Tobacco-free states spend less on Medicaid

America's Medicaid system could spend nearly $10 billion less within five years if all Medicaid beneficiaries who smoke, quit. A new study released today by the American Legacy Foundation found that effective smoking prevention and cessation programs could cut Medicaid costs by 5.6 percent.

The report, Saving Lives, Saving Money II, was conducted by RTI International and funded by the foundation. This report updates Legacy's 2002 report Saving Lives, Saving Money: Why States Should Invest in a Tobacco-Free Future, that presented estimated savings to state Medicaid programs associated with reductions in adult smoking rates. The 2007 report presents a powerful new analysis of the costs of smoking to state Medicaid programs over the course of the lives of a cohort of young smokers. The methodologies used in the two reports differ and estimates are therefore not comparable.

According to the report, Medicaid spending attributable to current smoking ranges from $15 million in Wyoming to $1.5 billion in New York. Across all of the states, Medicaid expenditures would be $9.7 billion lower if all smokers in the system successfully quit.

"This report is a wake up call to the nation's health policy makers," said Janet Napolitano, Governor of Arizona and a board member of the American Legacy Foundation. "All of us who are struggling with the ever-rising costs of Medicaid should take these dramatic findings to heart. With more than 8.6 million Americans suffering from tobacco-related disease, and tobacco remaining the number one preventable cause of death in our nation, we must help smokers quit. These data make clear that investing in proven tobacco cessation programs is sound fiscal and public health policy. We can - and must - take the necessary steps to save both lives and taxpayer dollars."

The study went on to examine how much Medicaid programs would save over the course of young smokers' lives if they never smoked. If states could prevent all smoking among current 24-year-olds, Medicaid savings over their lifetimes would be between $1.4 million (in Alaska and Vermont) and $125 million (in Texas).

Another of the report's findings highlights a significant difference in the net cost of smoking for men versus women. Over the lifetime of a male smoker, the net cost of smoking to Medicaid is $6, but for women -- who make up 69 percent of Medicaid recipients - the cost is $1,372.

"This study underscores the need for strong and effective smoking prevention and cessation campaigns," said Cheryl G. Healton, Dr. PH, president and CEO of the American Legacy Foundation. "We hope that this report will serve as a tool for states to use when setting both long and short-term goals for reducing Medicaid expenditures associated with tobacco use."

"Reducing the number of smokers in the United States could save taxpayers billions of dollars in Medicaid costs," said Justin Trogdon, Ph.D., a health economist at RTI International and author of the report. "Policymakers looking for ways to reduce health care costs in America would be wise to look at areas of health behaviors that both improve health and reduce health care costs."

Smoking remains the country's leading preventable cause of death. New data released earlier this month by the U.S. Centers for Disease Control and Prevention (CDC) showed that smoking rates are no longer on the decline with 45.3 million adults reporting smoking in 2006. Adult smoking rates in the U.S. have stalled for a second year in a row, after a 7-year smoking decline.

The CDC reported that 20.8 percent of adults in the U.S. (45.3 million) were current cigarette smokers in 2006 and of these adults, 80.1 percent (36.3 million) smoked every day. Most smokers in America - 70 percent - say they want to quit, but in 2000, only about five percent were successful in quitting long-term.

The American Legacy Foundation(R) is dedicated to building a world where young people reject tobacco and anyone can quit. Located in Washington, D.C., the foundation develops programs that address the health effects of tobacco use, especially among vulnerable populations disproportionately affected by the toll of tobacco, through grants, technical assistance and training, partnerships, youth activism, and counter-marketing and grassroots marketing campaigns. The foundation's programs include truth(R), a national youth smoking prevention campaign that has been cited as contributing to significant declines in youth smoking; EX(R), an innovative public health program designed to speak to smokers in their own language and change the way they approach quitting; research initiatives exploring the causes, consequences and approaches to reducing tobacco use; and a nationally-renowned program of outreach to priority populations. The American Legacy Foundation was created as a result of the November 1998 Master Settlement Agreement (MSA) reached between attorneys general from 46 states, five U.S. territories and the tobacco industry. Visit http://www.americanlegacy.org/.