Tobacco Documents Online

STATE OF MICHIGAN ~ 1_~cS ~~~~ WILLIAM G. MILLIKEN, Governor DEPARTMENT OF COMMERCE WILLlAM F. MCLAUGHLIN. Oirector Septemoer 10, 1980 MEMORANDUM TO: - Rhonda Runner FROM: Beverly Wiener SUBJECT: Smoking and Insurance INSURANCE BUREAU 10A8 PIERPONT P O. BOX 70220 LAN$;NG. MICHIGAN A8909 I'm sorry I won't be able to attend the meeting on Thursday, September 11. Based on our phone conversation, I am sending the following general comments on the proposed recommendations that relate to insurance. - Please feel free to call me if you have any questions. Recommendation 1: The feasibility of requiring premium differentials be explored with the Commissioner of Insurance. As described in a letter from Commissioner Mackey to Dr. Reizen dated August 26, 1980, a copy of which is attached, the relevance of smoking as a factor in insurance rating varies with the type of insurance. I am not aware of any studies which would conclusively demonstrate the extent of the relationship between smoking and the extent of the risk assumed by the insurance company. Without reliable studies, it is not possible to actuarially determine those situations in wnich premium differentials would be appropriate and what should be the amount of such differentials. Recommendation 2: Smoking cessation programs be included in health insurance policies. To require health insurance policies to include coverage for smoking cessation programs would require legislation. Because of the increasing cost of health care in recent years, which has resulted in increased premiums for health insurance, some people would oppose mandating additional coverages which would result in additional premium costs. -259- I I ,I I I I i I { I I r. I 6 I L

Page Two September 10, 1980 Rhonda Runner I I i I The costs you cited for smoking withdrawal programs are fairly low. Many health insurance policies contain deductibles of $50, $100 or more a year. Even if smoking withdrawal programs were covered, programs which cost less than the deductible would not be paid for unless the insured had other covered medical expenses during the year which were equal to or higher than the deductible. The cost for an insurance company to handle small claims is relatively high, and it is generally considered more important for health insurance policies to cover the expensive medical services which could put a person deeply in debt. BW:kab ~ ~_