🚀 go-pugleaf

Fred Winterer (bankreef@ais.net) wrote:

: Dr Alexander Grey wrote:
: 
: > Smoke longer, live shorter!,...die happy, save tax payers money,
: > 
: > The cost of supporting Americans who live longer outweighs the
: > medical costs of smokers who die early.

: -- Unless you're speaking with tongue in cheek, pease supply the
: data to support your allegations. --

Gladly.


Numerous "studies" purport to show that smokers are costing "society"
amounts which vary from 22 cents to $4.80 for each pack they smoke.
That the estimates vary so widely is already a clue that the authors
select data which pleases them and ignore the rest.

Apart from accidents, smokers and nonsmokers alike die mostly from
heart disease, cancer and strokes. Smokers just get them sooner, on
average. By living longer, non-smokers incur more in medical and old
age expenses, not less. In addition, smokers' shorter lifespans mean
they cost less in Social Security and pensions. Finally, they pay more
taxes during their lives. Thus it can be shown that smokers, rather
than costing money, actually pay into the system more than they take
out.

Stanford economist Timothy Taylor, an anti-smoker, made these points
in the San Jose Mercury News, March 7, 1994, and agrees that tobacco
taxation cannot be justified by the social cost theory.

In a recent paper for the National Bureau of Economic Research, Duke
University economist W. Kip Viscusi calculated a net saving to society
of 83 cents per pack.

In 1995, the non-partisan Congressional Research Service updated a
1986 Manning study on smoking costs originally published in the
Journal of the American Medical Association. The CRS recalculated
Manning's 1986 dollars into 1995 dollars by using the GNP deflator for
some costs and a medical services index for others, recognized
increased cigarette taxes and added ETS effects. The result: a net
saving to society of 15 cents per pack in 1986 became 33 cents per
pack in 1995.

But what of the Centers for Disease Control's much-publicised figure
of $50 billion? A proper economic analysis must include ALL external
costs: health care, sick leave, life insurance, nursing care, pension,
fires and effect (if any) of ETS. The  CDC arrived at their $50
billion figure as follows:

	EXPENSES
	$26.9 billion, hospitals
	$15.5 billion, doctors
	$4.9 billion, nursing homes
	$1.8 billion, prescription drugs
	$900 million, home health care

	TOTAL
	$50 billion

	PER PACK
	$2.06

	TAXPAYER BILL
	$21.6 billion, or 89 cents per pack 

What is important in this list is what is not there. No mention is
made of offsetting taxes, nor of social security savings, nor of the
extra cost of old age.

Also, they produced the numbers above not by adding up what was
actually paid, but by adding up the the total list price of procedures
recommended by the book for such illnesses as they declared were
caused by smoking. In real life many of the procedures are skipped,
what is actually paid by insurance companies is a discounted amount,
and some illnesses go largely or completely untreated. As a result,
the "costs" they used bear little resemblance to those of Taylor,
Viscusi, Manning or the CRS.

A recent issue of the New Yorker magazine had a short article on
smoking and health costs. Its take-off point was the recent Florida
law which authorizes the State to sue tobacco companies for its cost
of providing health care to smokers. Some of the arguments seem worth
quoting:

   ...there is something slightly off about Florida's arithmetic -- and,
   more broadly, about the whole notion of health care as an exercise in
   bargain-hunting. Florida says that it has spend a billion two hundred
   million dollars over the past five years in Medicaid payments for
   smoking-related illnesses. But that figure is misleading. While
   smokers use a lot of state-sponsored health care, and about three and
   a half billion dollars a year of federal Medicare money, they also
   tend to die around five years earlier than nonsmokers. That means five
   fewer years of the heavy health-care burdens of old age, five fewer
   years of nursing-home care, and five fewer years of drawing a federal
   pension.

   In fact, for those inclined to such ghoulish calculations, the easier
   case to make is that smokers save society money. Around a third of the
   Americans who die from smoking related causes die before the age of
   sixty-five, and that means that after paying into Social Security
   throughout their working lives many of them will collect little or
   nothing from it. In effect, they subsidize the pensions of nonsmokers.
   How great is the subsidy? The shortened life span of just those
   smokers born in 1920, according to a recent study by three Stanford
   University researchers, will end up saving the Social Security system
   fourteen and a half billion dollars. All told, they conclude, smoking
   will reduce the obligations of the system by 'hundreds of billions of
   dollars.' And, while it's true that smokers are out sick more
   frequently than their more virtuous fellowcitizens, it's also true,
   alas, that illness and death, with their attendant costs to the health
   industry, come to us all.

And the French have discovered the same thing:

   PARIS (AP) -- Smoking, long considered a costly health care burden,
   actually reaps the government an annual profit, according to a study
   released Friday by Paris' Institute of Political Science. High tobacco
   taxes and social security savings gained by premature deaths made the
   French government a net profit of 18.5 billion francs (dlrs 3.5
   billion) in 1990, the study revealed.
   
   The study, by Professor Jean-Jacques Rosa, attacks the idea that
   smoking creates "a considerable social cost." "Premature deaths of
   retired smokers benefit society because the government no longer has
   to pay their social security benefits or their healthrelated
   expenses," the professor said.
   
   According to the study, French smokers have a life expectancy of about
   67 years, which is six years less than the average French citizen. The
   study estimated smokingrelated medical expenses to cost the government
   about 26.5 billion francs ($5 billion).

   However, the combined profits from tobacco taxes and the annual
   savings brought about by premature deaths total about 44.9 billion
   francs ($8.5 billion). "Consuming alcohol and tobacco, just like
   reading or going to the movies, must be left to individual choice, and
   not be considered a social cost," Rosa said.

Finally, an article on the Viscusi study from the San Jose Mercury
News (3/27/95):

   Study Looks at Who Pays for Costs Cigarette Smokers Impose on Society
   By David Ress, Richmond Times-Dispatch, Va. Knight-Ridder/Tribune
   Business News

   Mar. 27--If there's no such thing as a free lunch, is it possible to
   at least get a free smoke?

   Nope, says Duke University economist W. Kip Viscusi. In a recent paper
   for the National Bureau of Economic Research, Viscusi took a hard look
   at the question of who pays for the costs smokers impose on society.

   These include additional health-care costs, passed on to everyone in
   the form of higher health insurance premiums and taxes for Medicare.
   They include additional sick days at work; more fire risks and higher
   group life insurance rates.

   Viscusi calculated the additional health-care costs for smokers at the
   equivalent of about 55 cents for every pack of cigarettes bought in
   the United States.

   The added sick days, he figures, aren't that big a deal: he estimates
   they cost society the equivalent of a penny a pack.

   Viscusi pegs the extra fire risk at about two cents a pack. This risk
   comes from those who smoke in bed or never listened to what Smokey
   Bear said about pitching lighted cigarettes in the woods.

   The economist puts the added cost to group life insurance policies at
   14 cents a pack.
 
   That adds up to social costs of 72 cents a pack. The federal
   government collects 24 cents a pack in excise taxes, and the states
   average another 29 cents. Taken together, that suggests 19 cents a
   pack of costs to society that cigarette taxes aren't paying.

   For Virginia, with its 2.5 cent-a-pack cigarette tax, the shortfall
   would be more like 45.5 cents a pack.

   But wait. Smokers don't live as long as nonsmokers. That, says
   Viscusi, means they spend less time than nonsmokers do in nursing
   homes. That's a saving to society equal to 23 cents a pack.

   Smokers don't collect pensions and Social Security for as long as
   nonsmokers do, Viscusi adds. There's a saving to society equivalent to
   $1.19 a pack.

   Society does lose out, though, in tax collections. If smokers lived
   longer, the additional taxes they'd pay on their income would
   translate to the equivalent of about 40 cents a pack.

   Overall, though, as Viscusi counts it, the cigarette taxes smokers pay
   more than compensate the rest of us for the additional costs they
   impose on society.

Viscusi's bottom line: a net saving to society of 83 cents per pack.

But what of absenteeism?. This is largely a result of excessive
drinking and ensuing hangovers. Based largely on socio-economic
differences, a higher proportion of smokers drink than non smokers.
Accordingly, if you survey absent workers and ask only the question
"Do you smoke?", smokers will appear to be absent more often. But it
is alcohol which is primarily responsible. If only non drinking
absentees were surveyed, there would be no correlation between smoking
and absenteeism.

Apart from being wrong as to fact, however, the social cost arguments
depend on a dangerous proposition: that when society, through taxes or
insurance, shares costs and spreads risks it thereby becomes entitled
to regulate, control and even prohibit behaviors deemed "costly". This
is the perfect principle with which to transform a free society into a
nation of brothers' keepers, since there is virtually no human
activity to which it cannot be extended.

-- 
"Man will occasionally stumble over the truth, but most of the time
 he will pick himself and continue." 
                     - Winston Churchill