The cost of smoking

A new paper in Health Affairs estimates the impact of smoking cessation on future health care costs among persons covered by TRICARE, taking account of changes in life expectancy. ScreenHunter_02 Dec. 11 14.53

The last column on the right shows the net impact by gender accounting for the expected increase in weight gain that is associated with cessation (slight reduction in lifetime medical costs for younger women; slight increase for men). The focus of the analysis is health care costs paid by third party insurers and you can follow the calculus of the cross subsidies above (lower costs while alive, higher costs from living longer,with the net depending on gender and age at cessation).

This table focuses only on part of the external cost of smoking (that cost that might be shifted outside of the household). The social, or total cost of smoking includes external costs, but also private ones and quasi-external costs that accrue within the household. I explored a complete assessment of the social cost of smoking (private, quasi-external and external costs) with colleagues in The Price of Smoking (MIT Press, 2004).

In $2000 we found that the cost of a pack of cigarettes was around $40/pack, but that most of the cost was borne by smokers (private cost ~$33/pack) and family members (quasi-external cost ~$5.50/pack) via shortened life span. The purely external costs (including flows like those above, but accounting for many other sources of potential cross subsidy like Social Security and private life insurance) were around $1.50/pack net of excise taxes. The new paper is a nice analysis, but focuses only on one aspect of the true, or societal cost of smoking and in doing so likely greatly underestimates the benefits of cessation.

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Wenya Yang, Timothy M. Dall, Yiduo Zhang, Shiping Zhang, David R. Arday, Patricia, W. Dorn and Anjali Jain. Simulation Of Quitting Smoking In The Military Shows Higher Lifetime Medical Spending More Than Offset By Productivity Gains. Health Affairs, 31, no.12 (2012):2717-2726.

About Don Taylor
Associate Professor of Public Policy at Duke University and author of Balancing the Budget is a Progressive Priority. On twitter @donaldhtaylorjr

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