CBO: Reducing Smoking Would Raise Medicare, Social Security Spending
Increasing the federal excise tax on cigarettes by 50 cents per pack eventually would increase Medicare and Social Security spending, because smokers would be healthier and live longer, according to a Congressional Budget Office report released Wednesday, the Fiscal Times reports (Pianin, Fiscal Times, 6/14).
The report found that the tax increase would create short-term deficit reductions. However, by 2085, the costs associated with individuals living longer and consuming more Medicare and Social Security services would outweigh the health benefits and tax revenues, causing the deficit to increase slightly.
According to National Journal, the findings contradict the common wisdom that preventing disease is less costly than treating it over the long term (Sanger-Katz, National Journal, 6/13).
Tax Increase Would Have Largest Effect on Teenagers
The report also estimated that a 50-cent tax increase would raise the price of cigarettes by about 10% and would have the largest effect on whether teenagers smoked, CQ HealthBeat reports. CBO estimates that after a few years the tax would cause a 5% decline in smokers ages 12 to 17.
The report was requested by Sen. John Rockefeller (D-W.Va), chair of the Finance Committee's health panel. Rockefeller did not say whether he would use the report to push for a higher tobacco tax. However, aides said the report demonstrates that higher cigarette taxes have health benefits, in terms of reducing disease rates, such as asthma, emphysema and cancer (Bunis, CQ HealthBeat, 6/13).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.