Decision-making in hypothetical health insurance marketplaces: A comparison of uninsured smokers and non-smokers

Researchers have long been interested in the link between risk-taking/risk-aversion, time discounting and smoking behavior. We also know that smokers demonstrate more difficulty understanding probabilities and risks information, have lower numeracy levels, demand more health care services (often inefficiently), and are more likely to be uninsured.  Under the Affordable Care Act, 24 million American will be enrolled in the health insurance marketplaces over the next few years, nearly 20% of these will be smokers.  As part of the ACA, smokers will face a 50% surcharge on premiums that will not be eligible for tax credits.  Whether smokers choose sufficient coverage in the marketplaces given their expected health care needs has serious financial and health implications, ranging from access to health services (e.g., detecting cancer and stage at diagnosis) to survival rates.  

To investigate the determinants and quality of coverage decisions among uninsured smokers and non-smokers choosing plans in a hypothetical health insurance marketplace, we collected data from two samples: an internet-based sample comprised largely of young, healthy, tech-savvy individuals (n=276), and from low-income, rural Virginians (n=161).  We assessed whether risk and time preference, numeracy, patient activation (one’s propensity to be engaged in their own health care choices), recent demand for health services, health insurance literacy, choice consistency, and participants’ ability to choose a cost minimizing plan given their expected health care needs was associated with being a current, former, or never smoker.

We find current, former, and never smokers differ significantly along several important axes of decision-making including numeracy, risk aversion, and patient activation with current and former smokers reporting lower levels of each (p<0.05). Current smokers are also more likely than non-smokers to visit the emergency room in the past year (p<0.05).  Importantly for health insurance choices, current smokers are much more likely than non-smokers to rate monthly premiums as the most important attribute of their insurance choice (p<0.05).  In addition, current smokers when compared to non-smokers choose less coverage given their expected health care needs in the coming year (p<0.10).

Taken together, the evidence suggests that smokers are likely to make poor health plan choices, which may have long-term implications for whether their care needs are adequately met. Furthermore, when there is a mismatch between care needs and plan choice, costs will be shifted to the safety net and other providers of uncompensated care.