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( PRELL~INARY DRAFT SMOKING-REIATED DEATHS AND FINANCIAL COSTS Karl Kronebusch Office of Technology Assessment U.S. Congress May 10, 1985 PEELIMINAEY DRAFT "~A~AA'~ ........... 4" " '~A'~'A~A ....... ~A~'A ............. * NOTE: This is a PRELIMINARY DRAFT. * * lU has not Been approved for release By OTA. * * IU is Being circulated for review purposes * * only, and should nou be quoted, disuribuued, * * or reproduced. The mauerial is Being re- * * viewed and should noU Be considered final. * ¢D

#'| DRAFT. (519185) DO NOT QUOTE, CITE, OK EEPRODUCE Iq~FRODUCTI ON Smoking is ~he larges~ single preventable cause of death in ~he United States. The use of cigarettes, cigars, and pipes has been associated with a diverse group of diseases, including cancers of the lung, lip and mouth, esophagus, pancreas and bladder; heart disease; and chronic lung disease. The Subcommittee on Health of ~he House Ways and Means Committee has asked ~hat OTA prepare an analysis of ~he financial costs of smoking uo societT, and ~he costs borne by the Medicare and Medicaid programs. This analysis includes a brief review of previous estimates of the costs of smoking-related disease. Pas~ cost estimates have generally used ~he fraction of mortality related to smoking (attributable risk) and ~hen multiplied ~hau fraction times ~he costs of a particular illness category. The estimates in ~his paper will follow ~he same general approach. The first step is to estimate ~he number of deaths related to smoking in each of the three major disease categories that has been associated wi~h smoking--cancers, heart disease, and chronic respiratory disease. Most previous estimates have not calculated ~he number of deaths by age group. The estimates in ~his paper will do so, and will ~hus be able to present the age distribution of smoking-related deaths as well as to calculate ~he number of life-years lost due to smoking-rela~ed disease. Life-years saved is a measure that is increasingly being used for evaluating ~he effects of health interventions. After all, death is inevitable for each of us, but l

q DR&.~rT (5/9/85) ( DO NOT QUOTE, CITE, OR REPEODUCE the reduction of ~he incidence of premauure death is an achievable goal. Life-years lost is one measure of =he extent of premature mortallry. The second step is to apply =he estimates of the fraction of mortality for each major disease category to =he heal=h care costs and lost produculvicy costs for each category. Thus, in the first step an estimate will be prepared of the fraction of cancers, cardiovascular disease, and respiratory system disease =hat are related to smoking. In =he second step, those fractions are applied to =he total heal=h care costs and los~ productivity costs for each class of disease. The third step of =his analysis will be to apply information on the share of heal=h care costs for the elderly paid for by government programs to =he esulmated costs of smoking-related disease among the elderly. Finally, there will be a discussion of how health care costs and the costs of other social programs might change as a result of reduced smoking. PReViOUS ESTIMATES OF THE EXTENT OF SMOKING-RELATED DISEASE Table I presents the range of a~ributablerisk estimates for smoking- related disease. "Attributable risk" is a concept from epidemiology. Put most simply, attributable risk is =he fraction or percen=age of disease that is associated with a specified risk factor. In this case, the risk factor is smoking of tobacco products, most generally cigarettes. O tO

e~ (519185) DO NOT QUOTE, CITE, 0RREPEODUCE The fraction of major disease categories a~ributed =o smoking ranges from 20 ¢o A0 percenu of cancers, ii =o 30 percenu of cardiovascular disease, and 20 ~o A0 percent of all respiratory system disease (including 80-90 percen~ of chronic obsuruc~ive lung disease)I. AU firs= blush, ~hese ranges appear to be fairly narrow--a factor of 2 or 3 separates ~he lower end of each range from the upper. Bun because the number of =oral deaths in each of ~hese categories is qu/=e large, the difference between an estimate based on the lower bound and one based on an upper can amounu =o =ens of thousands of deaths. Some analysus have also also au~ribuued some dear/%s from digesuive system disease (e.g. s~omach and duodenal ulcers), accidental injuries (e.g. fires), and perinaual morrmliry (mothers who smoke during pregnancy tend ~o have higher ra~es ofmlscarriages and lower bir~hweight babies). Table I also presents several of the esuimates of the number of deauhs from smoking-realted disease. These range from around 300,000 deaths each year ¢o 485,000. The Surgeon General's reports on smoking have, in the last few years, presenned estimates of 129,000 deaths from cancer, 170,000 deaths from hear~ disease, and 50,000 deaths from chronic obstructive lung disease. Together, these ~oual to abouu 350,000 deaths annually. PREVTOUS ESTIMATES OF THE COSTS OF SMOKING-RELATED DTSEASE Generally, two broad cauegories of costs have been considered in IChronic obsuructive lung disease is a general category of disease than includes chronic bronchi=is, emphysema, and asthma. Physicians compleuing death ceruifica=es now more commonly use this general category, rather ~han refering specifically =o bronchi=is or emphysema. &q O C¢ &1

? DRm'Z (519185) DO NOT QUOTE, CITE, OR REPRODUCE previosus esuimaces of smoking-related disease costs. These are usually called ~he direct and indlrecu cosus of illness. The direct cosus are goods and services ~hat are used in caring for and treating ~hose with disease. Generally, ~he only direct costs r_hac are estimated are ~hose directly associated wir/Imedical care. Indirect costs are generally represented by the lose producuivi~y of ~hose who suffer from disease. Lost productivity is generally measured using lost wages, often with some adjustment for ~he household services provided by housewives. The literat-ure on r~he cost of illness has used ~o differen~ approaches to estimate direcu and indirecU costs. In ~he prevalence approach, all medical cosus are attributed co ~he year in which ~he money is act~ally spenu. . In ~he incidence approach, present and future medical costs2 are aucributed co r~he year in which r~he disease flrsu becomes manifesU. Thus, if r_he course of a disease involves medical crea~menu over r_hree differenu years before the pauienc dies, ~he prevalence approach would assign ~he costs separauely co each year. The incidence approach, on ~he ocher hand, would calculate a presenn value for ~he scream of costs over nhe ~hree-year period, and assign r~hau single sum to ~he firs~ year ~he disease was treated. For diseases chac involve less than one year of Crea~menu, ~he ~wo approaches are essenuially the same. 2These are expressed as present values, i.e. ~hey have been discounted to cake account of ~he time value of money. This is the notion ~hat, even in an economy witch stable prices, a dollar today is worth more than a dollar tomorrow. This is so because wi~h a dollar ~oday, an investment can be made CO earn a return. The appropriate race of in~erest to use for discountin~ future effects, however, has been a matzer of some dispute.

• ° ,L " i. * ,r DRAFT (5/9/S5) L~ DO NOT qUOTE, CITE, OE R22KODUCE For uhe indirect costs, ~he prevalence approach assigns ~he costs of los~ productlvi~y due Uo morbidity co ~he year in which ~he producclvicy is lose. In ~he prevalence approach, ~he future earnlnEs lost due co mortallry are discounted Co uhe presen~ and assigned uo ~he year of death. In ~he incidence approach, all indirect costs due Co morbldicy and ~he lose fut,~re earnings due Co mortality are discounued Co ~he present and assigned Co ~he year ~he disease is first manifesu. The landmark work of rice and her colleagues (Rice, 1967; Cooper & Rice, 1976), which discusses ~he costs of all diseases, used ~he prevalence approach, as does ~he mosu recenu update of ~his method by Hodgson and Kopscein (Hodgson & Kopscein, 198A). Only recently have researchers ~-ried co implement uhe incidence approach. For example, Hartnmian and colleagues, have measured and compared ~he costs of coronary hearu disease, stroke, cancer, and motor vehicle injuries (Haruunian, et el. ). Table 2 presents previous estimates of ~he costs of smoking. One of ~he earliest estimate of ~he costs of smoking was ~hac of Hedrick. He used ~he resul~s of a Canadian s~udy of ~he cosrm of smoking in Canada for lung cancer, coronary heart disease, chronic bronchiuis and emphysema. The resulting costs of $278 million was increased hy 50 percenu co cake account of diseases not included. AfTer adding in estimates of -~he costs of morbidicy and of fires (from =he Canadian study), the total amounted to $526.5 million. An esclmate of U.S. costs was made by multiplying this figure for Canadian costs by !0--=he ratio of =he U.S. Gross National Produce to ~ha~ of Canada (Hedrick, 1971).

DRAYT, (5/9185) DO NOT QUOTE, CZTE, OR REPRODUCE The most commonly cited estimate of the costs of smoking is one prepared by Lute and Schweiczer (1978). Followlng =he prevalence approach, they used the Cooper and Rice (1976) cost of illness statistics for the year 1972, inflated them Co 1975 dollars,3 and then attributed 20 percent of =he costs of neoplasms, 25 percent of circulatory system costs, A0 percent of respiratory system disease costs, and 1.i percent of the costs of fires. The total estimated heal=h care costs were about $8.2 billion, which, according to =heir calculations represented 7.8 percent of =he Coral health care expenditures in the U.S. The indlrecC costs of lost earnings amounted Co $6.2 billion for morbidity, and 12.9 billlon for mortality. Their coral was $27.5 billion.A Then HHS Secretary Joseph Califano, in the forward co the 1979 Surgeon General's report on smoking, estimated thaC smoking resulted in $5-8 billion in health care expenses--2.5 Co A percent of the Nation's health care costs of $205 billion. Lost produccivlt-y, wages, and absenteeism due co smoking related illness were estimated Uo amount Co $12-18 billion.5 Sidney Wolfe estimated =he morbidiuy, mortality, and direct healr_h care costs of smoking to be $18.9A billion in 1976. The morbidity costs were calculated using =he results of a Depar=menc of Heal=h, Education, and Welfare study thaC found =hac 19 percent of days lost from work were related to smoking. This resulted in a figure of $2.96 billion. To this he added $I.18 3Using the medical care component of the Consumer Price Index (~or medical costs) and the Gross National Product Implicit Price Deflator (for lost earnings. Aincluding $176 million for property costs due to fires. 51 have no= ye= determined how these es=imaces were generated, it seems curious that they are lower than the estimates Lute and Schweiuzer had published the previous year! 1'¢ 0 CO t'O GO

. DRAFT (519/S5) DO NOT QUOTE, CITE, 0R REPRODUCE billion =o account for morbidity among ~hose unable ~o work, for a to~al morbidity cost of $4.14 billion. Mortality costs and direct medical care costs were estimated using a==ibuuable risks derived from a Nauional Science Foundation report. Mortalit-y costs amounted =o $7.7 billion. Direcu heal=h care costs were esuimated to be $.93 billion for cancers, $1.99 billion for cardiovascular disease, and $1.67 billion for respiratory diesease in 1972. An adjustment for the increase in medical costs between 1972 and 1976 resulted in an es~ima=e of $7.1 billion for 1976 (Wolfe, 1977). Marvin Kristein derived his estimate of heal~h care costs from informa=ion ~hat implied ~hat smokers of one or more packs per day had a 50 percen~ ~rea~er hospi~alizauion raue r~han nonsmokers. Using data on ~he number of such smokers in 1975, and ~he total nauional spending on health care, he calculated r.hat smokers used $5.2 billion in heal~h care services in 1975. He used a National Center for Heal~h Statistics esuima=e ~ha= 77 million days were lost from work in 1965 due to cigaret=e smoking. These he valued at $40 per day ~o generate an estimate of $3.1 billion in losu productlviUy due to morbidity. Using an es~ima=e ~hau 300,000 deaths in 1975 were associated witch smoking, he calculated that =he los= earnings amoun=ed to $12 billion (Kristein, 1977). In a second article, Kristein esuima~ed ~he costs of borne by business firms for r~he "average" smoker. He included estimates of r.he cosus of heal~h insurance, fire losses, workers' compensation, absenueeism, productivity losses, and involuntary exposure ~o tobacco smoke. Added ~ogether, ~hese amounted ~o be~aeen $336 and $601 (1980 dollars) per smoker (Kris~ein, 1983). Co

DRAF (5/9/S5) DO NOT QUOTE, CITE, OR REPRODUCE Osier and colleagues estimated r~e costs of smoking-related cases of lung cancer, coronary heart disease, and chronic obstr~u:tive pulmonary disease using the incidence approach (Osier, ec al, 1984). They, however, only estimated r.he "expected value" of costs for age and sex-specific groups of smokers. For example, men aged ~0-4~ who smoke more than two packs per day incur, on average, a discounted ~otal of $56,670 in direct medical care costs and indirect costs due Uo lost productiviuy compared ~o non-smokers of the same age and sex.6 They did not attempt ~o agEregate these group specific costs for all of society. Rice and Hodgson (1983) have also developed estimates for r.he costs of smoking, using ~he prevalence approach. They developed more detailed estimates of the fractions of mornality associated wir.h smoking than ~he ones used by Lute and Schweitzer. The result was that they attributed about 22 percent of cancer dear~s, 16 percent of circulatory system dearths, 20 percent of respiratory system deanhs, 16 percent of digestive system deaths, and 3.5 percent of infectious and parasitic disease deaths (specifically, ~uberculosis) to smoking. These fractions were ~hen multiplied by ~he costs of medical care and lost productivity for each of these categories. In 1980 dollars, ~he direct medical costs amounted to $16.1 billion, r~he indirect costs of morbidity were about 6.9 .billion, and the indirec~ costs of mortality, about $19.2 billion. The total costs were thus about $A2.2 billion (Rice and Hodgson, 1983). 6Costs are in 1980 dollars and r_he discounu rate used was 5 percent. For women smokers of the same age Croup, the costs are lower, $19,000, largely because the indirec= costs are based on the average eaz-nings of women, which are substantially less than those of men. ba O O

• JC • i (- ( DO NOT QUOTE, CITE, OK KEPEODUCE The Minnesota Department of Heal~h has developed estimates of the costs of smoking-related disease for r, he state of Hinnesota. Their approach is generally r/~e same as ~hat used by Rice and Hodgson, wi~h ~he addition of specific information on the prevalence of smoking in M/nnesota. They estimate ~hat r.he direct medical care cost of smoking-related disease in Minnesota in. 1983 was $37&.6 million and ~he indirect cost of lost income due to premature deanh was $303.3 million. These total to $677.9 million or about $807 for each smoker in t/~e s~aue and $I.A8 for each pack of cigarettes sold in Minnesota (Minn. Dept. of Heal~h, 198&). Table 2 also presents ~hese estimated costs with adjustments for ~he effects of inflation since~hese estimates were made. After this adjustment, most of ~hese estimates appear to fall within a limited range: $15 to $30 billion in direct health care costs, and $25 to SA0 billion fn indirect productivity losses (in 1985 dollars). In addition, researchers have used information from surveys and the medical care data collection system of a Health Maintenance Organization, to compare smokers and nonsmokers in their use of medical services and the frequency of lost worktime and disability. Based on data from the 196A-5 and 197& National Health Interview Surveys, r/le Surgeon General's 1979 report on Smoking and Heal~h found ~hat current cigarette smokers tend to report more chronic conditions, such as emphysema and arteriosclerotic heart disease, than persons who never smoked. The incidence of acute conditions, such as influenza, was higher among smokers ~han among nonsmokers. Current smokers also reported an excess of work loss days and bed disability days than did the nonsmokers. Finally, current smokers and former smokers reported more

. DRArZ (S/9185) DO NOT QUOTE, CITE, OR REPRODUCE hospitaliza~ions than nonsmokers (DHHS, 1979). R/ce and Hodgson are now conducting an analysis of r_he da~a collected in the 1979 Health Interview survey. Their preliminary analysis finds thac compared to persons who have never smoked, current and former smokers report more days of restricted activity, bed disability, and work loss. According ~o ~hese data, smokers also use more medical services. They repor~ about 12 percent more physician visits and 22 percent more hospital days for each I00 persons per year (Thomas Hodgson, personal communication, 1985). Ashford conducted a large survey of the use of medical services in ~he city of Exeter in the United Kingdom. They found ~hat up co about the age of 60, male smokers consistently had more contacts wi~h ~helr doctors r_han did nonsmokers. The amount of ~he difference varied by age group, but t~pically was about 25 percent more than for nonsmokers. Above ~he age of 60, however, the nonsmokers ~ended ~o use more medical services. In part, ~his was believed to occur because by ~hat age many of the smokers have already died. For hospital services, the smokers had a higher average length of stay in r~he hospital ~handld the non-smokers (Ashford, 1973). VogU and Schweitzer used data collec~ed from the computer system of ~he Oregon re~ion of the Kaiser-Permanente Medical Care Program. They observed ~hat smokers used 20 percent more inpatien~ services ~han never smokers, but chat this difference "did not quite reach s~auisuical significance." Smokers aged A5-6A did have siEnifican~ly more hospital discharges for influenza and respiratory infections than did never smokers. In responses ~o a survey question, smokers' assessments of their personal heal~h were worse than the assessment of never smokers. Finally, they found that the never smokers used i0

..... ( ( DRAFT (519185) DO NOT QUOTE, CITE, OR REPKODUCE m~re outpatient, preventive medical services ~han did smokers, and were more liekly to use outpatient medical care for minor illnesses (Vogu & Schweiczer, 19s4). 0TA'S ESTI~fATES The following discussion outlines OTA's methods for estimating the smoking-related mortality, ~he llfe-years lost, the direct and indirect social costs of smoking, ~he health care costs of smoking, and r~he costs incurred by Medicare and Medicaid for smoking-related disease. The discussion focuses on ~he accompanying tables, which show 0TA's calculations in detail7. Smoking-related MortaliT7 • Table 1 presents previous estimates of the percentage of mortality in different disease categories chat have been related to smoking. Some of ~hese categories are less clearly associated with smoking than o~her categories. In par~ ~his is because for some ~here are important factors that may confound the associations between smoking and disease. ~or example, smokers also tend to be relatively heavy drinkers of alcoholic beverages. Thus an apparent excess of disease in smokers may not be because of the use of tobacco, but due 7The detail is presented, not to overwhelm the reader, but to allow her/him co retrace each step of ~he calculations. For ~he same reason, most of the mortalit7 estimates presented in ~he ~ables have only been rounded to the nearest whole number. These calculations are no~ nearly this accurate, but further rounding has not been made in order to allow readers to duplicate OTA's methods. ii

,° DRAF (519/85) DO NOT QUOTE, CITE, OR REPRODUCE Co r.he consumption of alcohol. Smokers as a group have a higher incidence of cirrhosis of ~he liver and ulcers. This excess of liver cirrhosis is probably due Uo consumption of alcohol. Ulcers may be independently associated wluh smoking, but for ~his analysis, both cirrhosis and ulcers will be excluded. Women who smoke during pregnancy also tend Co have a higher rate of miscarriase and ~he babies born alive weigh less than r_he average for r_he babies of nonsmokers. There is also some evidence that children of smokers have more episodes of respiratory illness than do children of nonsmokers. Burning cigaretues also s~aru fires--fires that take an estimaUed 2,500 lives each year. Finally, nonsmokers who are exposed to cigarette smoke ("passive smokins") may have an increased risk of disease compared to people nou exposed to tobacco smoke. For simplicity, however, these cauegories will be excluded from ~his analysis. Instead, OTA has focused on the three major categories of smoking- related disease--cancers, cardiovascular disease, and respiratory system disease. These accoun~ for ~he vast majoriUy of smoking-rela~ed deaths. Cancer Deaths Table 3 presents r/Re calculation of the number of deaths in 1982 for" ~he cancer sites most clearly associated with smoking: the respiratory system; lip, oral cavil, and pharyr~; esophagus, pancreas, and bladder. The me~hod is identical Uo the method used by Doll and Peto to generate their estimate r.hat about 30 percent of cancer deaths in the U.S. in 1978 were associated wir.h smokin~ (Doll & Peto, 1981).8 .........._..__ 8Doll and Peto prepared their estimates under contract to OTA. Their report was the basis for part of the OTA assessment of Technologies for Dererminin~ 12 &n o

(5/9/85) ( DO NOT QUOTE, CITE, OR REPRODUCE Their method used the mortalit7 rates for nonsmokers from the large American Cancer Soclet7 (ACS) study (often referred to as ~he "25-state s~udy" or r.he "million person s~udy"). The age-specific mortality rates (from Garfinkle, 1980) are r~hen applied to the number of people in age and sex specific population Eroups. Multiplying the t~vo leads to an estimate of the "expected" number of deaths r~hat would have occurred in a given year if everyone had r~he mortalit-y experience of ~he nonsmokers in the ACS s~udy. This "expected" number is ~hen subtracted from the number of deaths that ac~ually occurred. The difference is attributed to smoking. The number of deaths for each t~/pe of cancer is taken directly from the Vital Scatlstics data published by the National Center for Health Statistics (NCHS). The NCHS data are based on ~he information about the "underlying" cause of death supplied on dearth certificates by physicians. The las~ column is r.he "attributable risk," the percen~ of r.he deaths in ~hau category ~hat can be attributed to smoking. It is calculated by dividing r.he number of "excess" deaths by ~he total number of dear.hs in that particular age or sex grouping. In addition to the five major sites, Doll and Peto also attributed a relatively small number of cancers at other specified sites to smoking. These include some sites ~hau may be associated with tobacco, such as kidney cancers, and o~hers that may include some misdiagnosed cancers (for example, some "stomach" and "liver" cancers may be misdia~nosed pancreatic cancers). Doll and Peuo included 5,000 male and 1,000 female cancer deaths for these Cancer Risks from the Environment. The Doll and Peuo report itself was later published in the Journal of the National Cancer Institute and republished as a book by Oxford University Press. 13

DRAZT (5/9/85) DO NOT QUOTE, CITE, OR REPRODUCE or-her si~es. The figures of 5,000 and 1,000 are also used for OTA's estimates. They also included a share of ~he cancers reported To NCHS wlthou~ information on r~he specific site. The fraculon of male and female cancers ~ha~ had been esuima~ed for the specified si~es was then applied to the total number from unspecified slues. Doll and Peso made one adjus~menu to ~he non- smokers' mor~alit-y rates from ~he ACS study. To allow for r~he possibiliuy ~ha~ ~he nonsmokers in ~he ACS s~udy were less exposed uo alcohol or o~her causes of upper respiratory or digestive system cancers r~han were nonsmokers in ~he enulre U.S. populauion, ~hey doubled the number of deaths from cancers of ~he mouuh, pharyruc, larynx, and esophagus expecUed in non-smokers. This adjusrmenu has been made for ~hese si~es in Table 3. Table 4 ~o~als uhe resulus of ~e calculauions in Table 5. Overall, abouu 32 percen~ of all cancer dear.hs in 1982 are a~ribu~ed to smoking, compared ~o 30 percen~ in 1978. Fort-y-four percenU of cancer mortali~ in men is relaued uo smoking, and abouu 18 percenU of female cancer moruali~y. There are siEnificanu age differences in the auuribu~able risks for cancer. Fifuy percent of male cancer deaths under ~he age of 65 are related to smoking, compared uo A1 percenu of male cancer deaths over age 65. Similarly, for women, 23 percenu of deaths under age 65 and 15 percenu of those over 65 are a~ributed to smoking. To construc~ a lower bound estimate of the smoking-relaUed autribuuable risk for cancers, OTA assumed ~hau only lung cancers are associated with smoking. In addition, uo accoun~ for ocher possible causes of lung cancer ~hau ACS subjects may nou have been exposed ~o (such as certain occupational 14 O

\ 6 DRAFT (5191S5) <. DO NOT QUOTE, CITE, OR REPRODUCE exposures, such as to asbestos), ~he non-smoker rates from the ACS study were doubled. The resulting attributable risk estimates for cancer are still large--33 percent for males under 65, 27 percent for males 65 and over, 15 percent for females under 65, and 8 percent for females 65 and over. This certainly overstates sets too low a lower bound for the estimates of cancer risks. However, the resultinE estimate of smoking-related dearths is still very large--about 89,000 deaths or 21 percent of all U.S. cancer deaths. The highest reported estimate for smoking-related attributable risk for cancer is 38 percent (Doll & Peto, 1981, based on tables prepared by Enstrom). An upper bound can be constructed from this estimate. If the 58 percent figure is increased to ~0 percent to allow for the increasing share of cancers due to smoking over time, ~his upper bound represents a 25 percent increase over r_he OTA attributable risk estimate of 32 percent. If this is assumed to apply equally to all age and sex groups, then the upper bound estimates are: 63 percent and 51 percent for men under and over 65, and 29 and 19 percent for women under and over 65. These lower and upper bounds are used in the calculation of smoking-related costs in Table 16. Chronic Obstructive Lung D~sease Deaths Table 5 presents r_he calculations of attributable risk for chronic obstructive lung disease. These include emphysema and chronic bronchitis. The attributable risks are calculated using the method employed for cancer deaths. The published results of the ACS study (Hammond, 1966) provide age- specific death rates only for emphysema. 15

DP, ArZ (5191S5) < C DO NOT QUOTE, CITE, OR REPRODUCE The races for nonsmokers for emphysema from r/%e ACS s~udy were doubled before ~hey were applied to ~he count of ~he U.S. population by age and sex in 1982. This allows for deaths from o~her forms of chronic obstructive lung disease ~hat are related tosmoking r~hat were not included under the coding "emphysema." In addition, this doubling allows for the probability that the ACS population did not have large numbers of people wir/% significant occupational exposures (such as to asbestos, silica, coal dust, cotton dust); exposures that lead to or_her forms of chronic lung disease. Finally, ~he actual dear/is reported by NCHS were reduced by I0 percent, r-he approximate number of dear/%s due to asthma that are also included in this cause of dear-h classification. Thus, about 87 percent of chronic obstructive lung disease deaths appears to be related to smoking. Table 6 presents the total number of deaths coded as related to t/Re respiratory system. These include pneumonia, and influenza, as well as chronic obstructive lung disease. While the approximately A6,000 smoking-related deaths from chronic obstructive lung disease represent about 87 percent of all chronic obstructive lung disease deaths, r-hey account for about ~3 percent of all deaths from respiratory system disease. In contrast to smoking-related cancer deaths, the attributable risk for male respiratory system dear/Rs is lower for r/Rose under 65 than it is for r_hose 65 and over. The attributable risk for men over 65 is A9 percent, while for those under 65 it is about AO percent. For women, however, the reverse is true. Forty-four percent of respiratory system disease deaths for women under 65 are attributed to smoking, compared to about 34 percent of respiratory system dear/Rs for women over 65. 16 G8

DP, (SlglSS) DO NOT QUOTE, CITE, OR REPRODUCE An important assumption is ~ha~ uhe death races for non-smokers from ~he ACS study can be applied co the U.S. population. Aside from smoking, ~he only or_her siEnificanC cause of chronic lung disease is occupational exposure. The ACS population may noU have included very many people with these exposures. To allow for ~his, the races from the ACS s~udy were doubled for OTA's esclmace ~hac about 87 percenu of chronic funE disease is associated with smoking. Even if the ACS races are ~ripled, the resultinE auuribucable risk estimate is 81 percent. Zf, on the ocher hand, the races from the AC3 s~udy are increased by only 50 percent (co allow for smoking-related funE disease no~ reporued as emphysema), the attributable risk is 90 percent. There is evidence thau smokers have an increased risk of dying of pneumonia and influenza, buU because of the epidemic nature of influenza, ic is difficult co estimate precisely the smoking-related fracuion for any one year. Thus, even though some of ~hese deaths are related Co smoking, they have been excluded from this estimate of the number of deaths associated with smoking. For uhe cosu analysis presenued below, however, an acuribucable risk estimate for pneumonia and influenza mor~aliuy has been used Co develop an upper limit Co the range of attributable risk estimates for all respirauory system disease. Rice and Hodgson aUuribuued abouu 20 percenU of male and 30 percent of female deauhs from pneumonia and influenza to smoking. Adding 20 percenu of pneumonia/influenza mortality to the Table 6 values of 39.9 percent (under 65) and A9.3 percenu (65 and over) yield upper bound esuimaues of A8 percenu and 59 percenu. For females, adding 30 percenu of pneumonia/influenza mor~alit-y yields upper bound estimates of 57 (under 65) and ~ percenu (65 and 17

• b DRA ' (5191S5) ( ( DO NOT QUOTE, CITE, OK REPRODUCE over). Lower bound estimates were constructed by simply (and somewhat arbitrarily) subCracn/aE 20 and 30 percent from ~he estimates in Table 6. resulting range of attributable risk estimates is used in Table 16 for calculating smoking-rela~ed healr/% care costs. The Caudiovascular Disease Deaths Cardiovascular disease includes bor.hhearu disease and strokes. The latter is less clearly linked to smoking ~han the former. In addition, even in ~he studies ~hat have linked it to smoking, it appears ~hat only in younger age groups (specifically, those under r/Re age of 65) do smokers have siEniflcan~ excess risk of cerebrovascular mortality. ~stlmates Usln~ Rates Sot Non-smokers. Epidemiologic studies have clearly linked smoking with ischemic heart disease. Death from ischemlc heart disease arises from a myocardial infarction, the most common form of fatal "heart attack." Heart disease rates have been declining over r/Re last 2 decades. Thus, r/Re heart disease death rates from the ACS study cannon be used directly to generate an "expected" number of cases. Mortality from all cardiovascular disease has been falling for the last 20-30 years--for heart disease rates began falling in the mid-sixties, while for strokes the decline began in r/Re 1950s. It is generally believed that these declines represent the results of a combination of factors, including improvements in diet, decreases in ~he prevalence of smoking, and changes in medical care, such as improved control of hi,h blood pressure, the use of intensive care units and coronary artery bypass surgery. However, the relative importance of these factors is still a ma~ter of debate (see Goldman 18 O

DO NOT QUOTE, CITE, OE REPRODUCE & Cook, 198A; Pell & Fayerweacher, 1985; ~alker, 1983; Kleinman, eC el., 1979; Kennel, 1982; Scallones, 1980). Because of the quantitative uncertaint-y in portion of the decline in cardiovascular mortality =hac can be attributed to the reduction in smoking, a range of adjustments is used here. Goldman and Cook have attributed 2& percenU of the decline in coronary hear~ disease death races co reductions in smoking. In Table 7, =he non-smoker death races for coronary hear= disease from the ACS study have been adjusted by I00%, 75%, and 50% of the overall percentage decline in the years following =he 1963 followup of =he ACS study. Seventy-flve percenu approximates the Goldman and Cook esuimace thaC 2A percent of the decline is due to reduced smoklng--a change thac would noc affect the rates for non-smokers. This is bounded by adjustments chat assume thac non-smokers experienced, either I00 percent or 50 percent of the decline in overall cardiovascular mortality races.9 Table 8 presents similar calculations using data from =he Framingham Hear~ Study. Because of =he care oaken in diagnosis of disease and reporting of informaclon on cause of death for =he subjects of =his suudy, the rates for the different subcacegories of deaths due co circulatory system disease do noC directly correspond co national raues. However, the races for all cardiovascular disease are comparable. Thus in Table 8 the races for all 91C should be noted Chac these calculations for hear= disease only include persons up co the age of 85. The ACS s=udy did uoc publish hear= disease rates for those over 85. However, as will be discussed later in =his paper, mortality ratios for smokers (compared co non-smokers) decline wizh advancing years as non-smokers eventually die of hear= disease. For example, =he mortality ratio for chose aged 75-8A is 1.2. Thus =he implici= assumption uhau no one over =he age of 85 dies of smoking-rela=ed hear= disease undersua=es these es=ima=es, but probably no= =o any great ex=enc. 19

• . 4 • DRA (519185) (- (" DO NOT QUOTE, CITE, OK P~EPEODUCE cardiovascular disease for non-smokers are used to calculate an "expected" number of deaths for each sex and age group. These rates are based on the data from ~he IS-year followup of =he Framingham suudy population. Again an adJus~nenC needs to be made for ~he changes in cardiovascular mortali~/ races since r~hac followup. So in Table 8 ~he rates have been adjusted by I00%, 75%, and 50% of ~he decline in total cardiovascular dear/1 rates among white males and females since 1968.10 Tables 9 and I0 present ~he results of ~hese calculations in summary form. Using ~he ACS races, ~he attributable risk of cardiovascular disease deaths for smoking in all ages and sexes is between 8.6 and 23.0 percent, wi~h a middle estima=e (using 75 percent of ~he decline in rates) of 15.8 percen= of ischemic hear= disease. Using ~he da=a from ~he Framingham s~udy, the range for all ages and bo~h sexes combined is beuween 8.3 and 15.8 percent of all cardiovascular disease dea=hs, wi~h a middle estimate of 13.3 percent. Ischemic hearu disease accounted for 552,786 of =he 967,868 U.S. dea=hs in 1982 from all cardiovascular disease. Thus abou= 57 percent of all cardiovascular disease deaths are coded as ischemic hear= disease. Thus ~he range from Table 9 (based on r~he ACS races) of 8.6 =o 23.0 percent of ischemic heart disease implies a range of 4.9 to 13.1 percent of all cardiovascular disease, wi~h a middle esuima=e of 9.0 percent. This, of course, assumes =ha= only ischemic hear= disease is associa=ed wi=h smoking and ~hau o=her forms of cardiovascular disease (non-ischemic heart disease, cerebrovascular disease, and or/ler forms of vascular disease) are not associa=ed wi=h smoking. 10The Framingham s=udy does not provide da=a for =hose over =he age of 75. For ~he middle es=imaue, and addi=ion was made of about 12,000 deaths--an au=ribu=able risk of 5 percent for men aged 75-8A, 2 percent for men over 85, and 2 percent for men aged 75-8A. These have been included in Table i0. 2O

(5/9/s5) ( DO NOT QUOTE, CITE, OK REPRODUCE This middle estlmace of 9.0 percent (from the ACS data) compares to a middle estimate of 13.3 percent from ~he Framingham data. To ~he extent that cardiovascular disease other ~han ischemic hear~ disease is associated wi~h smoking, a difference Between ~hese two estimates would be expected. However, a close look at ~he data in Table I0 for men and women in the age groups 55-6A and 65-7A reveals something a bit peculiar. Generally, attributable risk estimates decline for each age group when compared to ~he next younger age group. But in Table I0, ~he attributable risk for men aged 55-6A is less ~han ~hat for men aged 65-74. This is also true for women, but ~he difference is not nearly as dramatic. The Framlngham rates for non- smokers aged 55-6A are probably too low, while ~hose for 65-74 are probably too high.II Thus Table I0 also presents a recalculation that attempts uo smoo~h the a~Uribu~able risk estimates for this discrepant age groups. The resulting recalculation is an overall attributable risk of 9.5 percent of cardiovascular disease.12 Estimates Us~n~ MoT~alit-y Ka~os and $mokinK ?~eva~ence. A second approach for developing attributable risk estimates can also be used. This approach uses the mortality ratio (or relative risk) from the ACS "million person" stn/dy and combines it wi~h the prevalence of smoking in the U.S. population. The formula13 for this is: llpar~ of the reason for this may be the relatively small size of the Framingham S~udy population. Wi~h smaller study populations, there will be fluctuations in the rates for age and sex specific subgroups that are due urely to chance. 2Readers, of course are encouraged to sus~irute ~heir own figures for age- , specific ac~ributable risks. The "smoothed" 75% decline figures are merely "eyeball" estimates and are not based on r/%e use of statistical techniques for ~,~ smoo~hing data. .~,~ 13For the derivation of this formula, see, for example, Lilienfeld (1976). Go 21

. Da :'T (519185) DO NOT qUOTE, CITE, OKEEPEODUCE attributable risk b(r-1) ............ x 100 b(r-l) + 1 ~n r~his case, r is the relative risk or mortalit7 ratio--the ratio of the mortality rate for smokers to the mortality race for nonsmokers, while b is the fraction of the population that are smokers. Table Ii presents the results of these calculations. The mortalit7 ratios from the ACS "million person" study. Figures on smoking prevalence, by lO-year abe group are from unpublished data collected in the first stage of a new epidemiologic study being conducted by the ACS. The first three columns of the table show the results for current smokers. The attributable risk percentages fall rapidly with advancing age. This is because only for the younger age groups do the smokers have very large relative risks. As smokers and non-smokers age, r.he relative risks for heart disease deline, because ocher causes Of heart disease in non-smokers and smokers alike become more importantI~. Mortaliuy ratios for former smokers decline as the number of years of non-smokinE increases. A precise calculation of the attributable risk for this group would require information on the number of years of successful nonsmoking, as well as the level and duration of previous smoking. This information is difficult to gather. However, except for people who are ill and who have recently given up smoking because of their illness, the morualit-y ratios for current smokers would represent a maximum value for the mortality. 14The actual rates for heart disease in both smokers and non-smokers continue =o rise as =hey age. 22

DP3.rr (SlglSS) (- DO NOT QUOTE, CZTE, OR REPRODUCE ra~ios for former smokers. The righ~-haud half of Table Ii presents these calculations. Table 12 presents the application of these a~uribuuable risks to estimate ~he number of deaths from ischemic heart disease. Some of ~he o~her forms of hear~ disease, such as rheumatic hear~ disease, are no~ associated wir.h smoking. Bun some of ~he o~her ~ypes of disease r/Ran are grouped as "other forms of heart disease," such as aortic aneurism, are. Thus some fraction of deaths coded as due Uo other forms of heart disease should also be related Uo smoking. Table 13 presents calculations for ~hese deaths using the attributable risk estimates developed for ischemic hear~ disease (Table II). Table IA summarizes r/le results of ~hese calculations for deaths from heart disease. The first column presents total cardiovascular mortality (both heart disease and strokes). The second column presents ~he number of smoking- related ischemic heart disease deaths in curren~ smokers, while r.he ~hird column presents ~he maximum attributable ischemic heart disease deaths for former smokers. The fourr~h column presents deaths for other forms of heart disease amon~ current smokers, and ~he fifr/t columns does the same for former smokers. In both cases the calculations assume the same mor~aliuy ratios r_hat were used for ischemic hearu disease. The fifth column presents a lower bound estimate that is simply ~he number of ischemic hear~ disease deaths a~Kribu~able ~o smokin~ amon~ current smokers. The nex= column presents the maximum from these calculations--the to~alof ischemic and or~her forms of hear~ disease, assuming ~ha~ ex-smokers have the same relative risks as curren~ smokers. Assuming ~hat ~he relative risks from the ACS study are appropriate for 1982, the real smoking-rela~ed 23 &n &J

• DL L T (519185) (- DO NOT QUOTE, CITE, OR EEPKODUCE at=rihu~able risk lles somewhere in bet-~een the lower bound of about AS,000 dear~s and ~he upper bound of 130,000 deaths. These bounds Uranslace into a range of A.6 Uo 13.5 percenu. The "middle esuimaue" presenued in ~he lasu ~wo columns represents ~he ischemic hear~ disease deaths among current smokers plus one-half of ~he ischemic hear~ disease deaths amon5 former smokers and one-half of r/le or/let forms of hearu disease. The "middle esUimaue" amounts to 9.0 percenu of all cardiovascular disease. These calculaulons imply ~hac IA.5 percen~ of male cardiovascular mor~aliuy, and 3.5 percenU of female cardiovascular deaths are related Co smoking. These results are very dependenu on the age group being considered. For example, over 80 percenn of the cardiovascular deauhs among 35-~ year old males are associated wiUh smoking, while only abouu 5 percent of ~he dearths among 75-8A year old men are. For ~hese calculaclons, ic was assumed ~hat none of ~he cardiovascular deaths Co men and women over 85 are related Co smoking. The 1983 reporu of ~he Surgeon General scares ~hat "up to 30 percent of all CHD [coronary hearU disease] deaths in ~he United ScaUes are attributable co ~he cigarecue smoking habit" ~U..S. DHHS, 1983, p. 65). The source for this is given co a joinu document prepared by ~e National Cancer Institute and the National Heart, Lung, and Blood Institute (U.S. DHHS, 1977>. ThaC document presents a cable listing aucribucable risk estimates for heart disease, arteriosclerosis, bronchitis/emphysema, and cancers of the oral cavity, esophaEus, pancreas, larynx, ~rachea, kidney, and bladder. However, the document provides no deuails of ~he calculations or assumptions behind ~hese estimates. 2~ t0

- t (519185) < C DO NOT QUOTE, C~TE, OK REPRODUCE The ~otal number of smoklng-rela=ed cardiovascular disease dearths (assuming 75 percent of r.he decline in hear= disease dear/1 rates) in Table 9 is abou~ 87,000. The total number of cardiovascular disease deaths (again assumlnE 75 percent of ~he decline in the relevant death rates) in Table I0 is about 128,000. The "smoothed" estimate is 92,000. The "middle estimate" from Table IA is about 88,000, with a range of 45,000 to 150,000. These are still very large totals, even if ~hey are less than ~he Surgeon General's estimate of 170,000. For ~he cos~ calculation presented below, the range of attributable risks will use bo~h extremes. AU the lower bound will be the figure of about 90,000 deaths or an attributable fraction of about 9 percent. At the upper bound, we will use ~he figure of 30 percent of heart disease deaths (applied ~o all diseases of r_he heart) plus about 9 percent of deaths from cerebrovascular disease (Rice & Hodgson). Together, r.hese amount to about 25 percent of all cardiovascular system deaths.15 These 25 percent will be dlstribuued be~een men and women and between those over 65 and r_hose under 65 assuming r_hau this distribution is the same as that developed as the "middle estimate" of Table i4. Wile ~his range of between 9 percent and 25 percent is fairly large, we can be reasonably sure that the true value lies somewher in between. Life-Tears Los= Table 15 presents a calculation of the number of life-years lost due to 15This figure is also the upper limit of previous estimates of the attributable risk for all circulatory system disease. See Table I above. 25 Ui 0 ¢0

DRAYT (5/9/S5) C DO NOT QUOTE, CITE, OR REPRODUCE smoking-related disease for each of r/Re three major disease categories discussed above. The total life-years lost are calculated using ~o different estimates of r/Re number of years of expected remaining life. The first estimate is based on data for the entire U.S. published by the National Center for Healr/% Statistics. These data on average life expectancy aU given ages include bo~h smokers and non-smokers and, thus, tend to underestimate the number of years remaining for non-smokers. The second estimate uses unpublished life table data from the ACS million person st-~dy that distinguishes the life expectancy of non-smokers from that of smokers. Using these data, the estimated number of life-years lost increases from about A.A million to A.8 million, an increase of nearly I0 percent. The last two columns of Table 15 also present the number of life- • years lost before the age of 65--years ~hat are generally spent as part of the productive labor force. SmokinK-related Health Care Costs Once attributable risk estimates have been developed, it is relatively easy to estimate the financial costs of smoking using the approach ~hat has generally been used in the past. This method is to simply apportion direct health care costs and indirect productivity costs based on the attributable risks that are based on smoking-related mortality. The major assumption here is that the proportion of costs attributable to smoking is equal ~o the proportion of deaths related to smoking in each disease category. Thus, it is assumed that if 32 percen~ of all U.S. cancer deaths are associated with 26 N O G0

C DO NOT QUOTE, CITE, OR REPRODUCE smoking, then 32 percenc of the health care costs for treating cancer are also associated with smoking. This is an importanu assumption that should be explored in fuEure research on =he costs of smoking. However, answering this quesuion would require extensive data collection that is beyond =he scope of =his OTA sEudy. Table 16 presents the calculauions of health care costs for 1982, usinE the range of atEributable risk estimates discussed in the previous section. The costs of care for each major disease category for men and women over and under the age of 65 are from Hodgson and Kopstain (1984). Their figures for 1980 have been inflated ~o 1982 values using the increase in personal health care costs, by type of spendinE, that is implied in the estimates of National Health Expendit~LTes developed by the Healr.h Care FinancinE Administration (Gibson, Levit, Lazenby, & Waldo, 198A). UsinE the dana for 1982, the Coral health care costs of smoking-related disease amount co between $15 and $30 billion or from 5.6 co 10.9 percent of tonal U.S. healuh spending. Table 17 presents ~he same calculations using the projected spending for 1985.16 For 1985 the range is from about $20 billion co nearly $40 billion, wi=h a middle estimate of about $30 billion. Table 18 presents the method for calculating costs co the major government programs ~hat provide for health care services. The esCimaUed cosUs of each disease category and uype of service for chose over 65 (from Table 17) is shown in the first column. Each of these component values is multiplied by the estimated fraction of chat type of service uhat is paid for by =he paruicular governmenu program. 16Each component of the costs of care was increased by the latest projection for 1985 from HCFA (~. Arnett, personal communication, 1985). 27 &q Co

(519185) DO NOT QUOTE, CITE, OR REPEODUCE The results of these calculations, for the entire range of attributable risk estimates for those 65 and over, is presented in Table 19. OTA estimates that the smoklng-related costs to the Medicare program amount to between $2.8 and $6.7 billion. The Medicaid programbears costs between $0.5 and l.& billion, while other government programs (mostly the health services provided by ~he Veterans' Administration) incur costs of between $0.3 and $0.7 billion. The total for these programs is between $3.5 and $8.8 billion. The middle estimate is $6.& billion. Even if the costs of circulatory system disease are reduced by using ~he lower bound attributable risk, the estimate is still large, about $4.7 billion to the various government programs. The Medicaid program is Jointly financed by the Federal Government and the states.17 Thus, the Federal share of the estimated Medicaid costs for smoking-related disease amounts to about 54 percent of $0.5 and l.A billion or between $0.3 and $0.8 billion. Subtracting this range from the total government costs in Table 19 gives a range of $3.3 to $8.2 billion as the estimated burden on the Federal budgen of paying for the treatment of smoking- related disease. Table 20 is the calculation of indirect costs of lost productivity. Morbidity and mortality costs for each disease category are from Rice and Hodgson (1983)18. They have been inflated to 1985 dollars using the actual increase in aggregate employee earnings between 1980 and 198A and the 17In 1983, Medicaid was estimated to have paid $35.6 billion for personal health care services. Of this $19.2 billion (b& percent) was paid by the Federal government, and $16.~ billion (A6 percent) was paid by state and local ~overnments (see Table 10, in Gibson, Levit, Lazenby, & Waldo, 198A). 8Mor~ality costs represent the present value of :he stream of expected lifetime earnings, discounted at A percent. 28 0

..... < ( \ (S19188) DO NOT QUOTE, CITE, OR REPRODUCE projected increase to 1985 from r~he baseline projections of the Congressional Budget Office (C. Kask, personal communication, 1985). The attributable risks for r_hose under 65, developed in the previous section, are used to calculate r~he smoking-related costs. The productivlcy losses to r~he economy due to smoking-related morbidity and premature mortality are considerable. The range is from $49 billion to - about $85 billion, wir_h a middle estimate of nearly $70 billion. The final economic cost of smoking is simply r-he costs to smokers of purchasing cigarettes. In 198A, about 600 billion cigarettes, or about 30 billion packs, were sold. The retail sales of these cigarettes amounted to an estimated $28.8 billion. Sales of cigars, chewing tobacco, snuff, and loose tobacco (such as for pipes) added another $1.9 billion for total tobacco sales of $30.7 billion (USDA, 1985). FUTURE COSTS ZF SMOKING IS REDUCED It is tempting to treat the estimated smoking-related health care costs as an opporrunicy for reducing the costs of medical care in r/Re U.S. However, while reduced smoking will clearly lead to reductions in premature mortality, and increased life expectancy, this will not happen immediately. In addition, it is a perverse, but real fact of life, ~hat elimination of smoking might not result in reductions in total medical spending or in the costs of the Medicare program. However, a policy to reduce the costs of the Medicare system by allowing hundreds of thousands of preventable smoking-related deaths to occur each year is contrary to ethical standards and the principles of the U.S. 29 N O

C¸ DR~_~T (5/9/85) DO NOT QUOTE, CITE, 0KKEPRODUCE healr/% care system. Neverr.heless, a discussion of the potential impact on healr/% care costs of reduced smoking is necessary for informed decisions concerning policies ~hat affect r-he consumption of tobacco products. Several epidemiologic stn~dles have examined ~he question of whether ~hose who quit smoking improve ~heir chances of survival. The results are clear; except for ~hose who quit because of a serious illness, ~hose who stop smoking have improved life expectancy compared Uo those who continue to smoke. With each year of non-smoking, the relative risk of death for r_he ex-smoker, compared to ~hose who never smoked, tend~ to decline. Those who never smoke have ~he lowest mor~allry rates for the various smoking-related diseases. Measures that reduce the chances that people will ever start smoking, will have the greatest impact on longevity and death rates. Of course ~he heal~h benefit of fewer people initiating ~he smoking habit in 1985 will not be realized until years in the fut~re. For example, most twenty year olds who star~ smoking today will not experience smoking- related premature mortality until their forties, fifties, and sixties. Similarly, r_he benefits of improved health for twenty year olds dissuaded from the cigarette habit today will not be seen in death rates until 20 to A0 years from now. Although real, improvements in health due to reduced smoking will not be immediate. In addition, the improvements in health may not necessarily reduce medical costs in the long run. Leu and Schaub, using a computer model that simulated a hypothetical Swiss male population under the assumption that no one had smoked during the century from 1876 co 1976. They compared the estimated medical care spending in 1976 for this hypothetical population wi~h 3O

( DP.~'E (5/9/85) actual expenditures in 1976. DO NOT QUOTE, CITE, 0RREPRODUCE They found little difference becween the spending in 1976 for these ~wo populations. The major difference was chat r.he hypochetical non-smoking population was larger and older than r_he actual population. Overall, ~he non-smoking populaclon was about 1.~ percent larger. In the older age groups, the differences were much larger. They estimated r~hat if r~here had not been any smokers, r.he population of males over r.he age of 65 would have been i0 co IA percent larger in 1976 than ~he act'~al Swiss male population. (Gori and Richter have also pointed co the potential increase in r~he size of r_he populaclon over the age of 65 chat would accompany ~he reduction in the number of tobacco-related disease deaths (Gori & Richter, 1978; Richter & Gori, 1980).) Al=hough smokers use more hospital services ~han do non-smokers for a given year between the ages of 35 and 8A, ~he longer survival of non-smokers leads co their using more medical services over r_heir entire lifetimes. However, ~his is spread out over a greater number of years than for the smokers. According co Leu and Schaub, the lower annual medical care use by non-smokers bet-~een age 35 and 8A, is almost exactly offset by the predicted increase in overall spending that results from ~he increase in the size of the population and =he increase in percentage of the population in the older age groups (Leu& Schaub, 1983). A~kinson and Townsend estimated the effects thaC a ~0 percent reduction in smoking would have on the British National Health Service and budget of the British government over the years between 1976 and 2000. Reduced smoking would reduce the need for hospital beds and would temporarily reduce the 31

DR~ (5191s5) DO NOT QUOTE, CZTE, OR REPRODUCE number of ou~aclenc visits Co doctors. Over time, however, as r_he non- smokers aged, ~he number of physician visits would increase. In addition, ~here would be reducuions in r_he governmenu's cosus of providing sickness benefits and widows' benefits, but increases in the costs of providing retirement pensions (A~kinson & Townsend, 1977). A preliminary analysis by Lewit has pointed ouU tha~ savings in healr~h care costs can be achieved during ~he time it takes ~o move from uhe curren~ suate, in which r~here are cosus for treating smoking-related disease, to a fut~tre s~a~e in which ~hose cosus have been eliminated. For example, if smoking-related disease is eliminated by ~he year 2005, health care cosr_s for Ureaulng smokingorelaUed disease will have been eliminated, while ~here will be increased costs for ureauing ~he 'larger number of people alive in 2005. AU some point in ~he future, r_he increase in healr~h care costs for treatinE r_he additional people alive will approach (and probably a~ least equal) r.he decrease in costs from r_he elimination of smoking-rela~ed disease. During the many years between now and ~hat fut-~re time, Lewit argues that society can save heal~h care costs (Lewit, 1983). From ~he suandpoinu of r~he Nation's healr~ care system, savings may be possible during ~he transition to a society with fewer smokers. It is clear uhau currently large sums are spent treating smoking-relaUed disease. Future Urends in the use of medical technology and changes in government and ~hird- party reimbursement will clearly affect future costs. Predicting ~he extent of ~hese changes and their effects is difficul~. New, more expensive ~echnologies may become more widely used. In ~his discussion of smoking- relaued disease, iu should be no~ed ~hat all of the pa~ienus who have received 32

DRAFT (5191S5) DO NOT QUOTE, CZTE, ORREPRODUCE r~he experimental artificial heart had been smokers19. However, from r.he standpoint of ~he Social Security and Medicare progTams, reduced smoking may lead to increased costs. This is simply because r~here will be more people living Uo retirement age and thus becoming eligible ~o receive Social Security and Medicare benefits. For example, OTA's estimates imply that of ~he approximately 273,000 who died of smoklng-rela~ed disease in 1982, 44 percent or about 121,000, died before they reached their 65r.hbir~hday. There will be some increase in revenues to the governmen~ and the Social Security and Medicare trust funds because people will be working more years. The increase in ~hese revenues, however, may not equal the additional costs borne by these proErams for ~he additional retirees. Reductions in smoking will also be accompanied by reduction in the sales of cigarettes and declining demand for tobacco. This could create potentially large economic dislocations as well as reductions in Federal and state tax revenues that are associated wi~h the production and sales of tobacco and tobacco products20. Of course, from a narrow vantage point that considers only the finances of r~he Social Security and Medicare systems, we should all die the day before we retire. This is not an acceptable basis for public healr~h policy. More generally, many would argue that it is inappropriate to consider r~he potential future healr_h care costs avoided by unnecessary premature deaths. On the other hand, even ~hough the reduction of smoking-related disease may not lead 19Ravenholt estimates that each of these patients had smoked more than 250,000 ~igare=tes during his lifetime (Ravenhol=, in press). UHow these dislocations and adjus~nents can be ameliorated is an important issue for government policy. 33

(5/9/s5) DO NOT QUOTE, CITE, 0EREPEODUCE Co medical cost savings, it will lead to large gains in produccivit7 as people who would have died before age 65 continue to work until ~he normal age of retirement. But It is more important to focus instead on the improvements in healr.h, longevity, and overall quality of llfe chat would accompany reduced smoking. Measures to reduce smoking might lead to large improvements in longevity for relatively modest expenditures. Thus, as Warner has pointed out, reduction in smoking may be a cost-effecCive way of improving health, even if it does not prove to be cosC-savfnE (Warner, 198A). 34 Co

(519185) DO NOT QUOTE, CITE, OP, KEPKODUCE Ashford, "Smoking and the Use of the Health Services," Brit. J. Prey. Soc. Med. 27:8-17, 1973. Atklnson, A.B., & Townsend, J.L., "Economic Aspects of Reduced Smoking," Lancet, pp. A92-95, Sept. 5, 1977. Bloom, B.S., Knott, R.S., Evans, A.E., "The Epidemiolo~y of Disease Expenses: The Costs of Caring for Children with Cancer," JAMA 253(16):2393-97, April 26, 1985. Boden, L.I., "The Economic Impact of Environmental Disease on Health Care Delivery," Journal of Occuparional Medicine 18(7):~67-472, July 1976. Cooper, B., Rice, D.P., "The Economic Cost of Illness Revisited," Social Securi~yBulletln, 39:21-36, 1976. Doll, R. & Peto R., "The Causes of Cancer: Quantitative Estimates of Avoidable Risks of Cancer in ~he United States Today," Journal of the National Cancer Institute 66(6):1193-1308, June 1981. Garfinkel, L., "Cancer Mortality in Nonsmokers: Prospective Study by the American Cancer Society," Journal of the National Cancer InstiTute 65(5):1169-73, November 1980. Gibson, R.M., Levit, K.R., Lazenby, H., & Waldo, D.R., "National Health Expenditures, 1983," Health Care Financing Review 6(2):1-29, Winter 198A. Goldman, L., & Cook, E.F., "The Decline in Ischemic heart Disease Mortality Kates," Annals of Incernal Medicine 101(6):825-36, December 198A. Gori, G.B., & Richter, B.J., "Macroeconomics of Disease Prevention in the United States," Science 200:I12A-30, June 9, 1978. Hammond, E.C., "Smoking in Relation to the Death Rates of One Million Men and Women," in Epidemiological Approaches co the Scud7 of Cancer and O~her Chronic Diseases, W. Haenszel (ed.), National Cancer Institute Monograph 19, January 1966. Harrunian, N.S., Smart, C~N., & Thompson, M.S., The Incidence and Economic Cosrs of Major Health Impairments (Lexington, MA: D.C. Heath & Co., Lexington Books, 1981). Hodgson, T.A., & Kopstein, A.N., "Health Care Expenditures for Major Diseases in 1980," Health Care Financing Review, 5(A):I-12, Summer 198A. /¢ 35

DO NOT QUOTE, CITE, OR REPRODUCE Kannel, W.B., "Meaning of =he Downward Trend in Cardiovascular Mortaliuy," Journal of =he American Medical Associa~on 2A7(6):877-80, Feb. 12, 1982. Kleinman, J.C., Feldman, J.J., & Monk, M.A., "The Effects of Changes in Smoking Habits on Coronary heart Disease Mor=aliuy," American Journal of Public Health 69(8):795-802, August 1979. Kristein, M.M., "Economic Issues in Prevention," PrevenEive Medicine 6:252-6A, 1977. Kristein, M.M., "How Much Can Business Expect to Profit from Smoking Cessation," Preventive Medicine 12:358-81, 1983. Leu, E.E. & Schaub, T., "Does Smoking Increase Medical Care Expenditure?" Soc. Sci. Med. 17(23):1907-14, 1983. Lewit, E.M., & Coates, D., "The Potential for Using Excise Taxes to Reduce Smoking," Journal of Healch Economics 1:121-45, 1982. Lewiu, E.~., "Some Economic Issues Raised by Reduced Smoking," preliminary draft, typescript, 1983. Lewit, E.M., "Estimated Cost of Illness Attributable to Cigarette Smoking, 196A-1983," report prepared for the American Council on Science and Health, tTpescrlpt, 1984. Lilienfeld, A.M, Foundations of Epidemiology (New York: Oxford Univ. Press, 1976). Lute, B.E., & Schweir.zer, S.O., "Smoking and Alcohol Abuse: A Comparison of their Economic Consequences," New England Journal of Medicine 298(10):569-71, March 9, 1978. Lyon, H.L., & Simon, J.L., "Price Elasi=icicy of =he Demand for Cigarettes in =he United States," American Journal of Agricul~u:al Economics 50:888- 95, November 1968. Minnesota Department of Health, The Minnesora Plan for Nonsmoking and Health: Report and Recommendations fo =he Technical Advisory Committee on NonsmokinE and Healch, (Minneapolis, HN: Minn. Dept. of Health, September, 1984). -- Osuer, G., Coldiuz, G.A., & Kelly, N.L., The Economic Costs of Smoking and Benefits of Quic~ing (Lexington, MA: Lexington Books, 1984). Pell, S., & Fayerwea=her, W.E., "Trends in =he Incidence of Myocardial Infarction and in Associa=ed Mor=aliCy and Morbidity in a Large Employed Popula=ion, 1957-1983," New England Journal of Medicine 312(16):1005-i011, Apr. 18, 1985. 36 N O &J &q GD

(519185) r DO NOT QUOTE, CITE, OK KEPEODUCE Ravenholt, R.T., "Addiction Mortality in the United States, 1980: Tobacco, Alcohol, and O~her Substances," Populaclon and Development Review 10(A):697-72A, December 1984. Ravenholt, R.T., "Tobacco's Impac~ on 20~h Cenrury U.S. Mortality," American Journal of Preventive Medicine, in press. Rice, D., "Estimating the Costs of Illness," American Journal of Public Health, 57:A2~-~0, 1967. Rice, D.P., & Hodgson, T.A., "Economic Costs of Smoking: An Anlysis of Data for r.he United States," unpublished paper presented at ~he Allied Social Science Association Annual Meetings, San Fransisco, CA, December 28, 1983. Richter, B.J., & Gori, G.B., "Demographic and Economic Effects of the Prevention of Early Mortality Associated with Tobacco-related Disease," in Banbury Report 3--A Safe Cigarerte?, G.B. Gori, F.G. Book (ads.) (Cold Spring Harbor, NY: Cold Spring Harbor Laboratory, March 12, 1980), pp. 3AI-351. Rogot, E. & Murray, J.L., "Smoking and Causes of Death among U.S. Veterans: 16 years of Observation," Public Health Reports 95(3):213-222, May-June 1980. Stallones, R.A., "The Rise and Fall of Ischemic Heart Disease," Scientific American 2A3(5):53-59, November 1980. Townsend, J.L., & Meade, T.W., "Ischaemic Heart Disease Mortality Eisks for Smokers and Non-Smokers," Journal of EpidemioloEy and CommuniryHealch 33(A):243-2A7. U.S. Department of Agricult-u/e, Economic Kesearch Service, "Tobacco: Outlook and Siruation Kepor~," March 1985. U.S. Department of Health and Human Services, National Institutes of Health, National Cancer Institute and National Heart, Lung, and Blood InstiLnlte, Smoking and ~ealrh: A Program ro Reduce the Risk of Disease in Smokers, Status Keporu, December 1977. U.S. Department of Health and Human Services, Of $ice on Smoking and Health, Smoking and Healah: A Report of the Surgeon General (Washington, DC: U.S. Government Printing Office, 1979) U.S. DeparTment of Health and Human Services, Office on Smoking and Health, The Health Consequences of Smoking--Cancer: A Report of the Surgeon General (~ashing=on, DC: U.S. Government Printing Office, 1982) 37

(5/9/85) DO NOT QUOTE, CITE, ORKEPRODUCE U.S. Department of Heal~h and Human Services, Office on Smoking and Heal~h, The Heal=h Consequences of Smoking--Cardiovascular Disease: A Report of the Surgeon General (Washington, DC: U.S. Government Printing Office, 1983) U.S. Department of Heal~h and Human Services, Office on Smoking and Heal~h, The Heal~h Consequences of Smoking--Chronic ObsTrucTive LunE Disease: A Report of r~he Surgeon General (Washinguon, DC: U.S. Government Printing Office, 198A). Yogi, T.M. and Schweitzer, S.O., Medical CosTs of Clgarecre Smoking, reporu prepared for ~he National Center for Health Services Kesearch, U.S. Deparument of Heal~h and Human Services, January 1984. Walker, W.J., "Changing U.S. Life Style and Declining Vascular MortaliCy--A RetrospecTive," New England Journal of Medicine 308(11):649-51, Mar. 17, 1983. Warner, K., BenefiTs and Costs of An=ismoking Poli=cies, report prepared for =he National Center on Heal=h Services Research, U.S. Department of Heal~h and Human Services, May 1982. Warner, K., "The Economics of Smoking and Lung Cancer," in L.A. Loeb, V.L. Ernster, K.E. Warner, et al., "Smoking and Lung Cancer: An Overview," Cancer Research AA:5940-58, December 1984. Williams, J.K., & Jusrus, D.G., "Evaluauion of Nationwide Health CosTs of Air Pollution and Cigarette Smoking," Journal of abe Air Pollu~ion Control AssociaTion 24(11):1063-66, November 1974. Wolfe, S.M., "Economic Costs of Smoking," typescript, March 1977. 38