The taxes of sin: do smokers and drinkers pay their way?

Article Abstract:

Poor health habits, such as smoking and heavy drinking, result in high costs for society as a whole. Society is believed to subsidize the cost of smoking and drinking. Concern about these costs has prompted proposals to increase both federal and state excise taxes on cigarettes and alcohol. Researchers attempted to assess the economically efficient level of taxation (i.e., the "sin tax") imposed on cigarettes and alcoholic beverage purchases in order to cover the costs of alcohol and tobacco use absorbed by the general society. Over a lifetime, smokers and drinkers impose costs on others through the greater use of collectively-financed health insurance, a higher incidence of involvement in fires, a greater likelihood of involvement in motor-vehicle accidents, and a higher rate of involvement in the criminal justice system. However, researchers found that while nonsmokers subsidize smokers' medicare care and group life insurance, smokers subsidize nonsmokers' pensions and nursing home payments (they are more likely to die before collecting their benefits): on balance, smokers probably pay their way with the current level of excise taxes on cigarettes. By contrast, drinkers do not pay their way; for example, the present legal system can not reasonably make drunk drivers bear the full costs of their actions suffered by others.

Medical economics, Surveys, Alcoholism

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Can medical savings accounts for the nonelderly reduce health care costs?

Article Abstract:

Medical savings accounts (MSAs) probably will not significantly reduce health care spending. MSAs allow employees to make tax-free contributions to a fund that they can draw from to pay medical bills. Their only other form of insurance would be a catastrophic plan with a high deductible. Researchers used simulations to estimate the overall savings from such plans. If all employees switched to a low-deductible, employee-funded MSA, health care costs would not change substantially. If all employees switched to high-deductible, employer-funded MSAs, health care costs would drop 6% to 13%. If many Americans stay in their current plan, the change in health care costs from the implementation of MSAs would range from a drop of 2% to an increase of 1%.

Innovations, Health insurance, Medical savings accounts

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Relationship Between Modifiable Health Risks and Short-term Health Care Charges

Article Abstract:

Employers and health plans can lower their health care costs by encouraging workers to exercise and stop smoking. In a study of 5,689 adults in one health plan, annual health care costs for non-smokers with normal weights were about half that of smokers who were overweight or obese. A history of current or former smoking was associated with 18% to 26% higher health care costs compared to non-smokers. Physical activity led to 5% lower health care costs compared to sedentary people.

Obesity

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