NCPA - National Center for Policy Analysis


February 21, 2006

Smokers squeezed by soaring cigarette costs and workplace smoking bans are increasingly being hit with another cost increase -- this time for health insurance. A growing number of private and public employers are requiring employees who use tobacco to pay higher premiums, hoping that will motivate more of them to stop smoking and lower health care costs for the companies and their workers.

There is a significant trend toward smoker surcharges:

  • According to a general benefits survey of 950 U.S.-based employers last year, at least 41 percent used some form of financial incentives or penalties in their health care plans.
  • Several companies -- such as PepsiCo, Northwest Airlines and Gannett -- and some public employers -- such as the states of Alabama and Georgia -- require employees who smoke to pay $20 to $50 monthly in addition to standard health insurance premiums.
  • However, some companies waive the additional payments for employees who participate in smoking cessation programs or make other efforts to quit.

Linda Cushman, senior health care strategist at Hewitt Associates, says that "it just makes good business sense" to require employees who smoke to pay more for health insurance because employers spend about 25 percent more for health care for such individuals compared with other employees.

Gary Matthew, deputy administrator of the Alabama State Employees' Insurance Board, says, "We know smokers cost more as far as health care goes. We are putting the burden on them to take responsibility for their own health."

However, Lewis Maltby, president of the National Workrights Institute, says that the practice "could be the first step down a very dangerous road." He added, "Do we really want to live in a world where employers penalize us for everything in our private lives that isn't healthy?"

Source: Lisa Cornwell, "Some Smokers Pay More for Health Benefits," Associated Press/Houston Chronicle, February 16, 2006.


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