Will FDA Regulations Increase Your Insurance Costs?

e-cigarette studies woman in lab coatLast week I started to explore the slippery slope the FDA is creating by attempting to declare e-cigarettes as tobacco products. In that article I grappled with the trend of local governments and employers deciding to treat vapers more harshly.  Turns out, it doesn’t just stop there, what the FDA does could cost almost all vapers real money in the form of higher insurance premiums.

Right now, insurance companies are still a little up in the air what to do with e-cigarette users.  According to one industry article, health insurers aren’t quite clear how to define “smoker” because of the lack of a classification for e-cigarettes.

One of the ways that insurers might handle electronic cigarettes is to categorize them in the same way as other tobacco products. This will cause “vapers” – the nickname assigned to people who use the devices as opposed to smoking tobacco – to have to pay the same types of increased premiums as smokers of traditional products. This will, no doubt, cause considerable controversy, as they are not necessarily the same experience with the same risk, as the electronic version does not contain some of the problematic substances such as tar and other chemicals.

The reason any of this is a big deal is fairly simple.  The Affordable Care Act, AKA Obama Care, allows insurers to jack the rates of smokers up an additional 50%. Whether your insurance company considers you to be a smoker or not is a pretty big deal.

So, where does the FDA figure into this?

It’s quite simple really.  One of the cornerstones of the FDA’s strategy with its regulations is to get e-cigarettes classified as a tobacco product.  This opens the door for all sorts of stuff down the road, which the FDA openly admits.

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On top of that, the proposed regulations also have buried in them a provision that prevents merchants from stating e-cigarettes are safer than smoking.  Essentially, putting a gag on truthfully speaking of the benefits of e-cigarettes.

Put both of those things together and you have an official declaration that A. e-cigarettes are tobacco products and B. they are not safer than cigarettes.

I think that sends a clear-cut message to insurers.  That message is that e-cigarettes are the functional equivalent of traditional smokes.  So, rather than insurance companies teaming up and benefiting public health by encouraging the use of electronic cigarettes, the opposite will happen.

People will actively be penalized for quitting smoking in the form of increased insurance premiums.

Interestingly, life insurance won’t have quite the shakeup I expect health insurance to have.  But, that’s not actually the good news.  Life insurance companies already charge vapers higher premiums than complete non-tobacco users.

The reason is that life insurance companies will often require health screenings before offering a policy.  One of those screenings is often a cotinine test.

The dilemma for life insurers is that even if electronic cigarettes turn out to be safer than their tobacco counterparts, the insurers have no way to tell the difference between a smoker and vaper. Underwriters ask people applying for life insurance about their tobacco use and then verify those responses with a blood or urine test for cotinine, a product of metabolizing nicotine found in both products.

That article notes that only about 11% of insurers treat vapers different from smokers.  Chances are pretty good, that minority will fall in line when the legal definition of smoker is essentially changed to include all forms of nicotine not controlled by the Pharma industry.

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It appears that the danger of the FDA’s actions won’t just be limited to squeezing small businesses out of existence.  They’re going to harm end users financially as well.

Steve K

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