Economic Costs of Bads © Allen C. Goodman, 2004

Leading Cause of Preventable Death in U.S. Cigarette smoking is the leading cause of preventable death in the United States and produces substantial health-related economic costs to society. CDC calculated national estimates of annual smoking- attributable mortality (SAM), years of potential life lost (YPLL), smoking-attributable medical expenditures (SAEs) for adults and infants, and productivity costs for adults. Results show that during 1995 – 1999, smoking caused approximately 440,000 premature deaths in the United States annually and approximately $157 billion in annual health-related economic losses. Implementation of comprehensive tobacco-control programs as recommended by CDC could effectively reduce the prevalence, disease impact, and economic costs of smoking.

Methods of Analysis (1) The disease impact of smoking was estimated by using the Adult and Maternal and Child Health Smoking-Attributable Mortality, Morbidity, and Economic Costs (SAMMEC) software (4). Smoking-attributable deaths were calculated by multiplying estimates of the smoking-attributable fraction (SAF) of preventable deaths by total mortality data for 18 adult and four infant causes of death. For adults, SAFs were derived by using relative risks (RRs) for each cause of death from the American Cancer Society's Cancer Prevention Study-II (CPS-II; ) (5) and current and former cigarette smoking prevalence for two age cohorts: persons aged years and persons aged >65 years.

For infants, SAFs were calculated by using RRs of death for infants of women who smoked during pregnancy and maternal smoking rates from birth certificates for 46 states, the District of Columbia, and New York City (birth certificate data for 1995 – 1999 were not available for California, Indiana, South Dakota, and the remainder of New York). Smoking-attributable YPLL and productivity costs were estimated by multiplying age- and sex-specific SAM by remaining life expectancy and lifetime earnings data, respectively. Smoking-attributable fire deaths were included in the SAM and YPLL estimates; SAM included lung cancer and heart disease deaths attributable to exposure to secondhand smoke. Methods of Analysis (2)

CDC Viewpoint Cigarette smoking continues to be the principal cause of premature death in the United States and imposes substantial costs on society. For each of the approximately 22 billion packs sold in the U.S. in 1999, $3.45 was spent on medical care attributable to smoking, and $3.73 in productivity losses were incurred, for a total cost of $7.18 per pack. These costs provide a strong rationale for increasing funding for comprehensive tobacco-use interventions to the levels recommended by CDC. In California, decreases in smoking prevalence have resulted in reduced lung cancer and heart disease death rates. These results offer evidence of the potential benefits of expanding comprehensive tobacco-control programs in an effort to reduce current smoking prevalence by 50% by 2010.

References CDC. Smoking-attributable mortality and years of potential life lost---United States, MMWR 1997;46: Max W. The financial impact of smoking on health-related costs: a review of the literature. Am J Health Promot 2001;15: CDC. Best practices for comprehensive tobacco control programs---August Atlanta, Georgia: U.S. Department of Health and Human Services, CDC, CDC. Smoking-attributable mortality, morbidity, and economic costs (SAMMEC): adult SAMMEC and maternal and child health (MCH) SAMMEC software, Available at Thun MJ, Day-Lally C, Myers DG, et al. Trends in tobacco smoking and mortality from cigarette use in Cancer Prevention Studies I (1959 through 1965) and II (1982 through 1988). In: Changes in cigarette-related disease risks and their implication for prevention and control. Smoking and tobacco control monograph 8. Bethesda, Maryland: U.S. Department of Health and Human Services, Public Health Service, National Institutes of Health, National Cancer Institute, 1997; Hall JR. The U.S. smoking-material fire problem. Quincy, Massachusetts: National Fire Protection Association, Fire Analysis and Research Division, National Cancer Institute. Health effects of exposure to environmental tobacco smoke: the report of the California Environmental Protection Agency. Smoking and tobacco control monograph 10. Bethesda, Maryland: U.S. Department of Health and Human Services, National Institutes of Health, National Cancer Institute, Miller VP, Ernst C, Collin F. Smoking-attributable medical care costs in the USA. Soc Sci Med 1999;48: CDC. Declines in lung cancer rates---California, MMWR 2000;49: Fichtenberg CM, Glantz SA. Association of the California Tobacco Control Program with declines in cigarette consumption and mortality from heart disease. N Engl J Med 2000;343: Also, Surgeon General’s 2004 Report at

Alcohol and Drugs Key issues involve defining costs. Property theft, for example, is an economic cost ONLY to the extent that it leads to increased resources needed to prevent it, or to punish perpetrators. Otherwise it is a transfer.

Substance Abuse Costs For substance abuse and substance abuse treatment, one must be careful in defining the internal and the external costs and benefits. Substance abuse imposes three major costs that are fundamentally internal to the individual and his or her family. –Reduced productivity on the job, and hence reduced earnings. –Reduced health for the individual, even if his or her earnings are not affected. –Earlier death.

Substance Abuse Costs (2) Assuming that these costs are understood, the individual and his/her family choose or choose not to treat substance abuse conditions. There are, however, external costs attributable to substance abuse. Drinking may lead to violence against other people, and drunken drivers kill innocent people on the highways. Drinking, by itself or in concert with other substance abuse, may lead to criminal activity. Pregnant women who drink risk damage to their unborn children. These items suggest that there may be a societal choice to provide alcohol and substance abuse treatments even to those who would not choose it for themselves.

Interventions Fleming and colleagues (2000) evaluated a brief intervention remedy to at-risk or problem drinking. The study was confined to problem drinkers, defined as men who consumed more than 14 drinks per week (168 g alcohol/week) and women who consumed more than 11 drinks per week (132 g alcohol/week). There are six essential components to brief intervention. Physician: 1. States his/her concern. 2. Provides specific feedback to patients on how their drinking is affecting them (e.g. elevated blood pressure, liver function problems, family problems). 3. Gives a clear recommendation about changing patients’ alcohol use. 4. Negotiates a drinking contract. 5. Provides a self-help booklet 6.Establishes follow-up procedures.

Benefits and Costs Study team assessed the benefits and costs of brief intervention, including emergency room and outpatient and inpatient hospital use, automobile accidents and traffic violations, criminal activity, alcohol and substance use, and health status measures. The costs were measured for those who participated in the intervention. The benefits are reported as avoided costs, comparing the 392 study patients with a randomized control group (382 patients). The researchers report a benefit-cost ratio of 5.6:1. The benefits included savings of $195 thousand in emergency room and hospital use and $228 thousand in avoided costs resulting from motor vehicle events and crime for a combined economic benefit of $1,151 per subject. The estimated total economic cost of the intervention was $80 thousand or $205 per study patient.

Evaluation of Evaluation This study illustrates the importance of evaluating external effects. Of the $1,151 in benefits per subject, $620, or 54% were attributable to factors external to the individual, although the authors acknowledge a wide confidence interval around this point estimate. Nonetheless, this finding suggests the importance of a public health intervention rather than a simple individual decision as to whether to get treatment. An economist also asks questions when he or she sees a benefit- cost ratio of 5.6:1. If this measured ratio is a valid one, then why do we not see these types of programs for treating large numbers of alcoholics? Indeed why aren’t the insurers demanding that such programs be established? The Fleming study finds that from the perspective of the managed care organization (excluding the external benefits) the benefit cost ratio was 3.2:1.

References Fleming MF, Mundt MP, French MT, Barry KL, Manwell LB, Stauffacher EA Benefit-cost analysis of brief physician advice with problem drinkers in primary care settings. Medical Care 38 (1): Folland S, Goodman A, Stano M. The Economics of Health and Health Care, Upper Saddle River NJ: Prentice Hall, French MT Economic evaluation of alcohol treatment services. Evaluation and programming planning, 23 (1): Goodman AC, Nishiura E, Humphreys RS Cost and usage impacts of treatment initiation: a comparison of alcoholism and drug abuse treatments. Alcohol Clin. Exp. Res., Harwood H, Fountain D, Livermore G. The Economic Costs of Alcohol and Drug Abuse in the United States, Jones KR, Vischi TR (1979) Impact of alcohol, drug abuse and mental health treatment on medical care utilization Medical Care 17: 1. Yates BT. Measuring and Improving Cost, Cost-Effectiveness, and Cost-Benefit for Substance Abuse Treatment Programs. Bethesda MD: National Institute on Drug Abuse, 1999.