Tobacco’s continuing impact on Health Care Costs

Tobacco Use & Exposure is Driving Health Care Costs  $4.5 Billion is spent every year in Mass treating tobacco related illness – that’s 10% of our annual health care expenditures *  Today, each Massachusetts resident pays an average of $889 to cover those smoking-related health care costs *  Examples of Acute Care:  Asthma  Cancer (Pancreatic, Oral, Bladder, Lung, Breast, Esophageal)  Heart Attacks & Strokes  Emphysema * Department of Public Health, Massachusetts Tobacco Cessation and Prevention Program

Context/Background on Tobacco Control  Policies  According to the CDC & MA DPH’s Tobacco Cessation and Prevention Program, there are five essential tools to virtually end smoking, improve health and save billions of dollars in health care costs. 1) Ensure that all residents have access to effective cessation services 2) Protect young people from tobacco industry tactics 3) Implement evidence-based pricing strategies 4) Ensure that all health care visits include tobacco interventions 5) Promote a smoke-free environment for all residents  Progress  These policies and systems have brought the MA smoking rate in 2010 to 15%, one of the lowest smoking rates in the country. * * Department of Public Health, Massachusetts Tobacco Cessation and Prevention Program

Tobacco Use is Still a Problem  While we have made progress in Massachusetts, 222 MILLION packs of cigarettes are still sold every year in our state  Use of OTP (Other Tobacco Products) is on the rise, especially among youth  This use continues to drive health care costs

Evidence-based Pricing Raises Revenue and Decreases Utilization

 The number of packs sold in MA decreased 59% from 547M in FY92 to 222M in FY10  State excise tax revenue from cigarettes increased 6% annually from FY92 to FY10

OTP (Other Tobacco Products)  Discussion, what are OTPs?  Closing the tax loophole

OTP use among adolescents:

 From FY02 to FY10, revenue from the excise tax on smokeless tobacco increased 6% annually  From FY02 to FY10, revenue from the excise tax on cigars increased 18% annually

$1.25/pack increase + OTP Equalization $125 Million in new revenue  An excise tax increase would also reduce smoking and prevent key healthcare costs * Source: Campaign for Tobacco-Free Kids / Ann Boonn, May 6, 2011

Increasing tobacco excise taxes will: Bolster Payment Reform by including a critical form of prevention and wellness Generate significant revenue ($125 million) Opportunity to fund tobacco control, health insurance programs, and small business relief