Carnal Reason

“Yes I am a pirate, 200 years too late. The cannons don’t thunder, there’s nothing to plunder, I’m an over 30 victim of fate”

Jimmy Buffet, A Pirate Looks at Forty.

There are still pirates, but sea-faring piracy is dangerous work, not nearly worth the risks. You can steal a lot more money with a pen.

Back in the late nineties the United States, and several states, including Florida, Texas, Mississippi, California, and Minnesota, sued the American tobacco industry. The premise of these suits was that the tobacco industry was responsible for the costs of medical care incurred by the states as a result treating smoking related illnesses. I was doing a brief stint as an actuary back then, and had a professional interest in health care costs, mortality rates, and such. I thought the government’s argument was a load of crap, when considered in context.

Leave aside the astounding amount of money generated by sales taxes on tobacco products. Leave aside the corporate taxes paid by the tobacco industry, and the income taxes paid by workers in that industry. Ignore that money. Smoking still saves the government more than it costs in medical healthcare. The reason is simple. Joe Smoker dies at age 48 of cancer, costing the system something. But Joe doesn’t live to collect Social Security or Medicaid. Jim Healthy dies at age 84 in a nursing home after collecting decades of various benefits, and only then racking up medical bills every bit as large as Joe’s. Joe was a bargain.

I thought about that when I read the conclusion of a study paid for by the Dutch government. The researchers were considering whether obese people impose greater healthcare costs on the government than do the non-obese.

… lifetime health-care costs were estimated for a cohort of obese people aged 20 y at baseline. To assess the impact of obesity, comparisons were made with similar cohorts of smokers and “healthy-living” persons (defined as nonsmokers with a body mass index between 18.5 and 25). Except for relative risk values, all input parameters of the simulation model were based on data from The Netherlands. In sensitivity analyses the effects of epidemiologic parameters and cost definitions were assessed. Until age 56 y, annual health expenditure was highest for obese people. At older ages, smokers incurred higher costs. Because of differences in life expectancy, however, lifetime health expenditure was highest among healthy-living people and lowest for smokers. Obese individuals held an intermediate position. Alternative values of epidemiologic parameters and cost definitions did not alter these conclusions.

For some years I wondered why the tobacco companies did not make this argument in their defense. At first I thought it was because they just did not have the stones to say “we save the government money by helping people die before they collect their benefits.” Eventually it dawned on me that the tobacco executives were smarter than that. They spent a few billion, paid off the states, and got them hooked on tobacco money. Made them partners in crime, so to speak. It was an investment. Shakedown schemes are inevitable, so they handled it.

By way of disclosure, I have never made a dime from tobacco. I do not smoke, and never have. My father died of lung cancer, almost certainly because he smoked two packs a day for decades. He quit while I was a teenager, but it caught up with him twenty years later. So far as I know, he never blamed the cigarette makers. He was man enough to accept responsibility for his actions, a rare thing these days.

Oh yeah, you might ponder this, and this admittedly dead bill. If you want a bunch more, run a google search on “nhs obesity deny treatment”.

Posted on February 25th, 2008 by pwyll
Filed under: nanny state