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According to research by Jan J. Barendregt, M.A., Luc Bonneux, M.D., and Paul J. van der Maas, Ph.D.:

RESULTS

Health care costs for smokers at a given age are as much as 40 percent higher than those for nonsmokers, but in a population in which no one smoked the costs would be 7 percent higher among men and 4 percent higher among women than the costs in the current mixed population of smokers and nonsmokers. If all smokers quit, health care costs would be lower at first, but after 15 years they would become higher than at present. In the long term, complete smoking cessation would produce a net increase in health care costs, but it could still be seen as economically favorable under reasonable assumptions of discount rate and evaluation period.

When it comes to short-term effects, Cancer.org claims that:

  • From 2000 to 2012, tobacco-related health costs and productivity loss in the United States totaled $289 Billion

  • The average price of a pack of cigarettes in the United States is \$6.36. But each pack of cigarettes creates $35 dollars of health-related costs for the smoker.

However no information is given on long-term effects.

The question is therefore: if everyone stopped smoking, would healthcare systems around the world see a net increase or decrease in expenses in the long term?

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  • $\begingroup$ it kinda makes sense in that non-smokers tend to live longer, and the older people get, the more healthcare they need. If you stop people smoking, those smoker who would have otherwise died at a younger age will instead live longer, thus using more healthcare. $\endgroup$ – user1666620 May 18 '16 at 9:00
  • $\begingroup$ @user1666620 Maybe, or maybe not. Someone spending a year in a hospital bed in their '60s spends more healthcare money than someone dying after a short sick-bed in their '90s. In most variations of this claim, I've seen retirement money factored in, and clearly retirement spending should be expected to rise if people quit smoking and die at a higher age. $\endgroup$ – gerrit May 18 '16 at 9:43
  • $\begingroup$ @gerrit people who die before the retirement age also make no use of their pensions, although that's not a health care cost. $\endgroup$ – JonathanReez May 18 '16 at 9:48
  • $\begingroup$ @JonathanReez That was exactly what I meant. Depending on how pensions are funded, it does add up to public expenses, though. $\endgroup$ – gerrit May 18 '16 at 9:55
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    $\begingroup$ I edited the question, because the paper is only about healthcare costs, not about public healthcare costs. $\endgroup$ – DJClayworth May 19 '16 at 20:07
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It is a reputable journal and the results are surely correct on a "total dollars" sense. I guess the point they are making is that because health care expenditure of old age individuals is very likely to be high, there is some 'social benefit' of dying before old age.

However, it seems somewhat meaningless:

A) First, by this logic, murders also decrease health care costs. We're not trying to keep smokers form smoking solely because they will be a health care burden. We also want these people to live long, rewarding lives.

B) People contribute to society, their families, their friends and so on. They also save and, specifically, they pay health insurance premiums while they are alive. So, while they might require more care in the long run, non-smokers might well be able to pay or it with the taxes on their income and the productivity they bring to society. Similarly, we all invest through our taxes, on public education, and it goes to waste when somebody that has received public education dies.

C) There are enormous variations in the amount of healthcare spending that old people receive across countries, so the estimates of how much health are old people will receive has got to be very imprecise.

D) Investments pay a positive rate of return, so if we saved the money now we could pay for a lot more care later. Put differently, all the resources that would not be devoted to the care of smokers now would be used to improve our lives meaningfully, potentially even helping us do research into how to take care of old people effectively, which would again reduce the future expected cost of caring for the smokers.

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The result that `healthcare costs will rise if people stop smoking because they live longer and use more healthcare' is a sort of (very) partial equilibrium result (and somewhat pointless).

By living longer, people will work longer, and by being in better health conditions they will certainly be more productive. So, in the long run, the effect could be positive in terms of welfare, with higher healthcare costs in absolute terms but lower in relative terms, that is, in terms of GDP.

Update on the link between productivity and smoking: Akerlof and Kranton (2010) in their book Identity and Economics (chapter 3) cite a Center for Disease Control and Prevention report (2002): productivity losses due to smoking have been estimated at $82 billion per year.

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  • $\begingroup$ I am not saying that. I am assuming that people in better health conditions are more productive on average and that smoking tends to affect health condition in the long run. $\endgroup$ – emeryville Jun 2 '16 at 19:06
  • $\begingroup$ I didn't say you said that. I said that you're implying it. And I think the implication is wrong as there's no evidence for it. For example it was once assumed that smokers are less productive because they take more breaks, but it appeared wrong as they rest during those breaks. I don't believe assumptions without evidence. $\endgroup$ – Albert Hendriks Jun 2 '16 at 19:10
  • $\begingroup$ I am not thinking in the cross-section but in the long run (which is related to the asked question). I guess that we have evidence that (1) people in better health conditions are more productive on average and (2) that smoking tends to affect health conditions. $\endgroup$ – emeryville Jun 2 '16 at 19:19
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The paper is published in the New England Journal of Medicine, a widely respected peer-reviewed journal. There appears to be no reason to think that it is significantly flawed.

The study is pretty straightforward, and the essential conclusion is that 'healthcare costs will rise if people stop smoking because they live longer and use more healthcare'.

In terms of absolute benefits, it should be pointed out that things like 'reducing the homicide rate' or 'reducing the frequency of car accidents' might also result in increased healthcare costs for the same reason

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