss programs, enroll in exercise classes, and complete other wellness goals. Regulations currently cap those discounts at 5 percent; the law lifts that cap, said Representative Patricia A. Walrath, a Stow Democrat who cochaired the legislative committee that crafted the final bill.
The law also gives Medicaid recipients who meet other wellness goals, such as quitting smoking or undergoing cancer screenings, discounts on premiums and copayments. The Department of Public Health will determine the specific goals and the discounts on the small copayments and premiums Medicaid recipients pay. Families, for example, pay a maximum premium of $36 per month.
While the details will take months to work out, the changes represent a significant increase in the state's efforts to encourage people to take responsibility for their health and, by extension, reduce overall healthcare costs.
It is unclear how much money the changes will ultimately save by reducing medical treatments that are the result of unhealthy lifestyles. But lawmakers searching for ways to slow the rise of healthcare costs insisted that the provisions be included in the sprawling healthcare bill that will require all state residents to have insurance by July 1, 2007.
''We want to discourage unhealthy habits like smoking that only add to the cost of healthcare and obviously have a negative impact on the health of individuals," said Senator Richard T. Moore, Democrat of Uxbridge, cochairman of the Joint Committee on Health Care Financing.
At least two other states, Iowa and Michigan, are encouraging healthy behavior through discounts for Medicaid recipients. The Massachusetts approach differs somewhat between the Medicaid program and the private insurance market, in part because the state's regulatory authority differs greatly between the two types of insurance coverage.
The changes take aim at a high-risk population: Medicaid recipients and the uninsured, who have far higher rates of smoking than the general population. While 17 percent of Massachusetts residents with private insurance smoke, the rate is 37 percent for the uninsured and 39 percent for Medicaid recipients, according to 2003 data compiled by the state Department of Public Health.
Because of the high rate of smoking among Medicaid recipients, legislators included the $14 million in new funding for smoking-cessation programs, which will allow the state to offer programs to nearly all Medicaid recipients who smoke. Estimates by legislative staff put smoking-related medical costs for Medicaid recipients at $700 million a year, and stop-smoking groups lobbied heavily for the Legislature to include money for these programs.
In the private insurance market, the law's changes for wellness discounts and tobacco-use surcharges apply to all policies sold to small groups, such as small businesses, said Chris Goetcheus, Insurance Division spokesman. The changes will also affect up to 400,000 residents who currently are uninsured and who will buy low-cost health plans under the new law.
Major health insurers were cautious about the change.
''We're still evaluating this," said James Roosevelt Jr., chief executive of Tufts Health Plan. ''Obviously we want to provide every incentive for people not to smoke. We cover treatment for smoking addiction and smoking programs. We need to figure out whether the most effective approach is to make tools for quitting smoking available to people or to penalize them on the premiums."
Spokesman Chris Murphy said Blue Cross and Blue Shield of Massachusetts is also researching the issue. While some studies have shown that smokers cost the healthcare system 30 percent more than nonsmokers because they have a greater chance of needing treatment for lung cancer and other diseases, he said, that does not mean that Blue Cross would charge smokers 30 percent more for health insurance.
''The whole purpose of these plans is to keep them affordable," he said, ''so I don't think you're going to see onerous penalties."
One question is whether health insurers would require a person to prove he or she is a nonsmoker and therefore qualifies for lower rates. Life insurance companies, for example, use blood tests to look for chemical traces left by cigarettes.
The Legislature directed the Division of Insurance to develop regulations that lay out details of the new policy, including how insurers could be certain if a person ''or their dependents have not used tobacco products within the past year." Insurance regulators will also decide whether to limit how much insurers can factor tobacco use into premiums.
Until now, Massachusetts regulations did not allow insurers to take tobacco use into consideration when setting premiums for small groups or individuals, regulators said.
Insurers said they now are trying to figure out whether to adopt such ''smoker's premiums," how much they would charge, and how they might require nonsmokers to prove they don't smoke and therefore qualify for lower-cost insurance policies.
State regulations allowed insurers to consider age, location, group size, group participation rate, and industry type when setting premiums for small groups, according to the Insurance Division. In setting premiums for individuals, insurers considered age and location. The new healthcare law combines the small group and individual markets by April 2007 and adds tobacco use and ''wellness program usage" as a rating factor in developing premiums. But even when all of those factors are taken together, regulators limit how much variation can exist between premiums.
Insurers set premiums for large groups, or companies, not based on these factors but by looking at the medical history of their members. Many large companies already offer some discounts to their employees who enroll in smoking-cessation, weight-loss, or other programs to improve their health.
Gregory Connolly, a professor at the Harvard School of Public Health, said insurers should ''clearly make smokers pay their way."
''When a smoker buys a pack of cigarettes for $5, the actual cost is more like $13 to $15 if you consider the future burden on healthcare costs and on employers due to lost time at work because of illness," he said. ''In a rational economic model, we should say if you want to smoke, fine, just put up the $15. At the same time, it's a disease, and insurers have an obligation to provide smoking-cessation programs." 