What You Need to Know
- The researchers combined government health survey data with Medicare claim data.
- This gave the researchers the ability to track what happened over time, and when each survey participant was a specific age.
- High annual costs may not increase lifetime costs when a lifetime is short.
Researchers have come up with a new strategy for analyzing the effects of smoking on smokers’ lifetime Medicare spending.
The researchers, Michael Darden and Robert Kaestner, say their work suggests that smokers do little to increase Medicare spending over the course of their lifetimes.
Most of the serious, costly health effects of smoking show up when people are already eligible for Medicare, and smokers’ short life expectancy offsets their high annual levels of health care spending from age 65 through age 84. the researchers write.
The researchers note that Medicare spending on former smokers is very high.
Costs for former smokers are high because former smokers tend to live longer than current smokers, and because many former smokers stopped smoking after they learned that they already had serious, expensive-to-treat, smoking-related health problems, the researchers say.
What It Means
The Darden-Kaestner study could give retirement planners ideas about new ways to analyze the effects of smoking on clients’ income needs, for health-related costs and other costs, over the course of their retirement.
The study could also give planners ideas about how to analyze the effects of other long-lasting forces or behaviors that could affect a client’s annual and lifetime spending and might also affect the client’s life expectancy.
A client who exercised regularly, for example, might have a higher-than-average life expectancy, with lower-than-average annual health care costs but higher-than-average spending on preventive care, and higher-than-average lifetime health care spending, because of the client’s healthy habits and long lifespan.
Darden is a researcher with the Johns Hopkins business school, and Kaestner is a researcher with the University of Chicago public policy school.