Hilltop Studies the Costs to Medicaid of Tobacco Use

The Hilltop Institute has just completed a study funded by the Center for Mississippi Health Policy titled Estimating the Costs to Mississippi Medicaid Attributable to Tobacco. To conduct the study, Hilltop researchers analyzed Mississippi Medicaid claims data and quantified the financial impact of tobacco use on Mississippi’s Medicaid program. Hilltop Executive Director Cynthia Woodcock was principal investigator and Senior Policy Analyst Charles Betley was project manager.

State-level cost estimates of tobacco-related illness in the literature typically apply national estimates of Medicaid’s share of costs to state-specific Medicaid spending totals. Hilltop’s methodology for this study, however, accounted for differing prevalence rates for tobacco-related diseases in the Mississippi Medicaid population, differences in Medicaid members’ rate of smoking compared to national averages, and the effects of the state’s provider payment policies on costs. This approach could be adapted to other states to quantify their specific costs to Medicaid for tobacco-related illness.

Because tobacco impacts multiple body systems, Hilltop conducted a literature review that identified diagnosis codes from the U.S. Surgeon General’s 2014 Report—The Health Consequences of Smoking – 50 Years of Progress—as well as more recent literature to calculate a smoking-attributable fraction (SAF) of individual smoking-related diseases. These SAFs were then applied to actual Medicaid spending for each diagnosis, resulting in an estimated cost of tobacco per diagnosis, which were then summed to estimate total costs.

The estimated cost of tobacco-related illness to Mississippi Medicaid was $388 million in 2016 and $396 million in 2017, or about 9 percent of annual Medicaid expenditures. These estimates were somewhat lower than cost estimates derived using national estimates of the burden of tobacco-related illness to Medicaid, most likely because children and younger adults are the dominant demographic in the Mississippi Medicaid population.

The Hilltop methodology could help policymakers evaluate the return on investment (ROI) for tobacco cessation support and coverage, smoke-free ordinances and laws, limiting ages for tobacco purchases, and changes to taxes on tobacco and nicotine products.

The Center for Mississippi Health Policy also published an issue brief that summarizes the study methodology and elaborates on the policy considerations.

Hilltop will present its findings before a committee of Mississippi policymakers on January 11, 2019.