Yearly Medicaid Cost of Smoking Put at $12 Billion
Smoking-related illnesses cost the Medicaid program $12.9 billion a year nationwide, including $1.7 billion in California, according to a University of California study released Monday.
The study, published in the journal Public Health Reports, is the most comprehensive to date of the extent of Medicaid costs attributable to smoking-related lung cancer, heart disease, emphysema and other illnesses linked to tobacco use, according to the journal.
Although several of the authors have testified as expert witnesses for states that are suing the tobacco companies, research reported in the journal is reviewed by outside scientists before publication, a process known as peer review, and the researchers--from UC San Francisco, UC Berkeley and the Centers for Disease Control--are well respected experts in the field.
The study could create further problems for the proposed $368.5-billion national smoking settlement, now under consideration by Congress, because it implies that the costs that smoking imposes on taxpayers are considerably higher than the sums set aside in the settlement to cover Medicaid costs. Medicaid is the government program that pays for medical care for indigents. Costs of the program are shared by the states and the federal government.
Lance Morgan, a spokesman for the tobacco industry, declined to dispute the new cost figures, but defended the size of the proposed settlement, saying it “represents real, not estimated, money to pay for health costs and anti-smoking programs that public health groups have sought for years.”
Meanwhile, a state appeals court in Minnesota granted tobacco companies a stay of a judge’s order to turn over 39,000 confidential documents to the state of Minnesota, which is suing the industry for $1.77 billion.
The judge’s order to disclose the documents stated that they showed evidence of crime or fraud. That statement, along with a special master’s report on the documents, is already reverberating in Congress.
“The documents suggest that there was a criminal conspiracy to suppress information that could have saved millions of lives,” said Rep. Henry Waxman (D-Los Angeles). Similarly, Rep. Martin T. Meehan (D-Mass.), said, “many of the documents in the master’s report will bolster the contentions I made in a memo to Atty. Gen. [Janet] Reno in December 1994 that the major tobacco companies were acting in concert” to hide damaging information about the hazards of their products.
The authors of the Medicaid cost study said that over 25 years--the period covered by the $368.5-billion tobacco settlement--the costs to Medicaid would total $322 billion even without any inflation in medical costs.
The proposed settlement sets aside about $190 million to cover such costs, with the remainder going toward smoking cessation programs, counter-advertising campaigns, medical research and a tort fund of up to $5 billion a year to compensate individuals who can demonstrate that they developed medical problems as a result of smoking.
Based on the numbers in the new study, “I feel strongly that any global settlement with the tobacco industry should go beyond $368 billion,” said Dorothy Rice, one of the study’s chief authors and professor emeritus of health economics at the UC San Francisco School of Nursing. Rice, who is also the former director of the National Center for Health Statistics, co-authored the study with Leonard Miller, professor of social welfare at UC Berkeley. They were assisted by Thomas Novotny of the Centers for Disease Control, Wendy Max, associate professor at UC San Francisco, and Xiulan Zhang, a UC Berkeley graduate student.
Max, Miller and Rice all have been retained as experts by various states suing the tobacco industry in an attempt to recover Medicaid money spent treating sick smokers.
Since the proposed settlement was announced June 20, critics, including numerous legislators and Jeffrey Harris, an MIT economist who studied the deal for the American Cancer Society, have said the settlement is underfunded. Bills subsequently introduced by Sens. Kent Conrad (D-N.D.), Edward M. Kennedy (D-Mass.) and Orrin G. Hatch (R-Utah) all would extract considerably more money from the industry as part of any congressionally approved resolution of tobacco litigation.
Miller and Rice have been attempting for a decade to isolate the economic effects of smoking on health care spending. A report they wrote in 1994 estimated that smoking was responsible for $50 billion in annual health care costs, with more than 40% of that publicly funded, including $5.7 billion for Medicaid, $9 billion for Medicare and $5.4 billion for other government programs.
Rice said the latest study was considerably more sophisticated than the earlier research. It uses a model that was completed in 1996 based on a 1987 National Medical Expenditure Survey, a 1993 population survey and recent risk surveys.
She and Miller said the study took particular care to isolate direct smoking health effects from other confounding factors such as poverty, marital status, race, ethnicity and health insurance coverage, all of which independently affect health and the tendency to smoke.
According to their analysis, Nevada had the highest smoking rate in the country, 30.3% in 1993, and spent the highest percentage of its Medicaid budget--19.2%--on smoking-related illnesses.
Utah, where the leading religion is Mormonism, which forbids smoking, had the lowest adult smoking rate, 15.3%, while Washington spent the smallest percentage of its Medicaid budget, 8.5%, on smoking-related health care.
California spent 16.2% of its budget on smoking-attributable health expenditures, 10th in the nation. New York had the highest overall smoking-related Medicaid expenditure--$1.85 billion annually.
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Smoking’s Impact
States with the greatest percentage of Medicaid expenditures related to smoking in 1993.
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Spending on % of Medicare smoking-related Rank State expenditures illnesses 1 Nevada 19.24% $50.7 million 2 Illinois 18.13% $560.6 million 3 Ohio 16.95% $597.2 million 4 Alaska 16.85% $23.6 million 5 Louisiana 16.58% $417.0 million 6 Colorado 16.57% $151.5 million 7 Michigan 16.43% $532.6 million 8 Pennsylvania 16.36% $605.5 million 9 Washington 16.29% $237.2 million 10 California 16.22% $1.7 billion
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Source: University of California
