Older smokers are likely to benefit from Obama’s Affordable Care Act and could save about $4,500 a year on premiums, due to a computer glitch that limits the penalties insurers are allowed to charge.
A June 28 report by the Department of Health and Human Services discovered the smokers’ glitch, which could take the Obama administration a year to fix, AP reports. Even though the law allows insurers to charge smokers up to 50 percent higher premiums, the system glitch limits these penalties and particularly benefits older Americans who smoke.
"Because of a system limitation ... the system currently cannot process a premium for a 65-year-old smoker that is ... more than three times the premium of a 21-year-old smoker," the industry guidance said. If an insurance company tries to charge a smoker higher premiums, “the submission of the (insurer) will be rejected by the system,” the guidance added.
When President Obama's signature Affordable Care Act is implemented in 2014, insurance companies will be required to accept all applicants, regardless of their medical history, lifestyle or any pre-existing conditions. A 64-year-old non-smoker would pay about $9,000 a year for a standard “silver” insurance plan. A 50 percent penalty on premiums would add more than $4,500 to their annual health insurance costs, bringing the total to nearly $13,600.
But the glitch prevents insurers from charging older customers more than three times what they charge the youngest. In order for the system to approve the insurance plans, a young smoker and an old smoker would have to be charged the same penalty.
Initially, health insurance experts predicted that companies would charge young smokers lower penalties and older smokers higher penalties.
"Generally a 20-year-old who smokes probably doesn't have much higher health costs than someone who doesn't smoke in any given year," said Larry Levitt, an insurance market expert with the nonpartisan Kaiser Family Foundation. "A 60-year-old is another story."
The Obama administration is now suggesting limits on penalties for smokers of all ages. The Department of Health and Human Services suggested a 20 percent penalty, which could be significantly less for older smokers who would have otherwise been forced to pay 50 percent.
A 64-year-old smoker with a 20 percent insurance penalty would be paying about $10,900 a year, rather than the $13,600 they would pay under a 50 percent penalty. Younger smokers, on the other hand, would most likely be paying more than they normally would.
“It’s going to throw cold water on efforts to get younger people to sign up,” Larry Levitt, an insurance market expert, told AP.
On July 2, the Obama administration unexpectedly announced a one-year delay of the provision that would mandate larger employers to provide coverage for their workers or pay hefty fines. The administration is preparing the launch of the health insurance marketplace on October 1, but news of delays and glitches has concerned health industry experts and consultants.
In recent weeks, new data and reports have discovered that Obamacare would increase healthcare premiums in California by up to 146 percent and penalize nearly half a million Native Americans who would no longer be “Indian enough” for eligibility at federally-funded health clinics. And with younger smokers set to pay significantly more and older smokers able to get away paying less, flaws of Obamacare have once again been highlighted, just a few months before it goes into effect.
"This was an administration that was telling us everything was under control," health care industry consultant Robert Laszewski told AP. "Everything was going to be fine. Suddenly this kind of stuff is cropping up every few days."