The Return on Investment of a Medicaid Tobacco Cessation Program in Massachusetts

Background and Objective: A high proportion of low-income people insured by the Medicaid program smoke. Earlier research concerning a comprehensive tobacco cessation program implemented by the state of Massachusetts indicated that it was successful in reducing smoking prevalence and those who received tobacco cessation benefits had lower rates of in-patient admissions for cardiovascular conditions, including acute myocardial infarction, coronary atherosclerosis and non-specific chest pain. This study estimates the costs of the tobacco cessation benefit and the short-term Medicaid savings attributable to the aversion of inpatient hospitalization for cardiovascular conditions. Methods: A cost-benefit analysis approach was used to estimate the program's return on investment. Administrative data were used to compute annual cost per participant. Data from the 2002–2008 Medical Expenditure Panel Survey and from the Behavioral Risk Factor Surveillance Surveys were used to estimate the costs of hospital inpatient admissions by Medicaid smokers. These were combined with earlier estimates of the rate of reduction in cardiovascular hospital admissions attributable to the tobacco cessation program to calculate the return on investment. Findings: Administrative data indicated that program costs including pharmacotherapy, counseling and outreach costs about $183 per program participant (2010 $). We estimated inpatient savings per participant of $571 (range $549 to $583). Every $1 in program costs was associated with $3.12 (range $3.00 to $3.25) in medical savings, for a $2.12 (range $2.00 to $2.25) return on investment to the Medicaid program for every dollar spent. Conclusions: These results suggest that an investment in comprehensive tobacco cessation services may result in substantial savings for Medicaid programs. Further federal and state policy actions to promote and cover comprehensive tobacco cessation services in Medicaid may be a cost-effective approach to improve health outcomes for low-income populations.