Philadelphia making nonunion workers who smoke pay more for health insurance

Looking to better manage health-care costs, the Nutter administration is taking two big swings at tobacco.

Come Jan. 1, Philadelphia will add a $500 annual premium to benefits costs for nonunion employees who use tobacco products, and a $15 surcharge for prescriptions filled at pharmacies that sell tobacco products.

The charge on prescription co-pays is part of a plan being launched by the city in partnership with CVS Caremark, a pharmacy benefits provider owned by the parent company of CVS drug stores. CVS pharmacies have recently stopped selling tobacco products.

The city, with CVS Caremark, is creating what is being called the Preferred Health Network, the first tobacco-free pharmacy network in the country, according to James Startare, the city's deputy human resources director.

So far, Startare said, 135 independent pharmacies and three retail chains - CVS, Target Pharmacy, and Wegmans Pharmacy - have registered with the city's new health network.

Startare said any pharmacy that does not sell tobacco products is eligible to be part of the network. Nonunion city employees will be required to fill prescriptions at those pharmacies or be charged an additional $15. The current generic drug co-pay is $10, Startare said.

The new network and the $500 health-care premium for smokers will affect about 5,400 city employees, Startare said.

Based on self-reporting surveys, from 15 percent to 20 percent of the city's nonunion workforce smokes, he said. The city will be relying on those smokers to identify themselves when they register yearly for their health benefits.

"We are counting on honesty," he said.

The move comes on the heels of a new state-approved $2-a-pack tax on cigarettes sold within the city, to help finance the Philadelphia School District.

Startare said he considered the tobacco-free health network to be more radical than the new $500-a-year premium.

The idea occurred to Startare as he was trying to find ways to control health-care costs for the city.

Startare said the city can negotiate better prescription prices if it limits the number of pharmacies available to employees. CVS's move to tobacco-free stores presented an opportunity to negotiate a deal with the chain while also encouraging nonsmoking, he said.

While CVS Caremark is a partner in the new network, Startare said, independent pharmacies should not suffer because, in his experience, few sell tobacco products.

"I see this as a win-win-win," he said. "We are promoting the health of our workers, we are promoting small business in terms of independent pharmacies, and, thirdly, the city is getting a financial benefit."

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