Insurance Firms Still Need To Cover Pre-existing As ACA Is Over-ruled?

Federal judge Reed O’Connor of Texas has just ruled all of the Affordable Care Act [ACA, also known as Obamacare] unconstitutional, including the provision which prohibits insurance firms from denying or limiting health insurance because of pre-existing conditions, or charging more for people with such conditions.

        Fortunately, a much better and fairer way of dealing with a major part of the problem already exists under Obamacare, and an invalidation of the ACA would make it even better and stronger, argues public interest law professor John Banzhaf.

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        According to the National Cancer Institute, lung cancer kills more Americans each year [154,050] than any other form of cancer - more than twice that of the next leading form of cancer - and the costs of treating this leading cancer are correspondingly huge.

        Moreover, most lung cancers are caused by smoking, an activity only a tiny fraction of Americans (about 15% of adults) indulge in, yet the huge healthcare and other costs are shared not only by insurance firms, but by all Americans in the form of high taxes (to treat smoking-caused diseases under Medicare, Medicaid, and many other programs) as well as needlessly inflated healthcare insurance premiums.

        Indeed, the American Lung Association estimates that smoking costs the American economy over $300 billion a year (including over $115 billion in direct healthcare expenses alone).

        Looking at it from another perspective, a judge in a case in which Banzhaf participated, after hearing all the evidence under oath and subject to cross examination, concluded that each smoking worker can cost his employer over $12,000 (in 2018 dollars) per year - thereby imposing a major financial burden on all of the other nonsmoking employees.

        Recognizing this, and that many healthcare insurance firms had already been charging smokers more for their healthcare insurance - as they routinely do, for example, with life insurance - Banzhaf helped to amend the ACA to authorize Insurance firms to impose a 50% surcharge on smokers; an additional charge which would cover only a fraction of the additional costs their smoking adds to the insurer's liability.

        So if the ACA is ended, this provision would also end, so the law regarding surcharges for smoking would revert to the law which existed prior to the passage of the ACA, says Banzhaf.

        But, as a result of two different rulings which Prof. Banzhaf obtained in 1987, and then reaffirmed in 2004, insurance firms were authorized to charge smokers a surcharge on healthcare insurance of any amount - or at least by any amount which could justified by actuarial statistics.

        Forcing smokers to pay more of their fair share of the huge costs their habit imposes on the nation's healthcare system is fairer than forcing the overwhelming majority of taxpayers who are not smokers to shoulder these costs.

        It is also much fairer and more humane to force them to pay for the cancer and other diseases their smoking causes now, when they can still quit and thereby largely avoid the deadly disease and the entire surcharge, than denying them coverage after their deadly lung cancer [pre-existing condition] has been detected and it is too late.

        This would impose, for the first time, widespread personal responsibility for individual health-related decisions, which is something both Republicans and Democrats insisted was necessary to slow ever escalating healthcare costs, rather than the ACA approach which largely simply shifts these huge costs from one population group to others.

        We do know from many studies that even small incremental increases in the cost of being a smoker - e.g., small hikes in the per-pack tax on cigarettes - clearly have a significant impact on helping the overwhelming majority of smokers who want to quit to do so, notes Banzhaf.

        Thus it is reasonable to believe that a multi-thousand-dollar surcharge on yearly Insurance firms premiums, even if broken up into monthly or bi-monthly payments, would have an even bigger impact - especially since smokers will see the figure all at once, rather than spread out over time as they do for a typical one-pack or two-pack a day smoker.

        Indeed, the Wall Street Journal and the British Medical Journal have reported that imposing a smoker surcharge can slash smoking rates among employees by 50%.

        So, at least with regard to lung cancers, imposing surcharges on smokers before they contract lung cancer is far preferable, and certainly fairer, than insurance firms denying or limiting their coverage once the deadly disease strikes.




About the Author

JOHN F. BANZHAF
JOHN F. BANZHAF III, B.S.E.E., J.D., Sc.D. Professor of Public Interest Law George Washington University Law School, FAMRI Dr. William Cahan Distinguished Professor, Fellow, World Technology Network, Founder, Action on Smoking and Health (ASH) 2000 H Street, NW, Wash, DC 20052, USA (202) 994-7229 // (703) 527-8418 http://banzhaf.net/ jbanzhaf@law.gwu.edu