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The Governmental Composition of the Insurance Costs of Smoking

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  • Viscusi, W Kip

Abstract

The estimated health risks from smoking have significant external financial consequences for society. Studies at the national level indicate that cigarettes are self-financing since external costs such as those due to illnesses are offset by cost savings associated with premature death, chiefly pension costs. This paper extends this analysis to all 50 states and considers the costs considered in the state attorneys general suits against the cigarette industry. Cigarettes are always self-financing from the standpoint of costs to each state. The extent of the cost savings is less than at the federal level. However, smokers' higher medical costs are outweighed by reduced nursing home expenditures, lower pension costs, and excise taxes, where each of these factors alone usually exceeds the medical cost effect. Copyright 1999 by the University of Chicago.

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  • Viscusi, W Kip, 1999. "The Governmental Composition of the Insurance Costs of Smoking," Journal of Law and Economics, University of Chicago Press, vol. 42(2), pages 575-609, October.
  • Handle: RePEc:ucp:jlawec:v:42:y:1999:i:2:p:575-609
    DOI: 10.1086/467435
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    Cited by:

    1. David M. Cutler & Jonathan Gruber & Raymond S. Hartman & Mary Beth Landrum & Joseph P. Newhouse & Meredith B. Rosenthal, 2002. "The Economic impacts of the tobacco settlement," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(1), pages 1-19.
    2. Usher, Dan, 2001. "Personal goods, efficiency and the law," European Journal of Political Economy, Elsevier, vol. 17(4), pages 673-703, November.
    3. Frank A. Sloan & Justin G. Trogdon, 2004. "Litigation and the Political Clout of the Tobacco Companies: Cigarette Taxes, Prices, and the Master Settlement Agreement," HEW 0411002, University Library of Munich, Germany.
    4. Schnellenbach, Jan, 2012. "Nudges and norms: On the political economy of soft paternalism," European Journal of Political Economy, Elsevier, vol. 28(2), pages 266-277.
    5. Picone Gabriel & Sloan Frank, 2001. "How Costly Are Smokers to Other People? Longitudinal Evidence on the Near Elderly," Forum for Health Economics & Policy, De Gruyter, vol. 4(1), pages 1-31, January.
    6. Rajeev Goel, 2008. "Unemployment, insurance and smoking," Applied Economics, Taylor & Francis Journals, vol. 40(20), pages 2593-2599.
    7. Cutler, David M & Epstein, Arnold M. & Frank, Richard G. & Hartman, Raymond & King, Charles III & Newhouse, Joseph P. & Rosenthal, Meredith B. & Vigdor, Elizabeth Richardson, 2000. "How Good a Deal Was the Tobacco Settlement? Assessing Payments to Massachusetts," Journal of Risk and Uncertainty, Springer, vol. 21(2-3), pages 235-261, November.
    8. W. Kip Viscusi & Joni Hersch, 2010. "Tobacco Regulation through Litigation: The Master Settlement Agreement," NBER Chapters, in: Regulation vs. Litigation: Perspectives from Economics and Law, pages 71-101, National Bureau of Economic Research, Inc.
    9. Mariana Conte Grand & Pablo Perel & Raúl Pitarque & Gustavo Sánchez, 2003. "Estimación del costo económico en Argentina de la mortalidad atribuible al tabaco en adultos," CEMA Working Papers: Serie Documentos de Trabajo. 253, Universidad del CEMA.
    10. Mariana Conte Grand, 2005. "Reestimación y actualización del costo económico en Argentina de la mortalidad atribuible al tabaco en adultos," CEMA Working Papers: Serie Documentos de Trabajo. 305, Universidad del CEMA.

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