Public Health

Thursday, June 14, 2012

CBO: Reducing Smoking Would Raise Medicare, Social Security Spending

Increasing the federal excise tax on cigarettes by 50 cents per pack eventually would increase Medicare and Social Security spending, because smokers would be healthier and live longer, according to a Congressional Budget Office report released Wednesday, the Fiscal Times reports (Pianin, Fiscal Times, 6/14).

The report found that the tax increase would create short-term deficit reductions. However, by 2085, the costs associated with individuals living longer and consuming more Medicare and Social Security services would outweigh the health benefits and tax revenues, causing the deficit to increase slightly.

According to National Journal, the findings contradict the common wisdom that preventing disease is less costly than treating it over the long term (Sanger-Katz, National Journal, 6/13).

Tax Increase Would Have Largest Effect on Teenagers

The report also estimated that a 50-cent tax increase would raise the price of cigarettes by about 10% and would have the largest effect on whether teenagers smoked, CQ HealthBeat reports. CBO estimates that after a few years the tax would cause a 5% decline in smokers ages 12 to 17.

What's Next

The report was requested by Sen. John Rockefeller (D-W.Va), chair of the Finance Committee's health panel. Rockefeller did not say whether he would use the report to push for a higher tobacco tax. However, aides said the report demonstrates that higher cigarette taxes have health benefits, in terms of reducing disease rates, such as asthma, emphysema and cancer (Bunis, CQ HealthBeat, 6/13).

Reader Comments:
  • 14
  • 06/23/2012
  • Tim Colling

Susan: You said, "Hopefully, our technical and human progress in caring for elders will improve and thus cost less."

Costs for care technologies almost always increase, not decrease. The only way to lower the overall cost of care for government is to ration it, withhold it altogether, or make someone else pay for it, like employers.

Usually, employers are government's favorite chump to stick with these costs, but that just increases inflation for everyone as employers have to pass on those costs in the form of higher prices.

People have forgotten that there's no such thing as a free lunch. If you give or promise something to someone, you have to either pay for it yourself or have the power to take money from someone else to pay for it.

  • 13
  • 06/23/2012
  • Tim Colling

Susan: You said, "You said, "In addition, with greater longevity, people may not perceive dying as the enemy and may be more willing to forego the very expensive end-of-life care that many people receive today. "

That's easy to say when it's not YOU or YOUR FAMILY MEMBERS who we're talking about. I take care of very elderly and sometimes very sick individuals in my work.

I can tell you from experience that the majority of people facing their own end of life or that of their parents don't view the situation in the sort of "enlightened" way that you describe. Instead, quite the opposite is usually true: people facing death and their families treasure their lives and they cling to life tenaciously.

  • 12
  • 06/23/2012
  • Tim Colling

Susan: You said, "As we progress in treatment of many problems, we may be able to assume that the costs of those diseases/treatments may also be reduced."

Unfortunately, the opposite is true. As we learn more and more about how to diagnose and treat people, there are more and more ways to spend money doing those things. We create more opportunities to spend, not fewer.

  • 11
  • 06/23/2012
  • Tim Colling

Jason: sounds like we pretty much agree. The idea that health care is an "entitlement" is a relatively new one. It was relatively easy (i.e. inexpensive) for politicians to make it an entitlement at first, but now that the true cost of doing so is so huge, they are looking for any way possible to shift the cost to others or to backpedal on how much care is actually available.

  • 10
  • 06/22/2012
  • Susan Pfettscher

Yes, this finding does defy the principle that "prevention is cheaper than treatment." Longevity, however, may not be that much more expensive re: healthcare costs. As we progress in treatment of many problems, we may be able to assume that the costs of those diseases/treatments may also be reduced. In addition, with greater longevity, people may not perceive dying as the enemy and may be more willing to forego the very expensive end-of-life care that many people receive today. Hopefully, our technical and human progress in caring for elders will improve and thus cost less.



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