Tobacco Documents Online

of cigarettes also yields significant tax revenues for the Federal, state, and local governments. The effects that measures to reduce smoking would have on the U.S. economy,and government tax revenues will not be discussed in this Memo. In general, throughout this Staff Memorandum, OTA has been "conservative" in its choice of assumptions. Estimates of mortality are limited to only the three major groups of smoking-related disease. The assumptions employed in this analysis will, in most cases, lead to underestimates of the extent of smoking-related disease. The estimates presented here should thus be considered minimum estimates. PREVIOUS ESTIMATES OF SMOKING-RELATED DISEASE Table 3 presents the range of attributable risk estimates for smoking- related disease. "Attributable risk" is a concept from epidemiology. Put most simply, attributable risk is the fraction or percentage of disease that is associated with a specified risk factor and that would not have occurred in the absence of the risk factor. In this case, the risk factor is smoking of tobacco products, most generally cigarettes. As used in this paper, the attributable risk for smoking is the percentage of deaths in a given year that would not have occurred if no one had smoked. The fraction of major diseases attributed to smoking ranges from 20 to 40 percent of cancers, 11 to 25 percent of cardiovascular disease, and 20 to 40 percent of all respiratory system disease (including 80-90 percent of 8 % TIMN 218254

Table 3 Previous estimates of attributable risks for smokingl Source Cancer Deaths Cardio- Respir- Diges- Deaths Total vascular atory tive from Peri-natal Smoking- Year estimate Disease Disease Disease Injuries Deaths Related applies to Deaths Deaths Deaths Deaths --•-------------------------------------•-----------...------•-------------------------•-------- ...--------------- Kristein (1977) 30% 15% 33% Luce & Schweitzer (1978) 20% 25% 40% -- 1% (1976) Richter & Gori (1980) •-6 30%2 85%3 Rice & Hodgson (1983) 22% 16% 20% 16% -- -- 290,313 (1980) Leu & Schaub (1983b) •-7 20%/6%1,2 67%/16%1,3 Ravenholt (1984) 35% 24% 57% 39% 4% 9% 485,000 (198D) Minn. Health Dept. (1984) 24% 11% 39% 8% 1% 13% 5,0009 (1981) Lewit (1984) 20-30% 20% 40% (1964-84) Enstrom (1979) 38%10 Hammond & Seidman (1980) 35%/5%1 (1967-71) Doll & Peto (1981) 30% 122,0485 (1978) Whyte '(1976) Surgeon General (1979) -- •- 16%2.8 -- -- 346,000 Surgeon General (1982) 30% •- -- 129,0005 (1982) Surgeon General (1983) - up to 30%2 -- 170,0002 (1983) Surgeon General (1984) -- -- 80-90%4 50,0004 (1983) American Cancer Society (1985) 29% -- -- 320,000 (1985) ---------------------------------------------------------------------------------------------------- -------------- Source: Office of Technology Assessment, based on cited sources. 9 , TIMN 218255

Table 3 (continued) Previous estimates of attributable risks for smokingl NOTES N.B.: ALL percentages have been rounded to the nearest whole number percent. Dashes indicate that no estimate was made for that category. Unless indicated otherwise, attributable risk estimates are for males and females combined. 1 First figure is for males; the second for females. 2 Heart disease deaths only. 3 Bronchitis & emphysema deaths only. 4 Chronic obstructive Lung disease deaths only. 5 Cancer deaths only. 6 Richter & Gori gave no overall percentage for cancer deaths. Site-specific cancer estimates were: Male: Trachea, bronchus, & lung--90%, Oral cavity--70X, Larynx--50Y, Espohagus--40/G, Pancreas--35%, Bladder--50X, Kidney--25X Female: Trachea, bronchus, & lung--85X, Oral cavity--70%, Larynx--50X, Espohagus--20X. Pancreas--35Y., Bladder--30x, Kidney--15X They also estimated that 33% of arteriosclerosis in both males and females to be attributable to smoking. 7 Leu & Schaub gave no overall percentage for cancer deaths. Site-specific cancer estimates were: Male: Trachea, bronchus, & lung--83X, Oral cavity--40X, Larynx--47X, Esophagus--34%, Pancreas--44'6, Bladder--30%. Female: Trachea, bronchus, & lung--22x, Oral cavity--19X, Larynx--20%, Esophagus--15%, Pancreas--OX, Bladder--OX. They also attributed 45% of male aortic aneurysm deaths, and 53% of male and 18% of deaths from other peripheral vascular disease to smoking. 8 Whyte also attributed 24% of first coronary events to smoking. 9 Deaths in Minnesota only. 10 Estimated by Doll & Peto (1981) from tables in Enstrom (1979) 10 ~ TIMN 218256

chronic obstructive lung disease)2. Some analysts have also attributed to smoking some deaths from digestive system disease (e.g. stomach and duodenal ulcers), accidental injuries (e.g. fires), and perinatal mortality (mothers who smoke during pregnancy tend to have higher rates of miscarriages and lower birthweight babies). In general, a factor of 2 or 3 separates the lower end of each range from the upper. But because the number of total deaths in each of these categories is quite large, the difference between an estimate based on the lower bound and one based on an upper can amount to tens of thousands of deaths. Also shown in Table 3 are estimates of the number of deaths from smoking-related disease. These range from about 300,000 deaths each year to 485,000. The Surgeon General's reports on smoking'have, in the last fdw years, presented estimates of 129,000 deaths from cancer, 170,000 deaths from heart disease, and 50,000 deaths from chronic ob'structive lung disease. Together, these total to about 350,000 deaths annually. PREVIOUS ESTIMATES OF SMOKING-RELATED DISEASE COSTS Generally, two broad categories of costs--direct and indirect--have been considered in making estimates of disease costs. The direct costs are goods and services that are used in caring for and treating those with disease. Usually, the only direct costs that are estimated are those directly associated with medical care. Indirect costs are generally represented by the lost productivity of those who suffer from disease. Lost productivity is most 2 Chronic obstructive lung disease is a general category of disease that includes chronic bronchitis, emphysema, and asthma. Physicians completing death certificates now more commonly use this general category, rather than referring specifically to bronchitis or emphysema. 11 6 TIMN 218257

commonly measured using lost wages, often with some adjustment for the household services provided by housewives, and usually includes the lost productivity from work,loss during illness and future earnings lost due to premature death. The literature on the cost of illness has used two different approaches to estimate direct and indirect costs. In the prevalence approach, all medical costs are attributed to the year in which the money is actually spent. In the incidence approach, present and future medical costs3 are attributed to the year in which the disease first becomes manifest. Thus, if the course of a disease involves medical treatment over three different years before the patient dies, the prevalence approach would assign the costs separately to each year. The incidence approach, on the other hand, would calculate 'a present value for the stream of costs over the three-year period, and assign that single sum to the first year the disease was treated. For diseases that involve less than one year of treatment, the two approaches are essentially the same. For indirect costs, the prevalence approach assigns the costs of lost productivity due to morbidity to the year in which the productivity is lost. In the prevalence approach, the future earnings lost due to mortality are discounted and assigned to the year of death. In the incidence approach, all indirect costs due to morbidity and the lost future earnings due to mortality are discounted and assigned to the year the disease is first manifest. 3 These are expressed as present values, i.e. they have been discounted to take account of the time value of money. Even in an economy with stable prices, a dollar today is worth more than a dollar tomorrow. This is so because with a dollar today, an investment can be made to earn a return and because people prefer present consumption to future consumption. The appropriate rate of interest to use for discounting future effects, however, has been a matter of some dispute. 12 g TIMN 218258

The landmark work of Rice and her colleagues (Rice, 1967; Cooper & Rice, 1976), which discussed the costs of all diseases, used the prevalence approach, as does the most recent update of this method by Hodgson and Kopstein (Hodgson & Kopstein, 1984). Only recently have researchers tried to implement the incidence approach. For example, Hartunian and colleagues, have measured and compared the costs of coronary heart disease, stroke, cancer, and motor vehicle injuries (Hartunian, et al., 1981). Table 4 presents previous estimates of the costs of smoking. Hedrick, who prepared one of the earliest estimates, used the results of a study of the costs of smoking in Canada. The estimated cost of $278 million associated with lung cancer, coronary heart disease, chronic bronchitis and emphysema was increased by 50 percent to take account of diseases not included. After adding in estimates of the costs of morbidity and of fires (from the Canadian study), the total amounted to $526.5 million. An estimate of U.S. costs was made by multiplying this figure for Canadian costs by 10--the ratio of the U.S. Gross National Product to that of Canada (Hedrick, 1971). The most commonly cited estimate of the costs of smoking is one prepared by Luce and Schweitzer (1978). Following the prevalence approach, they used the Cooper and Rice (1976) cost of illness statistics for the year 1972, inflated them to 1975 dollars,4 and then attributed 20 percent of the costs of neoplasms, 25 percent of circulatory system disease costs, 40 percent of respiratory system disease costs, and 1.1 percent of the health care costs 4 Using the medical care component of the Consumer Price Index (for medical costs) and the Gross National Product Implicit Price Deflator (for lost earnings. 13 t TIMN 218259

s Table 4 0 Previous Estimates U.S. Smoking-related Disease Costs (in billions of dollars) Direct Indirect Source Health Care Productivity Costs Costs (year) (year) Direct Indirect Health Care Productivity Costs Costs (1985)1 (1985)2 Hedrick (1971) -- 5.3 -- (1966)3 Williams & Justus 4.2 23.9 (1974) (1970)4 Freeman, et al. 1.5 8.6 -- (1976) (1970)5 Luce & Schweitzer 8.2 19.1 23.0 33.6 (1978) (1976) (1976) Catifano (1979) 5-8 12-18 10-16 17-25 (1979) (1979) Wolfe (1977) 7.1 11.8 19.9 20.8 (1976) (1976) Kristein (1977) 5.2 15.1 16.6 28.5 (1975) (1975) Rice & Hodgson 16.1 26.1 27.4 34.3 (1983) (1980) (1980) Lewit (1985) 14.2 32.4 16.9 35.6 (average 1964-1983, in 1983 dollars) (average 1964-1983) Lewit (1985) 284.5 647.3 338.6 712.0 (total 1964-1983, in 1983 dollars) (total 1964-1983) ......................................... -..................................... Source: Office of Technology Assessment, based on cited sources. 14 k TIMN 218260

Y Table 4 (continued) Previous Estimates U.S. Smoking-related Disease Costs NOTES 1 Adjusted to 1985 dollars using the change in total expenditures for personal health care in the U.S. Values for 1970 to 1983 were taken from Table 2, "National health expenditures, by type of expenditure," in R.M. Gibson, K.R. Levit, H. Lazenby, & D.R. Waldo, "National Health Expenditures, 1983,1' Health Care Financing Review 6(2):1- 29, Winter 1984. The value used for 1985 ($372.8 billion) is the latest available projection for personal health care expenditures from the Health Care Financing Administration (R. Arnett, personal communication, 1985). 2 Adjusted to 1985 dollars using the change in average weekly earnings. Values for 1970 to 1983 were taken from the data on hours and earnings of production workers on private, nonagricultrual payrolls published in Emplovment and Earnings, March 1985, Table C-1. The value for 1985 was estimated, assuming a 5 percent increase in average weekly earnings from 1984 to 1985. 3 Direct and indirect costs were not presented separately. 4 Respiratory disease only. 5 Emphysema only. 15 TIMN 218261

and lost earnings from accidents (for the fire-related injuries).5, The total estimated health care costs were about $8.2 billion, which, according to their calculations represented 7.8 percent of the total health care expenditures in the U.S. The indirect costs of lost earnings amounted to $6.2 billion for morbidity, and 12.9 billion for mortality. Their total, including property losses, was $27.5 billion.6 Then HHS Secretary Joseph Califano, in the forward to the 1979 Surgeon General's report on smoking, estimated that smoking resulted in $5-8 billion in health care expenses--2.5 to 4 percent of the Nation's health care costs of $205 billion. Lost productivity, wages, and absenteeism due to smoking related illness were estimated to amount to $12-18 billion. Sidney Wolfe estimated the morbidity, mortality, and direct health care costs of smoking to be $18.94 billion in 1976. The morbidity costs were calculated using the results of a Department of Health, Education, and Welfare study that found that 19 percent of days lost from work were related to smoking. This resulted in a figure of $2.96 billion. To this he added $1.18 billion to account for morbidity among those unable to work, for a total morbidity cost of $4.14 billion. Mortality costs and direct medical care costs were estimated using attibutable risks derived from a National Science Foundation report. Mortality costs amounted to $7.7 billion. Direct health care costs were estimated to be $.93 billion for cancers, $1.99 billion for cardiovascular disease, and $1.67 billion for respiratory disease in 1972. An adjustment for the increase in medical costs between 1972 and 1976 resulted in an estimate of $7.1 billion for 1976 (Wolfe, 1977). 5 They also included and estimate of the value of property lost in smoking- related fires. 6 Including $176 million for property costs due to fires. 16 6 TIMN 218262

Marvin Kristein derived his estimate of health care costs from information that implied that smokers of one or more packs per day had a 50 percent greater hospitalization rate than non-smokers. Using data on the number of such smokers in 1975, and the total national spending on health care, he calculated that smokers used $5.2 billion in health care services in 1975. -He used a National Center for Health Statistics estimate that 77 million days were lost from work in 1965 due to cigarette smoking. These he valued at $40 per day to generate an estimate of $3.1 billion in lost productivity due to morbidity. Using an estimate that 300,000 deaths in 1975 were associated with smoking, he calculated that the lost earnings amounted to $12 billion (Kristein, 1977). In a second article, Kristein estimated the costs of smoking borne by business firms for the "average" smoker. He included estimates of the costs of health insurance, fire losses, workers' compensation, absenteeism, productivity losses, and involuntary exposure to tobacco smoke. Added together, these amounted to between $336 and $601 (1980 dollars) per smoker (Kristein, 1983). Oster and colleagues estimated the costs of smoking-related cases of lung cancer, coronary heart disease, and chronic obstructive pulmonary disease using the incidence approach (Oster, et al, 1984). They, however, only estimated the average costs for age and sex-specific groups of smokers. For example, men aged 40-44 who smoke more than two packs per day incur, on average, a discounted total of lifetime costs of $56,670 in direct medical care costs and indirect costs due.to lost productivity compared to non-smokers 17 TIMN 218263 b