Study: E-Cigarettes Could Save Government Billions in Health Care Costs

High smoking rates among Medicaid recipients.

Electronic cigarettes are an effective smoking cessation aid that could save Medicaid billions of dollars a year.

A review of current literature has found that e-cigarettes have the potential to save billions of dollars in Medicaid expenditures related to cigarette smoking. Among all smoking adults in the United States, the total cost of direct medical care due to smoking totals almost $170 billion.

The review, written by J. Scott Moody, chief economist of State Budget Solutions, estimates that a smoking cessation program for Medicaid recipients — one that used e-cigarettes — could have saved Medicaid roughly $48 billion in 2012. Fifty-one percent of Medicaid recipients are smokers, compared with 21 percent of the general population.

Smoking has been linked to half of the deaths caused by the 12 most common cancers, and together with secondhand smoke, causes 1,300 deaths every day. There are numerous health complications associated with smoking, including cancer, stroke, diabetes, respiratory disorders, and many more.

The annual cost in lost productivity in a smoking population also is very high. Among smokers, lost productivity due to smoke breaks and sick days totaled around $185 billion in 2005.

Moody makes a case for avoiding over-regulation or taxation of e-cigarettes because the cost of smoking in terms of health care and lost productivity is much greater than potential revenue from a tax on e-cigarettes.

E-Cigarettes as a Smoking Cessation Aid

Research has found that e-cigarette users can successfully quit at high rates or greatly reduce the number of tobacco cigarettes they smoke per day. A study conducted on smokers provided them with e-cigarettes, information about how to use them, and instructions on where to buy e-liquid. Nineteen percent of e-cigarette users completely quit by the end of eight months, while almost half of smokers studied had cut their smoking in half while vaping.

Another study, published in the journal Addiction, found that smokers who quit traditional cigarettes using e-cigarettes were more successful than smokers using the nicotine patch or gum.

Whether smokers quit completely or reduce the number of cigarettes smoked with e-cigarettes, the benefits are clear: reducing or quitting cigarettes with e-cigs can reduce the health complications associated with smoking cigarettes.

E-Cigarettes Threatened By Regulation And Taxation

In 2012, states collected $28 billion in revenue from taxes on tobacco products — a drop in the bucket compared to the cost of smoking in terms of medical costs and lost productivity.

Unfortunately, the public health benefits and health care savings associated with e-cigarette use and smoking cessation would not reach their full potential if e-cigarettes were to be taxed and treated like tobacco products.

It seems clear that Medicaid’s precarious financial situation would be greatly relieved by a widespread movement to quit smoking.

For smokers who are unsuccessful using other smoking cessation methods, e-cigarettes represent a life-saving opportunity to kick the habit.

A tax increase on e-cigarettes could likely discourage some smokers from making the switch to e-cigarettes. Continuing as cigarette smokers is not only bad for public health, but is bad economic policy. The amount of revenue that would be brought in by e-cigarette taxes pales in comparison to the societal costs of continued smoking.

Understanding the full costs associated with smoking cigarettes is crucial for states considering the taxation and regulation of e-cigarettes as tobacco products.

Unfortunately, many states have already made the wrong decision.

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