City of Austin charging employees who smoke more for health insurance

City of Austin charging employees who smoke more for health insurance


By Andra Lim - American-Statesman Staff

City of Austin employees who smoke are now paying extra for health insurance after the city quietly instituted a new policy meant in part to encourage those workers to kick the habit.

Employees who admitted using any of a range of products — cigarettes, cigars, chewing tobacco, snuff, pipes, snus (a smokeless tobacco), hookahs and electronic cigarettes — began paying a surcharge of $12.50 per two-week pay period at the start of 2015. Nonsmoking employees pay no insurance premium or $5 per pay period, depending on what kind of plan they pick.

Other Texas cities have similar policies, which are applauded by some public health officials but have drawn criticism from a range of groups who say financial penalties can put the cost of health care out of reach for those who might be least able to afford it, and there is little evidence they get smokers to quit.

The city offers a tobacco cessation class, and those who have enrolled in the class don’t have to pay the surcharge.

“The goal of implementing the tobacco user premium was to educate employees about the health risks associated with tobacco use and encourage healthy behaviors which will lower overall health care costs for both the employee and city,” the city said in response to a list of written questions from the American-Statesman. (The city’s human resources department, which devised the surcharge, declined an interview request.)

The city said the U.S. Centers for Disease Control and Prevention estimated a tobacco user costs an employer $3,400 more than a nonsmoker. And the cost to provide health benefits has been on the rise for the city, growing 58 percent from 2008 to 2014 to $99 million, even as the number of employees enrolled in those benefits has stayed roughly steady.

The city’s surcharge currently applies to 663 full- and part-time city employees, but not dependents, who smoke. Employees disclose whether they are tobacco users when signing up for health benefits, the city said. There are 11,513 city employees enrolled in health benefits.

Cam Scott, an Austin-based senior director with the American Cancer Society Cancer Action Network, said the group is opposed to such surcharges because they make health insurance — which covers smoking cessation resources — more expensive for a population that tends to have lower incomes.

“Some think it’s counterintuitive that we have this position,” Scott said. “We’re trying to look out for the best interest of tobacco users and make sure they have what they need to quit.”

A Families USA fact sheet said that 29 percent of adults whose incomes are below the federal poverty level smoke, 25.5 percent of those without a high school diploma smoke and 36.1 percent of people with mental health conditions reported smoking in the past month.

City Council Member Ora Houston, who said she quit smoking in the 1980s, said the city’s surcharge is designed to give employees options. Houston pointed out that employees who don’t stop smoking after taking a cessation class still have their surcharge waived.

“If it strictly said, ‘You have to quit,’ then I would say I have a problem with that,” Houston said.

Stacey Pogue, a senior policy analyst with the Center for Public Policy Priorities, said the group is against tobacco surcharges because they disproportionately affect “vulnerable populations.” But she noted it’s not easy to address the question of how to spread health insurance costs fairly.

“So should the city of Austin charge employees who are 60 years old more than those who are 20 years old?” Pogue said. “One costs more.”

Dr. Philip Huang, medical director and health authority for the Austin/Travis County Health and Human Services Department, said tobacco kills more people in Travis County than AIDS, crack, heroin, cocaine, alcohol, car crashes, fire, murder and suicide combined.

“What’s nice about these sort of policies and interventions is they give that extra push to help people quit,” Huang said.

But Andrew Westerkom, executive director of the Texas E-cigarette & Vaping Association, said the city’s doing the exact opposite: fining users of e-cigarettes who use the product to help them quit.

“In my opinion, there isn’t a smoker that doesn’t on some level want to quit,” Westerkom said. “Vaporizing is a legitimate alternative.”

City Council Member Ann Kitchen, who has worked as a health care consultant, said smokers should have real opportunities to quit before being charged extra.

“I don’t support just charging people without making available to them options to help them quit smoking. To me, the two go hand in hand,” Kitchen said, adding that she doesn’t know enough about the cessation opportunities the city offers.

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