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E-Cigarettes Poised to Save Medicaid Billions

March 31, 2015
By J. Scott Moody

Electronic cigarettes (e-cigs) have only been around since 2006, yet their potential to dramatically reduce the damaging health impacts of traditional cigarettes has garnered significant attention and credibility.

two tumblers with liquor and a lit cigarrette

Electronic cigarettes (e-cigs) have only been around since 2006, yet their potential to dramatically reduce the damaging health impacts of traditional cigarettes has garnered significant attention and credibility. Numerous scientific studies show that e-cigs not only reduce the harm from smoking, but can also be a part of the successful path to smoking cessation.

The term "e-cig" is misleading because there is no tobacco in an e-cig, unlike a traditional, combustible cigarette. The e-cig uses a battery-powered vaporizer to deliver nicotine via a propylene-glycol solution-which is why "smoking" an e-cig is called "vaping." The vapor is inhaled like a smoke from a cigarette, but does not contain the carcinogens found in tobacco smoke.

Unlike traditional nicotine replacement therapy (NRT), such as gum or patches, e-cigs mimic the physical routine of smoking a cigarette. As such, e-cigs fulfill both the chemical need for nicotine and physical stimuli of smoking. This powerful combination has led to the increasing demand for e-cigs-8.2% use among nondaily smokers and 6.2% use among daily smokers in 2011.1

The game-changing potential for dramatic harm reduction by current smokers using e-cigs will flow directly into lower healthcare costs dealing with the morbidity and mortality stemming from smoking combustible cigarettes. These benefits will particularly impact the Medicaid system where the prevalence of cigarette smoking is twice that of the general public (51% versus 21%, respectively).

Based on the findings of a rigorous and comprehensive study on the impact of cigarette smoking on Medicaid spending, the potential savings of e-cig adoption, and the resulting tobacco smoking cessation and harm reduction, could have been up to $48 billion in Fiscal Year (FY) 2012.2 This savings is 87% higher than all state cigarette tax collections and tobacco settlement collections ($24.4 billion) collected in that same year.

Unfortunately, the tantalizing benefits stemming from e-cigs may not come to fruition if artificial barriers slow their adoption among current smokers. These threats range from the Food and Drug Administration regulating e-cigs as a pharmaceutical to states extending their cigarette tax to e-cigs. To be sure, e-cigs are still a new product and should be closely monitored for long-term health effects. However, given the long-term fiscal challenges facing Medicaid, the prospect of large e-cigs cost savings is worth a non-interventionist approach until hard evidence proves otherwise.

Article Tags
Alcohol & Tobacco