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1 STAFF MEMO SMOKING-RELATED DEATHS AND FINANCIAL COSTS September 1985 Prepared by the Health Program Office of Technology Assessment U.S. Congress This OTA Staff Memorandum has been neither reviewed nor, approved by the Technology Assessment Board. s TIMN 218244

. r a OTA STUDY STAFF Karl Kronebusch, Project Director PARTICIPANTS IN AN OTA WORKSHOP ON THE COSTS OF SMOKING April 9, 1985 Sid Lee (Chair) Milbank Memorial Fund New York, NY Robert Garrison National Heart, Lung, & Blood Institute Bethesda, MD John Pinney Institute for the Study of Smoking Behavior & Policy Cambridge, MA Thomas Glenn National Cancer Institute Bethesda, MD Millicent Higgins National Heart, Lung, & Blood Institute Bethesda, MD Thomas Hodgson National Center for Health Statistics Hyattsville, MD Eugene Lewitt University of Medicine & Dentistry of New Jersey Newark, NJ Jay Lubin National Cancer Institute Bethesda, MD Bryan Luce Battelle Human Affairs Research Center Washington, DC Gerry Oster Policy Analysis, Inc. Brookline, MA Earl Pollack Pollack Associates, Ltd. Bethesda, Md R.P. Ravenholt World Health Surveys, Inc. Bethesda, MD Harry Rosenberg National Center for Health Statistics Hyattsville, MD Herbert Seidman American Cancer Society New York, NY Donald Shopland Office of Smoking &-Health Rockville, MD . James Shultz Minnesota Dept. of Health Minneapolis, MN Kenneth Warner School of Public Health Univ. of Michigan Ann Arbor, MI TIMN 218245

TABLE OF CONTENTS SUMMARY ............................................................ 1 INTRODUCTION ....................................................... 6 PREVIOUS ESTIMATES OF SMOKING-RELATED DISEASE ...................... 8 PREVIOUS ESTIMATES OF SMOKING-RELATED DISEASE COSTS ............... 11 OTA'S ESTIMATES ................................................... 21 Smoking-related Mortality .................................. 21 Cancer Deaths .............. 22 Chronic Obstructive Lung Disease Deaths .............. 29 Cardiovascular Disease Deaths ........................ 33 Summary of OTA Estimates of Smoking-related Deaths...43 Life-years Lost and Probability of Early Death ............. 43 Smoking-related Disease Costs .............................. 48 FUTURE COSTS IF SMOKING IS REDUCED ................................ 56 ACKNOWLEDGEMENTS ................................................... 63 REFERENCES ........................................................ 64 ° TIMN 218246

SUMMARY Smoking is associated with a number of diseases, including cancer, heart disease, and chronic lung disease. This OTA Staff Memorandum reviews previous estimates of the extent of smoking-related disease and the financial costs associated with treating smoking-related disease. At the request of the Subcommittee on Health of the House Ways and Means Committee, OTA has developed estimates of the smoking-related health care costs borne by the government through the Medicare and Medicaid programs. For this analysis, OTA has focused on the three major categories of smoking-related disease--cancers, cardiovascular disease, and respiratory system disease. These account for the vast majority of smoking-related deaths. The basic data for many of OTA's calculations are from an American Cancer Society health study of nearly one million Americans for the years 1959 to 1.965. Using the death rates for cancer, cardiovascular disease, and chronic lung disease for non-smokers who were enrolled in that study it is possible to calculate the expected number of deaths that would occur if no one in the U.S. smoked. Subtracting that expected number from the number that actually occurred yields an estimate of the deaths that may be attributed to smoking. Table 1 summarizes OTA's numerical estimates of smoking-related deaths. About 139,000 people died in 1982 from smoking-related cancers--about 32 percent of all cancer deaths. (This represents an increase of about 17,000 cancer deaths from that previously estimated using 1978 mortality data by 1 ® TIMN 218247

Table 1 Smoking-related Deaths Sumnary DEATHS (in 1982) Middle Estimate Range --------------------------------------------------------- Cancer 139,000 (32% of cancer deaths) 89,000=174,000 Cardiovasular 123,000 (13% of cardiovascular 48,000-170,000 disease disease deaths) Chronic obstructive 52,000 (88% of chronic lung 49,000- 54,000 lung disease disease deaths) Total of above 314,000 (16% of deaths from 186,000-398,000 all causes) ----------------------------------------------------------------------------- LIFE-YEARS LOST (in 1982) Total person-years Lost 5,300,000 Years lost before age 65 1,200,000 ----------------------------------------------------------------------------- Source: Office of Technology Assessment 2 d TIMN 218248

Richard Doll and Richard Peto.) About 123,000 are estimated to have died from cardiovascular disease associated with smoking. And 52,000 died in 1982 from smoking-related non-cancerous chronic lung disease. The middle estimate of the total death toll from these three disease categories amounts to nearly 320,000 deaths, with a range between OTA's low and high estimates of 186,000 to 398,000 deaths in 1982. This range is broad, indicating some uncertainty about the exact magnitude of the smoking toll. But it should be emphasized that the even the lower estimate is substantially greater than zero. Life-years lost is one measure of premature mortality. For 1982, OTA estimates that about 5.3 million person-years were lost from smoking-related disease. Of these years, 1.2 million are lost before the age of 65. Previous estimates of the health care costs of smoking, adjusted for inflation, range from $8.6 to $27.4 billion (in 1985 dollars). These estimates have been based on apportioning health care costs by the fraction of deaths that are associated with smoking. Using the same methodology, OTA estimates that in 1985 the U.S. health care system will spend between $12 billion and $35 billion to treat smoking- related diseases. OTA's middle estimate is health care costs of about $22 billion. This amounts to about 72 cents for each pack of cigarettes sold in the U.S. Estimated Medicare costs are $1.7 billion to $5.4 billion, while Medicaid costs amount to $0.3 to $1.1 billion. After subtracting the State share of Medicaid costs and adding in other Federal programs that provide health care to the elderly, the estimate is that the Federal government pays between $2.1 billion and $6.6 billion for treating smoking-related disease. OTA's middle estimate is that the Federal costs amount to about $4.2 billion in 1985 or about 14 cents for each pack of cigarettes. 3 h TIMN 218249

Table 2 I Smoking-related Financial Costs Sunmary -----•-------------------------------------------------------------------------------------- HEALTH CARE COSTS (in 1985 dollars) Middle Estimate Per Pack Range Per Pack ------------------------------------------------------------- Total health care costs - $22 biLlion S.72 512-35 billion $ .38-$1.17 Medicare costs* - $3.4 biltion $ .11 51.7-5.4 billion $ .06-$ .18 Medicaid costs* - $0.7 billion E.02 $0.3-1.1 billion S.00-5 .04 Federal govt. costs for smoking-related health care* $4.2 billion $ .14 • $2.1-6.6 billion $ .07-5 .22 -------------------------------------------------------------------------------------------- LOST PROOUCTIVITY COSTS (in 1985 dollars) Middle Estimate Per Pack Range Per Pack ................................................... -......... Total Lost earnings $43 billion $1.45 527-61 billion S.90-$2.02 -------------------------------------------------------------------------------------------- TOTAL OF HEALTH CARE AND LOST PRODUCTIVITY COSTS (in 1985 dollars) Middle Estimate Per Pack Range Per Pack ------------------------------------------------------------- Total costs $65 billion $2.17 • 538-595 billion 51.27-53.17 -------------------------------------------------------------------------------------------- Source: Office of Technology Assessment * Government program cost estimates are only for persons aged 65 and over. TIMN 218250 4

Smoking-re].ated disease also results in productivity losses for the economy. For 1985, OTA estimates that these fall in the range of between $27 and $61 billion,-with a middle estimate of $43 billion. The middle estimate amounts to about $1.45 for each pack of cigarettes sold. The total of smoking-related health care costs and lost productivity costs amounts to between $39 and $96 billion, with a middle estimate of $65 billion. The middle estimate equals $2.17 per pack of cigarettes. This analysis does not discuss in detail all of the effects that smoking has on the economy or all government programs. For simplicity, only the mortality toll of smoking and its effects on direct medical care spending and the indirect costs of lost productivity were estimated. Currently smoking currently leads to,a real and substantial loss of life and significant health care spending. Reduction or.elimination of smoking would improve health and extend longevity, but it may not lead to savings in health care costs. In fact, reduction in the prevalence of smoking could lead to future increases in total medical spending, in the costs of the Medicare program, and in the budgets of the Social Security program and other government programs. OTA has not estimated what these hypothetical effects might be. Research on this question is still in its infancy and it is not clear exactly what effect reduced smoking will have on future health care costs. But even if reduced smoking leads to increased costs in future years, it will also lead to improved health and additional years of life for thousands currently dying of smoking-related disease. Relatively modest expenditures might lead to large improvements in longevity and thus represent cost-effective ways of improving health and preventing premature death. 5 TIMN 218251 11

INTRODUCTION Numerous epidemiologic studies have shown that the use of cigarettes, cigars, and pipes is associated with a diverse group of diseases, including cancers of the lung, lip and mouth, larynx, esophagus, pancreas and bladder; heart disease; and chronic lung disease. Nearly all researchers in this field are now convinced that smoking causes disease and premature death.1 Based on preliminary data from the 1983 Health Interview Survey, there are about 50 million smokers in the U.S. In 1984, 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). The Subcommittee on Health of the House Ways and Means Committee has asked that OTA prepare an analysis of the financial costs of smoking to society, and the costs borne by the Medicare and Medicaid programs. This analysis includes a review of previous estimates of the costs of smoking- related disease. Past cost estimates have generally used the fraction of mortality related to smoking (attributable risk) and then multiplied that fraction times the costs of a particular illness category. The estimates in 1 Comprehensive reviews of the scientific literature on smoking and health can be found in the various Surgeon General's reports (listed in the bibliography under U.S. Dept. of Health, Education, and Welfare and U.S. Dept. of Health and Human Services, Office on Smoking and Health). A few still dispute the consensus in the epidemiologic and medical communities concerning the links between smoking and disease. See, for example, testimony presented at hearings concerning the Smoking Prevention Act (U.S. Congress, 1982,. 1983), and comments to OTA (Chilcote, 1985; Sterling, et al, 1985). 6 TIMN 218252

this paper will follow the same general approach. The first step in calculating costs is to estimate the number of deaths related to smoking in each of the three major disease categories that has been associated with smoking--cancers, heart disease, and chronic respiratory disease. Unlike most previous estimates of smoking-related deaths, OTA's estimates will provide the age distribution of smoking-related deaths. This also permits calculation of the number of life-years lost due to smoking- related disease. "Life-years saved" is increasingly being used to measure the effects of health interventions. After all, death is inevitable for each of us; but'the reduction of the incidence of premature death is an achievable goal. Life-years lost is one measure of the extent of premature mortality. The second step is to apply the estimates of the smoking-related fraction of mortality to the health care costs for each major disease category. Thus, in the first step an estimate will be prepared of the fractions of cancers, cardiovascular disease, and respiratory system disease that are related to smoking. In the second step, those fractions are applied to the total health care costs for each class of disease. The third step of this analysis estimates the share of smoking-related health care costs for the elderly paid for by government programs. Finally, OTA presents estimates of the lost productivity costs for people who are ill and disabled or who die prematurely from each major type of smoking-related disease. This Staff Memorandum will concentrate on the mortality associated with smoking and on the health care costs and lost productivity costs that may be attributed to smoking. Thus, this analysis leaves out a number of important topics. The production and sale of cigarettes and other tobacco products affects several sectors of the economy, providing jobs and profits. The sale 7 ° TIMN 218253