NOTE:  As provided in LFC policy, this report is intended only for use by the standing finance committees of the legislature.  The Legislative Finance Committee does not assume responsibility for the accuracy of the information in this report when used for other purposes.

 

The most recent FIR version (in HTML & Adobe PDF formats) is available on the Legislative Website.  The Adobe PDF version includes all attachments, whereas the HTML version does not.  Previously issued FIRs and attachments may be obtained from the LFC in Suite 101 of the State Capitol Building North.

 

F I S C A L   I M P A C T   R E P O R T

 

 

 

SPONSOR:

Jennings

 

DATE TYPED:

2/23/03

 

HB

 

 

SHORT TITLE:

Smoking Cessation & Prevention Insurance

 

SB

743

 

 

ANALYST:

Wilson

 

APPROPRIATION

 

Appropriation Contained

Estimated Additional Impact

Recurring

or Non-Rec

Fund

Affected

FY03

FY04

FY03

FY04

 

 

 

 

 

See Narrative

 

 

 

Relates to HB 144, SB 133 & SB 534

 

SOURCES OF INFORMATION

 

Responses Received From

Public Regulation Commission (PRC)

Department of Health (DOH)

Human Services Department (HSD)

Retiree Health Care Authority (RHCA)

Public School Insurance Authority (PSIA)

 

SUMMARY

 

     Synopsis of Bill

 

Senate Bill 743 amends the Insurance Code to create a mandated benefit of smoking prevention and cessation treatment in an individual or group health insurance policy, health care plan or certificate of health insurance delivered, or issued for delivery, in this state that offers maternity benefits. The mandated coverage may be subject to the policy deductibles, coinsurance and co-pays.

 

    Significant Issues

 

There is conclusive evidence that smoking has an adverse affect on health.  Smoking during pregnancies also affects the health of the new born.  Proponents of SB 743 believe that this coverage will improve health and ultimately lower the cost of health insurance. 

 

Opponents of SB 743 argue that this is another mandated benefit that will drive up the premiums for of health insurance.

FISCAL IMPLICATIONS

 

There is no immediate fiscal impact of SB 743. There is, however, disagreement about whether mandating smoking cessation and prevention will ultimately raise or lower health premiums. The premiums affect the state since the employers share of premiums is paid by the Risk Management Division of the General Services Department for the active state employees, the PSIA for the public school employees and the RHCA for the retirees.

 

Some experts believe that mandating any coverage will increase premiums. Others argue the overall health benefits of stopping smoking will ultimately result in healthier covered individuals and save money in the long run.

        

ADMINISTRATIVE IMPLICATIONS

 

Insurers will be required to refile policy forms and premium rates with the Insurance Division of the PRC, but the administrative impact is minimal.

 

RELATIONSHIP

 

SB 743 relates to:

HB 144 and SB 133, which propose tobacco settlement program fund appropriations for FY04, including prevention and cessation programs, on behalf of the recommendations of the Tobacco Settlement Revenue Oversight Committee. 

SB 534, which proposes tobacco settlement program fund appropriations, including prevention and cessation programs.

 

TECHNICAL ISSUES

 

The DOH recommends changing “smoking “ to “tobacco use”, such that it incorporates all forms of tobacco (e.g., spit tobacco) in the following sections:

Title, Page 1 Line 12,

Section 1, Page 1, Lines 17, 22 and 24

Section 3, Page 8, Line 5

Section 4, Page 10, Line 12

Section 6, Page 12, Line 13

 

OTHER SUBSTANTIVE ISSUES

 

DOH provided the following:

 

Tobacco exacts a heavy death toll in our state.  More than 2000 New Mexicans die each year from smoking-related conditions, and more than 2000 children in the state have lost at least one parent as a result of tobacco use.  If current trends continue, the number of New Mexicans currently under age 18 who will ultimately die from smoking is estimated at 44,000. 

 

Treating tobacco dependence is the most important action health care providers can take to improve the length and quality of life for patients who smoke. Patients would benefit if systems were in place to ensure that preventive healthcare is addressed at each patient visit. The influence of health care system administrators, insurers and purchasers could be used to encourage and support the consistent and effective identification and treatment of tobacco users.    

 

Smoking cessation treatments are not only clinically effective, but they are economically defensible as well. Cost effectiveness analyses have shown that smoking cessation treatments compare quite favorably with routine medical interventions such as the treatment of hypertension and other preventive interventions such as periodic mammography.

 

Savings from prevention and cessation treatments are immediate and measurable.  For example, Massachusetts and California are saving up to $3 in tobacco-caused health care costs for every dollar spent on prevention.  Each pack of cigarettes sold in the United States costs the nation an estimated $7.18 in medical care costs and lost productivity.  Per pack, the medical costs were estimated to be $3.45 in 1999, up significantly from $2.06 per pack in 1993.  Lost productivity costs are estimated to be $3.73 per pack.

 

Smoking cessation is also cost effective in special populations such as hospital patients and pregnant woman. Every dollar spent on trying to get pregnant women to stop smoking can save $6 in long-term costs. Smoking cessation interventions for pregnant women are especially cost effective because they result in fewer low birth weight babies and perinatal deaths, fewer physical, cognitive and behavioral problems during infancy and childhood, and also yield important health benefits for the mother.

 

DW/yr