Measuring medical cost and life expectancy impacts of changes in cigarette sales

A change in cigarette sales triggers changes in medical-care costs and in years of life expectancy. Changes in sales result from changes in excise tax policy, agricultural policy, cigarette design, smoking behavior, or anti-smoking laws. The model uses data on medical costs, life expectancy, cigarette price elasticity, and smoking demographics to estimate medical-cost and life-year impacts for any change in cigarette sales. It takes into account the medical costs incurred by quitters over their extra years of life, the asymmetry of impacts for increases and decreases in sales, and the delayed medical effects for ages not yet subject to the health risks of smoking. For example, a 1% decrease in U.S. cigarette sales increases life expectancy in the United States by 1.45 million years and increases medical-care costs by $405 million for ages 25 to 79. This amounts only to $280 in added medical costs for each extra year of life. By generating aggregate health impacts at the margin, the model becomes a valuable tool for evaluating programs that affect smoking.