Health Fail – ACA Smoking Surcharges

Sometimes people’s behavior triggers, surprises and pleases me all at once. The ACA contains a provision enabling insurance providers to add a surcharge on the premiums of smokers, hoping to incentivize smokers to quit. Yale researchers report in Health Affairs how the smokers reacted to these incentives:

That’s right. Smokers dropped insurance coverage. I can’t even anymore.

The administration managed to put through a measure penalizing smoking without using the word that shall not be spoken in congress (tax) and got outsmarted (outdumbed?) by the smokers. I napped through most of my college macro economics course, but the one thing I took away from that class was that if you encounter a market failure that you want to correct, you tax it directly and never tangentially.

This is exactly why.

By the way, this is also why we desperately need to #MakeTaxesGreatAgain in U.S. politics. Treating the taxman as a pariah is tying down policymakers hands with foolish and disastrous consequences.