Medicaid Could Save $2.6 Billion Within a Year if Just 1 Percent of Recipients Quit Smoking

I just published “Estimation of 1-Year Changes in Medicaid Expenditures Associated With Reducing Cigarette Smoking Prevalence by 1%” in  JAMA Network Open.  As the title indicates, this paper estimates immediate (next year cost savings to Medicaid in each state if they reduced smoking prevalence by 1% (absolute).

Here is the UCSF press release on the paper:

Medicaid Could Save $2.6 Billion Within a Year if Just 1 Percent of Recipients Quit Smoking
The Median State Would Save an Estimated $25 Million in Medicaid Expenditures, Says UCSF Research 

Reducing smoking, and its associated health effects, among Medicaid recipients in each state by just 1 percent would result in $2.6 billion in total Medicaid savings the following year, according to new research by UC San Francisco.

The median state would save $25 million, ranging from $630.2 million in California (if the smoking rate dropped from 15.5 percent to 14.5 percent) to $2.5 million in South Dakota (if the rate dropped from 41.3 to 40.3 percent), the research found.

The study, by Stanton A. Glantz, PhD, director of the UCSF Center for Tobacco Control Research and Education, is published April 12, 2019 in JAMA Network Open.  

“While 14 percent of all adults in the U.S. smoke cigarettes, 24.5 percent of adult Medicaid recipients smoke,” said Glantz. “This suggests that an investment in reducing smoking in this population could be associated with a reduction in Medicaid costs in the short run.”
 
Total Medicaid costs in 2017 were $577 billion. 

“There is no question that reducing smoking is associated with reduced health costs, but it’s commonly assumed that it takes years to see these savings, which has discouraged many states from prioritizing helping smokers quit,” said Glantz.

“While this is true for some diseases, such as cancer, other health risks such as heart attacks, lung disease and pregnancy complications respond quickly to changes in smoking behavior. So reducing the prevalence of smoking would be an excellent short-term investment in the physical health of smokers and the fiscal health of the Medicaid system,” he said.

Glantz derived state-by-state percentages of Medicaid recipients who smoke based on data from the 2017 Behavioral Risk Factors Surveillance System, which provides the percentage of smokers among the population of each state, and the 2017 National Health Interview Survey, which identifies Medicaid recipients in four major regions in the United States (Northeast, Midwest, South and West). 

He then estimated potential Medicaid savings based on a previous research finding which showed that a 1 percent relative reduction in smoking prevalence is associated with a reduction of 0.118 percent in per capita health care spending.

Glantz noted that the study looked only at the potential savings from reducing the total number of Medicaid recipients who smoke. But even if each smoker just smoked less, there would be additional reductions in health care costs, he said.

Cost reductions from reducing smoking would continue and likely grow over the long term.

“Because some health risks linked with smoking, such as cancer, can take years to fully manifest, these savings would be likely to grow with each passing year,” Glantz said.

The paper shows predicted reductions in Medicaid costs by each state. 

Here are the keys points and abstract from the paper:

Key Points

Question  What are the expected changes to Medicaid costs the following year associated with reducing absolute cigarette smoking prevalence in each state by 1%?

Findings  This economic evaluation found that, based on observed short-run elasticity between changes in smoking and health care expenditures, estimated Medicaid savings in the year following a 1% reduction of smoking prevalence would total $2.6 billion, with median state savings of $25 million.

Meaning  Reducing cigarette smoking could contribute to lowering Medicaid costs in the short run.

Abstract

Importance  Reducing smoking is associated with a reduction in health care costs, including in the short run. Medicaid recipients smoke at higher rates than the general population, which suggests that investments to reduce smoking in this population would reduce short-run Medicaid costs.

Objective  To estimate the short-run (1-year) change in health care expenditure associated with a 1% decrease in absolute smoking prevalence in all US states.

Design, Setting, and Participants  Economic evaluation based on state Medicaid expenditures and the elasticity between changes in smoking prevalence and health care costs. Data sources were the 2017 Behavioral Risk Factors Surveillance System, 2017 National Health Interview Survey, and Kaiser Family Foundation Total Medicaid Spending for fiscal year 2017. Analysis was conducted in 2018. Participants were all people receiving Medicaid in all US states and the District of Columbia.

Exposures  Cigarette smoking.

Main Outcomes and Measures  Short-run (1-year) change in health care costs.

Results  Reducing absolute smoking prevalence by 1% in each state was associated with substantial Medicaid savings the following year, totaling $2.6 billion (in 2017 dollars). Each state saved a median (interquartile range) of $25 million ($8 million to $35 million).

Conclusions and Relevance  Effective efforts to reducing smoking could be a cost-effective way to reduce Medicaid costs in the short run.

The full citation is Glantz SA. Estimation of 1-Year Changes in Medicaid Expenditures Associated With Reducing Cigarette Smoking Prevalence by 1%. JAMA Netw Open. 2019;2(4):e192307. doi:10.1001/jamanetworkopen.2019.2307 and it is available for free here.

NOTE ADDED 9 Jun 2019:  An PDF of the paper with an erratum is available here.  The total savings are $2.5 billion.