New England Journal of Medicine Commentary Argues Against Cigarette Tax Increase Because It Would Save So Many Lives that Payments for Social Security Would Increase

A commentary published yesterday in the New England Journal of Medicine argues against a federal cigarette tax increase because it would save so many lives that tens of thousands of people would live longer, resulting in increased Social Security and Medicare payments years later.

(See: Baumgardner JR, Bilheimer LT, Booth MB, Carrington WJ, Duchovny NJ, Werble EC. Cigarette taxes and the federal budget -- report from the CBO. New England Journal of Medicine 2012; 367:2068-2070.)

The authors, from the Congressional Budget Office (CBO), estimate the effects of a 50 cent per pack increase in the federal cigarette tax on the federal budget over a 70-year period. They find that while health care spending would substantially decrease, this effect would eventually be offset by increases in Social Security and Medicare spending because tens of thousands of people would live longer and thus be eligible for these programs.

The authors conclude that: "By 2035, some 63,000 additional adults would be alive because of the higher cigarette tax. And by 2085 (the final year of the analysis), more than 3 million adults would be nonsmokers because of the policy, including about 200,000 who would otherwise have died earlier."

However, they also find that: "The reduction in federal outlays would total $730 million over the period between 2013 and 2021. During the second decade, however, the effects on longevity would begin to dominate and federal spending would be higher than it would have been otherwise — an effect that would continue through 2085. The two principal drivers of that increase in spending would be Social Security and Medicare. Improvements in longevity from a reduction in smoking tend to have their greatest effect on the size of the elderly population and thus tend to boost spending on programs aimed at that population."

The Rest of the Story

This is one of the most perverse policy analyses that I have ever seen, and it is certainly the most perverse one that I have ever seen published in a medical journal. The authors are actually putting forward the argument that a major consideration in public health policy should be the fact that by saving tens of thousands of lives, a policy may result in increased spending for Social Security and Medicare because people will live longer.

Can you imagine the same argument being put forward regarding an analysis of whether the federal government should require health insurance companies to cover mammography? Would anyone in their right mind advance the argument that we should not require coverage for mammography screening because it would save the lives of thousands of younger women, therefore increasing Social Security spending because they will now live to be 65, rather than dying in their 40s or 50s and thus not becoming a drain on the system?

Should we consider that by requiring insurance companies to cover costly treatments for acute leukemia in children, the federal deficit could be affected because large numbers of children who otherwise would have died will now live long enough to enjoy their senior years and having children and grandchildren of their own?

Should policy makers consider that by instituting flu clinics for senior citizens they may be saving tens of thousands of lives per year, and therefore increasing Social Security and Medicare costs from what they would have been if these seniors contracted the flu and pneumonia and died off?

The fiscal effects of prolonged life on future Social Security and Medicare payments is simply not an appropriate criterion upon which to evaluate public health policies. Decisions about funding Social Security and Medicare must be kept separate from decisions about interventions to improve the public's health. If a public health program results in saving lives and people living longer, than it is the government's responsibility to find methods to raise the revenue necessary to provide Social Security and Medicare payments when these people reach age 65. The decisions must be kept separate.

Interestingly, one does not see the CBO or other groups advancing this same argument for other issues, such as mammography. The argument is almost always reserved for tobacco policies. In fact, the argument was developed by the tobacco industry, which in 2001, advanced the argument that smoking in the Czech Republic had net economic benefits for the economy because smokers die earlier. The report was attacked internationally, forcing Philip Morris to disavow the report and apologize.

The rest of the story is that it is despicable that the Congressional Budget Office believes that it is appropriate to evaluate a public health policy based on whether it might save lives and therefore increase Social Security and Medicare spending. In doing so, the CBO is borrowing a page right out of the tobacco industry's playbook. This type of analysis would never be done for an issue such as mammography, because anyone who advanced such an argument would be raked over the coals.

Like Philip Morris, the CBO should disavow its report and apologize for the argument it advances.

Finally, while it is shameful that the CBO has advanced this argument, it is also shameful that the journal agreed to publish this argument, thus giving it legitimacy. Both the CBO and the journal owe readers and the public an apology.