Tobacco Documents Online

.t 1 } Statement of Clyde Behney Assistant Director Office of Technology Assessment and Maria Hewitt, Dr.P.H. Senior Analyst, Health Program Office of Technology Assessment On Smoking-Related Deaths and Financial Costs: Office of Technology Assessment Estimates for•1990 Before.the House Committee on Ways and Means November 18, 1993 Congress of the United States OBice of Technology Assessment Washington, DC 20510-8025

SMOKING-RELATED DEATHS AND FINANCIAL COSTS: OFFICE OF TECHNOLOGY ASSESSMENT ESTIMATES FOR 1990 INTRODUCTION Cigarette smoking causes cancer, respiratory disease, and circulatory system disease, all conditions that contribute greatly to disability and death in the United States. In 1991, an estimated 46 million adults in the United States (26 percent) were current smokers and for the first time in nearly two decades smoking prevalence had not declined (MMWR, April 2, 1993;USDHHS, CDC, CCDPHP, 1989). Until many more U.S. residents stop or curb their smoking, smoking will continue to be the largest source of preventable death and disability and will burden the health care system with avoidable health care costs. At the request of the Senate Special Committee on Aging in early 1993, OTA assessed the extent of smoking-related deaths and overall financial costs and developed estimates of the smoking-related health'care costs borne by the Federal government through the Medicare, Medicaid, and other government- financed programs. These estimates, using 1990 data, update earlier ones published by OTA in 1985 (OTA, 1985). OTA relied on a computer program called SAMMEC (Smoking Attributable Mortality, Morbidity, and Economic Costs), designed and distributed by the Centers for Disease Control and Prevention's Office on Smoking and Health, to estimate smoking-related mortality and economic impacts (USDHHS, PHS, CDC, OSH; Shultz, J.M., et al., 1991). OTA Smoking-Attributable Mortality Estimates OTA estimates that smoking-related illness accounted for nearly one in five deaths in 1990, killing as many as 417,000 U.S. residents (table 1).1,2 These smoking-related deaths far exceed the combined number of deaths from - m 1 OTA's mortality estimate excludes those dying as a consequence of smokeless -~ tobacco and passive smoking. In 1988, an estimated 3,825 U.S. residents died Cj from passive smoking (MMWR, February 1, 1991) and subsequent estimates of CJT deaths attributable to passive smoking have been higher (Steenland, K., 1992). ~ OTA's mortality estimates relied on preliminary data from NCHS. CDC has ` subsequently estimated 1990 smoking-attributable mortality to total 419,000 (MMWR, August 27, 1993). 2 The number of smoking-attributable deaths has declined since 1988 (i.e., from an estimated 434,000 in 1988) primarily because of a general decline in . -1-

AIDS, automobile and other accidents, homicide, and suicide (173,000 deaths). In 1990, more than one-fourth of cancer deaths, nearly one-fifth of cardiovascular disease deaths, and one-half of respiratory disease deaths were attributable to smoking (table 1). The smoking-related mortality burden falls disproportionately on young-to-middle aged adults. More than one-quarter of all deaths among those age 35 to-64 are smoking-related (table 2). Because many deaths occur at relatively young ages, there are many years of potential life lost due to smoking. Each smoker who died as a consequence of his or her smoking would have, on average, lived at least 15 additional years had they not smoked. For the population at large, this premature mortality translates into more than 6 million years of potential life lost. OTA Smoking-Attributable Financial Cost Estimates The greatest "costs" of smoking are immeasurable insofar as they are related to dying prematurely and living with debilitating smoking-related chronic illness with attendant poor quality of life. Measuring the financial costs associated with smoking is an inexact science, but generally three cost components are included: the direct cost of providing personal health care services to those with smoking-related diseases; the indirect morbidity costs associated with lost earnings from work or. housekeeping because of smoking-related illness; and -- the indirect mortality costs related to the loss of future earnings from premature death. OTA estimates the total financial cost of smoking in 1990 to be $68.0 billion or $2.59 per pack of cigarettes sold in the United States. The total cost of $68.0 billion includes $20.8 billion in direct health care costs, $6.9 billion in indirect morbidity costs, and $40.3 billion in lost future earnings (figure 1) (table 3).3 The total 1990 cost of smoking per smoker is $1,078, and per capita is $272 (table 4). Ca cardiovascular deaths. Smoking-attributable cancer deaths'have increased *J W since 1988 (MMWR, February 1, 1991). ~ 3 The indirect mortality estimate of $40.3 billion is based on a 4 percent 0 rate to discount future lifetime earnings and excludes deaths of persons under~ age 35. Comparable indirect mortality costs using a 2 and 6 percent discount rate are estimated at $46.2 and $35.7 billion, respectively. If smoking- related deaths of persons under age 35 are included, 1990 indirect mortality costs are estimated to be $41.9 billion (at a 4 percent discount rate). Comparable figures for 2 and 6 percent discount rates are $49.4 and $36.6 billion, respectively. -2-

Direct costs-Direct costs are measured as the expenditures for preventing, detecting, diagnosing, and treating smoking-related diseases and medical conditions (Rice, D.P., et al., 1986). In 1990, the United States spent an estimated $20.8 billion on health care for smoking-related diseases, representing 3.5 percent of total U.S. 1990 personal health care expenditures. This amounts to about $329 per smoker, $83 per capita, and 79 cents for each pack of cigarettes sold in the United States in 1990 (table 4). OTA estimates that in 1990, Federal, state, and local governments together funded approximately 43 percent, or $8.9 billion, of smoking- - attributable direct costs. The 1990 Federal government share was an estimated $6.3 billion or about 24 cents for each pack of cigarettes sold (table 5). Estimated Medicare costs were $3.5 billion, Medicaid costs were $2.7 billion, and spending for other government-funded health programs was $2.7 billion in 1990 (table 5).4 Total government smoking-related direct costs were fairly evenly split between the population under age 65 ($4.5 billion) and the population age 65 and over ($4.3 billion) (table 5). Indirect morbidity costs-Smoking-related disease results in productivity losses to the economy through lost time at work (e.g., sick leave) and lost housekeeping services by homemakers. OTA estimates indirect morbidity costs at $6.9 billion or $109 per smoker, $28 per capita, and 26 cents per pack of _-_- cigarettes sold in 1990 (table 4).5 Indirect mortality costs-The foregone earnings of those dying prematurely in 1990 from smoking-related causes amount to $40.3 billion or $639 per smoker, $162 per capita, and $1.54 per pack of cigarettes sold in 1990 (table 4).6 The value of future earnings were discounted by 4 percent to 1990 present-valued dollars.7 4 Other Federal government smoking-attributable direct medical expenditures include those of the following programs and agencies: Workers' Compensation; Department of Defense; Maternal and Child Health; Vocational Rehabilitation; Alcohol, Drug Abuse, and Mental Health Administration; Indian Health Service; ~ and miscellaneous general hospital and medical programs. Other State and local expenditures include those of the Temporary Disability Program, Workers' ~ Compensation, General Assistance, Maternal and Child Health, Vocational Q Rehabilitation, hospital subsidies, and school health (Levit, K.R., et al, ~ 1991; USDHHS, HCFA, ORD, 1990; Waldo, D.R., et al., 1989). ~p 5 Methods used to calculate population daily earnings in the SAMMEC program likely overestimate indirect morbidity costs. 6 The indirect mortality estimate excludes those dying before age 35. 7 Indirect mortality costs discounted by 2 and 6 percent rates are estimated at $46.2 and $35.7 billion, respectively. -3-

Improving Estimates of Smoking-Related Financial Costs OTA relied on techniques developed by the Centers for Disease Control and Prevention's Office on Smoking and Health to produce these 1990 estimates. The CDC's Office on Smoking and Health are further'refining methods used to estimate smoking-related costs (Arday, D., personal communication, November 1993). The improved direct cost-estimation will rely on analyses, by smoking status, of the 1987 National Medical Expenditure Survey (Rice, D.P., personal communication, April 1993) and will adjust for differences in sociodemographic characteristics that exist between smokers and nonsmokers (Novotny, T.E., personal communication, April 28, 1993). Factors Excluded From OTA's Estimate of Smoking-Related Financial Costs The 1990 OTA estimate of smoking-related financial costs does not include all of the effects that smoking has on the economy or on all government programs. Only the mortality toll of smoking and the effects of smoking on direct medical care spending and the indirect costs of lost productivity and lost earnings were estimated. Smoking currently leads to a substantial loss of life and significant health care spending. Reduction or elimination of smoking would improve health and extend longevity, but may not lead to savings in health care costs. In fact, significant reductions in smoking prevalence and the attendant increase in life expectancy could lead to future increases in total medical spending, in Medicare program outlays, and in the budgets of the Social Security and other government programs (Warner, K.E., 1987). OTA has not estimated what these hypothetical effects might be. Others have assessed these "off-setting" costs in their estimates of smoking- related costs (Manning, W.G., et al., 1991). - CONCLUSIONS OTA estimates that as many as 417,000 United States residents died in 1990 as a consequence of smoking and that the total financial cost of smoking was $68.0 billion or $2.59 per pack of cigarettes sold in the United States in 1990. Reductions in smoking prevalence would lead to marked improvements in health and gains in years of life for thousands currently dying of smoking- -4-

related disease (USDHHS, Report of the Surgeon General, 1990). Health education and smoking cessation programs, especially those targeted to children, adolescents, and young adults might lead to large improvements in longevity and thus represent significant ways to improve health and prevent premature death. Other policies that might discourage smoking include raising taxes on tobacco products, enforcing minor-access laws, restricting smoking in° public places, and restricting tobacco advertising and promotion (MMWR, April 2, 1993).

SMOKING-RELATED DEATHS AND FINANCIAL COSTS: OFFICE OF TECHNOLOGY ASSESSMENT ESTIMATES FOR 1990 REFERENCES Levit, K.R., Lazenby, H.C., Cowan, C.A., and Letsch, S.W., "National Health Expenditures, 1990," Health Care Financing Review, 13(1): 29-54, Fall 1991. Manning, W.G., Keeler, E.B., Newhouse, J.P., et al., The Costs of-Poor Health _ Habits, (Cambridge, MA: Harvard University Press, 1991). Morbidity and Mortality Weekly Report, "Cigarette Smoking-Attributable Mortality and Years of Potential Among Adults--United States, 1991," MMWR 42(12):230-233, April 2, 1993. Morbidity and Mortality Weekly Report, "Cigarette Smoking Among Adults--United States, 1991," MMWR 42(12):230-233, April 2, 1993. Morbidity and Mortality Weekly Report, "Smoking-Attributable Mortality and Years of Potential Life Lost =- United States, 1988," MMWR 40(4):62-71, February 1, 1991. Arday, D., Preventive Medicine Specialist, U.S. Department of Health and Human Services, Centers for Disease Control and Prevention, National Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, personal communication, November 16, 1993. Novotny, T.E. University of California, Berkeley, CA, personal communication, April 28, 1993. Rice, D.P., Professor, Institute for Health and Aging, Department of Social and Behavioral Sciences, University of California, San Francisco, personal communication, April 7, 1993. Rice, D.P., Hodgson, T.A., Sinsheimer, P., et al., "The Economic Costs of the Health Effects of Smoking, 1984," The Milbank Quarterly 64(4):489-547, 1986. Rice, D.P., Hodgson, T.A., and Kopstein, A.N., "The Economic Costs of Illness: A Replication and Update," Health Care Financing Review 7(1):61-80, Fall 1985. Shultz, J.M., Novotny, T.E., and Rice, D.P., "Quantifying the Disease Impact ~ of Cigarette Smoking with SAMMEC II Software," Public Health Reports ~ 106(3):326-333, May-June 1991. CA O Steenland, K., "Passive Smoking and the Risk of Heart Disease," JAMA CD 267(l):94-99, January 1, 1992. N U.S. Congress, Office of Technology Assessment, "Smoking-Related Deaths and Financial Costs: Staff Memorandum," September 1985. References-1

U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control and Prevention, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, SAMMEC 2.1: Computer Software & Documentation (Atlanta, GA). U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control and Prevention, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, The Health Benefits of Smoking Cessation: A Report of the Surgeon General, 1990, DHHS Pub. No. (CDC) 90-8416 (Rockville, MD: 1990). U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, Reducing the Health Consequences of Smoking 25 Years of Progress: A Report of the Surgeon General, 1989, DHHS Pub. No. (CDC) 89-8411 (Rockville, MD: 1989). Warner, K.E., "Health and Economic Implications of a Tobacco-Free Society," JAMA 258(15):2080-2086, October 16, 1987. References-2

} Figure 1--Components of 1990 Smoking-Related Cost Estimates Direct Costs + Indirect Costs = Total Costs $ 21 Billion + (Costs of providing health care to persons with smoking-related illnesses) $ 47 Billion = $ 68 Billion Indirect Morbidity Costs $ 7 Billion (Costs of lost productivity for persons disabled by smoking-attributable diseases) Indirect Mortality Costs $ 40 Billion (Estimates of forfeited earnings of those dying premature deaths from smoking-attributable diseases) Source: Office of Technology Assessmentas calculated using the SAMMEC 2.1 program, 1993. D6USE46B

, Table 1--Total Deaths and Deaths Attributable to Smoking by Cause of Death, United States, 19901 Total Smoking-attributable deaths Cause of death deathsb Number Percent All causes 2,148,463 416,829 19.4% Neoplasms 505,322 148,224 29.3 Cardiovascular disease 916,007 179,436 19.6 Respiratory disease 168,203 84,872 50.5 Perinatal disease 15,237 2,215 14.5 Burns° 4,175 2,082 49.9 aThese numbers are slightly lower than those published by CDC in August 1993. OTA used preliminary mortality data from NCHS in making these estimates. CDC estimates that 418,690 U.S. deaths were attributable to smoking in 1990. b Tota1 neoplasm deaths include ICD-9 codes 140-208, total cardiovascular diseases include ICD-9 codes 390-448, total respiratory diseases include ICD- 9 codes 10-12, 466, 480-87, 490-96, total perinatal conditions include ICD-9 codes 765, 769, 770, 798.0, and total burn deaths include ICD-9 codes E-890- 899. °One-half of all burn deaths are assumed to be cigarette-related (DHHS, CDC, Office on Smoking and Health, 1990). SOURCES: Office of Technology Assessment, as calculated using the SAMMEC 2.1 program, 1993; USDHHS, PHS, CDC, NCHS, Advance Report of Final Mortality Statistics. 1990 41(7) Supplement, January 7, 1993.