Commentary: Eliminate tobacco surcharge

Virginia's Joint Commission on Health Care initiated a study in 2021 on the affordability of health insurance in the individual market. The high cost of health insurance is a great concern to many families in the commonwealth.

The joint commission found one way to reduce the cost of health insurance was to eliminate the tobacco surcharge, which some insurers add to the cost of plans. To discourage people from smoking, insurers often charge tobacco users up to 50% more in premiums than nonsmokers.

Numerous studies have found the tobacco surcharge does not work as intended. Instead, it is a barrier to people purchasing health insurance coverage — especially younger, healthier tobacco users. Many have low incomes, and for them, the surcharge is a significant cost.

Studies show removing the tobacco surcharge would encourage more people to enter the market and lower the price of health insurance. Increasing the number of healthy individuals in the market spreads costs across a larger pool of people, thereby reducing premiums and allowing smokers to take advantage of cessation programs offered by insurers.

The joint commission found eliminating the tobacco surcharge likely would reduce premiums by 3% to 4.5%. The number of people in the individual market could increase by as much as 13,000 and the number of uninsured could be reduced by 14,000.

As a result of this study, the joint commission unanimously voted to recommend legislation that would reduce the costs of health insurance in the individual market. We sponsored the legislation with Senate Bill 422 and House Bill 675, and both chambers passed the bills by wide margins.

A tobacco surcharge is prohibited in six states, and several others restrict the amount of the surcharge. The legislation was supported by a number of organizations, including the American Lung Association, the American Cancer Society and the Virginia Poverty Law Center. No organization spoke against it.

Eliminating the tobacco surcharge would mean having more insured people in the market, which makes monthly health insurance premiums more affordable. This would help many Virginia families struggling to keep up with higher prices due to inflation.

Localities with some of the highest numbers of uninsured people also have some of the highest totals of tobacco users. Thus, eliminating the surcharge would encourage the uninsured to purchase much-needed health insurance. Also, many young people who do not purchase health insurance would be encouraged to do so if costs were lower.

Unfortunately, Gov. Glenn Youngkin vetoed the legislation, saying it "would force insurance companies to recover costs associated with tobacco users by raising premiums on non-tobacco users." In fact, the legislation would not raise premiums, but reduce them and help many Virginia families. The governor did not discuss the legislation with the joint commission or with its sponsors.

By eliminating the tobacco surcharge, this legislation would encourage more people to purchase insurance, make it more affordable and enable the costs per person to drop. The General Assembly should override the governor's veto at the reconvened session and help reduce the high costs of health care for Virginians.