Billions in Medical Costs Saved by Tobacco

I smoke. I wish I did not. I've been trying to quit for almost two decades now with pathetic results. I know it is important to my health and increasingly to my wallet as well. Unfortunately, I must admit my addiction. What is really boggling to the mind is a recent study by researchers at the University of California that shows an unexpected way that smoking effects us all financially: health care costs. Now I know everyone is aware that health cost are higher for smokers, but this report brings a whole new perspective to things.

California's state Tobacco Control Program has saved $86 billion dollars (in 2004 dollars, FYI) in individual health care costs during its first 15 years in place.

Via Science Daily:

During the same period, the state spent only a total of $1.8 billion on the program, a 50-to-1 return on investment, according to study findings. The study is the first that has been able to quantifiably connect tobacco control to healthcare savings, say its authors.

The savings come from the 3.6 billion packs of cigarettes that were not smoked as a result of these programs between the beginning of the Tobacco Control Program and the end of the study in '04. While great for health care consumers, I am sure the tobacco industry is not happy. Those lost sales account for $9.2 billion dollars in sales.

Now those of you familiar with George C. Halvorson's position on chronic conditions are aware that he considers them to be a lion's share of overall health care expenditures. Numerous studies indicate that lung cancer and heart disease -- both of which are inextricably linked to smoking -- are very high on the list of those chronic conditions. With that info in hand, these findings are hardly surprising, but it is the fact that this study presents the first verifiable link between attempts at tobacco control/regulation and health care savings that is a landmark.

Go on over and give the original article a read. There is a lot of documentation and a very nice run down on how they collected and analyzed their data.

SOURCE: "California Tobacco Control Program Saved Billions In Medical Costs" 08/26/08
photo courtesy of Saudi, used under its Creative Commons license

Fear of Big Tobacco in California?

This morning Mike Zapler at the Sacramento Bureau of the Mercury News examines the the new tobacco tax proposed in California as a means of funding health care reform. Two dollars a pack could generate a lot of revenue for expanding coverage to the twenty percent of California residents who lack it, but will it be that easy?

Problem is, it might be the very thing that dooms health care reform.

A new cigarette tax would be tantamount to a declaration of war on Big Tobacco, which last year spent more than $65 million to defeat a $2.60-a-pack tax on the California ballot and just this week easily turned back an attempt in Oregon to raise tobacco taxes.

"You can bet they would aggressively fight it, and I don't think they'd be alone," said Sacramento political consultant Frank Schubert, who advised tobacco companies during last year's ballot campaign.

Any attempt to overhaul health care is bound to invite opposition, given the huge financial stakes in the system. The tobacco tax idea is an example of the difficult balance that Gov. Arnold Schwarzenegger and Democrats are struggling to strike at the negotiating table: achieving meaningful reform without triggering insurmountable opposition.

The challenge is amplified by the fact that any health care proposal is certain to end up on the ballot, where interest groups can spend tens or even hundreds of millions of dollars to defeat it.

He goes on to look at the pros and cons of several aspects of the legislation in its current form, paying particular attention to sections of the law that could be contentious. From Governor Arnold Schwarzenegger's lottery lease plan to the Democratic provision for purchasing drugs in bulk, he provides a concise summary of the options being put forth.

As for tobacco, backers of the proposed cigarette tax - which would be on top of the current 87-cent-a-pack tax - acknowledge the industry's political might. But they say the millions of dollars tobacco companies likely would spend against a health care initiative wouldn't necessarily ensure defeat, given the industry's low standing among the public.

"If you have all of the health care community backing reform, I think it can trump the money spent by tobacco," said Kris Deutschman, a political consultant who advised last year's failed campaign to raise the tobacco tax. "Because all they have is money and self-interest."

SOURCE: "Analysis: Tobacco Tax Could Doom Plan for Health Overhaul" 11/09/07
photo courtesy of curran.kelleher, used under this Creative Commons license

Attempt to Overturn SCHIP Veto Goes Up In Smoke

President Bush's veto stands. After a long and acrimonious war of words the results are now in. Williams Neikirk, a senior correspondent for The Chicago Tribune recounts the closing round of the current congressional battle:

The measure fell 13 votes short of the two-thirds requirement to override the veto. The vote was 273-156, as 54 Republicans voted with Democrats to pass the bill, compared with 53 GOP members who voted for the bill when it first passed. Only two Democrats voted to sustain the veto compared with six who voted against the bill originally....

The bill killed Thursday would have cost an additional $35 billion over the next five years and made children's health-care insurance available to more middle-class families. The expansion would have been financed with a 61-cent-a-pack increase in the federal tobacco tax, raising the levy to $1 a pack.

John Godfrey of Dow Jones Newswire gives us some specifics about the tax on CNNMoney:

Companies that would have been affected include R.J. Reynolds Tobacco Co., a wholly owned operating subsidiary of Reynolds American Inc. (RAI); Philip Morris USA, a subsidiary of Altria Group (MO); and Carolina Group (CG), which is a unit of Loews Corp. (LTR).

The $35 billion raised by the tobacco tax increase over five years would have offset the cost of expanding the State Children's Health Insurance Program. The bill's supporters said that by 2012, the expansion would have allowed the program to cover nearly 10 million children.

House Speaker Nancy Pelosi, D-Calif., already has promised to have the same bill back on Bush's desk within two weeks. Asked whether the bill might include an alternative funding source, Pelosi said simply, "no."

Smoking and health, two subjects often found intertwined. It is interesting to note how little this aspect of the legislation has been touched upon over the last few weeks of constant media coverage. To some it is not only a very relevant concern, but also an emotionally charged issue.

Take the following excerpt from a letter to the Yale Daily News by Jose Abrego, a student in the Ezra Stiles College, as an example:

Consider the ramifications of raising the tax on tobacco by such a ridiculous rate. Nearly all of the tobacco farmers in my province in the Dominican Republic would have their contracts frozen. The same goes for other countries in Latin America.

What worries me about this whole issue is that the tax increase guaranteed that hundreds of thousands of farmers across Latin America would suddenly find themselves unemployed. For Third World nations that are already neck-deep in a sea of poverty, this bill promised to drown them outright. Why didn't any of the major news networks report on the number of jobs that Bush saved in Latin America? Or the number of children that will continue to eat because their parents are employed? Isn't the media's job to present the news to us impartially - or at least pretend to do so?

SOURCE: "House Fails to Foil Health-Care Veto: Defiant Democrats Vow Revised Bill" 10/19/07
SOURCE: "House Failure to Override Veto Good News for Tobacco" 10/18/07
SOURCE: "Letter: Media Ignores Benefits of Health Care Veto" 10/18/07
photo courtesy of SuperFantastic on Flickr, used under this Creative Commons license

The Veto Heard Round The World

President George W. Bush on Wednesday issued his expected veto of $35 Billion in children's health care funding. In short order the commentary and criticism of this move have rippled through not only our own national news, but across the the global media as well. Here is a quick World Tour of reactions to this fourth veto of President Bush's career:

The first stop on our world tour is Korea, where we pick up a copy of The Korea Times and read about the SCHIP legislation:

The bill has problems. It is expensive, $35 billion over five years; the use of a cigarette tax to finance it is questionable; and it may indeed cover some families who could afford private insurance.

But it is not, as some overheated opponents charge, socialized medicine or anything like it. Some Republicans charge that SCHIP is the first step toward "HillaryCare," but even if that were in the back of the Democratic candidate's mind, it would be beside the point.

Then we head over to nearby China to see what The Xinhua News Agency has to say:

The veto of Bush was seen by analysts as a high-risk gamble that might impair his party's efforts to compete with democrats for the next presidency and the dominance in Congress.

Lets shift perspective to Western Europe, how are they viewing this? A quick glance at The Economist (UK Edition) unearths the following:

Up with children, down with smokers: it was, in other words, an easy sell. But Mr Bush balked for several reasons. He said that expansion would mean shifting the programme's focus away from poor children. Better off parents might be tempted to drop their private coverage in lieu of the government option, nudging the country down the dangerous road to nationalised care. Mr Bush objected to the tax increase. And although this White House is not known for fiscal restraint, it thought the expansion would cost too much. Mr Bush had previously said that a $5 billion spending increase would be about right.

Getting a bit closer to home we find the Dominican Republic rejoicing at the veto. Why? As Dominican Today reports, it has saved their industry:

Tobacco farmers of the country's north region (Cibao) yesterday heard with joy the news that U.S. president George Bush's vetoed a bill passed by Congress, which threatened to decimate the Dominican and Central American tobacco industries.

The president of the Cibao Tobacco Harvesters Federation, Jorge Mercado, said the U.S. president's decision would reactivate the north zone's tobacco industry, mainly in Santiago province. "The veto of the law represents hope and relief for more than 300 harvesters in this region who have lived off the production of tobacco for centuries."

Agriculture minister Salvador Jiménez, quoted by the newspaper Diario Libre, said if the bill had been signed into law the country would've lost some 54,000 jobs.

Stay tuned.

SOURCE: "Veto of Child Health Bill" 10/04/07
SOURCE: "Bipartisan Tension Tightens as Bush Vetoes Program" 10/04/07
SOURCE: "Why Did George Bush Veto a Popular Health Care Bill?" 10/04/07
SOURCE: "Bush Veto Saves The Dominican Tobacco Industry" 10/04/07
photo courtesy of Bluedharma used under this Creative Commons license

Smokers to Pay for Uninsured Children

Despite a threat from President Bush to veto the bill, the Senate Finance Committee has approved a 5-year, $35 billion expansion to the State Children's Health Insurance Program (SCHIP).

As many as 9 million U.S. children lack health coverage, a statistic many see as the most urgent sign of the need for reform in the U.S. healthcare system.

The expansion would be financed by a 61-cent increase in federal cigarette taxes, as well as taxes on other tobacco products.

That proposed solution is receiving strong support:

"A higher cigarette tax is a win-win solution," said William Corr, executive director of the Campaign for Tobacco-Free Kids. "It is a health win that will reduce tobacco use and save lives and a financial win that will raise much-needed revenue."

...and equally strong criticicsm:

It would also place two government goals -- reducing smoking and paying for children's healthcare -- at odds, [says Michael Cannon, director of health policy studies at the Cato Institute]. "It puts the government in a bind. On the one hand it wants to achieve good by discouraging people from smoking but on the other hand it will be relying on (tobacco taxes) for revenues."

SOURCE #1: "Analysis: Panel OK's Children's Insurance" 07/20/07
SOURCE #2: "Analysis: Burning Smokers to Help Kids" 07/20/07