Secondhand Smoke Costs U.S. Economy $10 Billion Annually, According to New Study by Society of Actuaries

• For Immediate Release: August 17, 2005
• Kim McKeown
• Marketing & Public Relations Program Manager, SOA
• 847.706.3528
•  
• Christie Ly
• 212.593.6435

CHICAGO,–Secondhand smoke imposes significant costs on nonsmokers and society, according to a recent Society of Actuaries (SOA) study that concluded the annual cost of excess medical care, mortality and morbidity from secondhand smoke exposure in the U.S. is approximately $10 billion. This includes approximately $5 billion in direct medical costs and approximately $5 billion in indirect costs, such as lost wages, reduced services and costs associated with disabilities per year.

The study is one of the first to explore the economic effects of secondhand smoke exposure for a variety of medical conditions in which it has shown to increase the incidence of illness. The many conditions examined include, but are not limited to, lung cancer, asthma, and chronic pulmonary and coronary artery diseases. This research was developed by the SOA in partnership with the Robinson College of Business at Georgia State University.

The study determined both the direct and indirect costs associated with a specific medical condition.

Estimated Direct Medical Cost of Exposure to Secondhand Smoke per Year for the U.S. Population, Based on Present Values

Estimated Economic Value of Lost Wages, Fringe Benefits, and Services per Year for the U.S. Population Excluding Infants, Based on Present Values

By relating where secondhand exposure happens–either at home, work or in both locations–to the level of increase in incidence, the research team determined the number of additional medical cases in the U.S. related to secondhand smoke exposure.

"We wanted to understand the difference in cost that would occur if exposure to environmental tobacco smoke were simply eliminated," said Donald Behan, Fellow of the SOA and lead researcher for the project. "While the health effects of secondhand smoke are reduced in comparison to active smoking, the number of people exposed is so large that the costs are substantial. As our research shows, even though exposure to secondhand smoke has been greatly reduced over the last 15 years, it remains a public health concern with an economic impact in the U.S. of many billions of dollars per year."

These findings were gathered by reviewing more than 200 published studies or reports that date back as far as 1964 on the health effects of environmental tobacco smoke. While many of the studies document a health risk associated with secondhand smoke exposure, few have attempted to quantify an economic consequence of the risk.

"Actuaries are adept at measuring risks and their implications and this unique study will lead to a better understanding of the financial impact of secondhand smoke exposure," said Tim Harris, Fellow of the SOA and chairman of the project's oversight committee.

For more information, visit the Economic Eddects of Environmental Tobacco Smoke.

The Society of Actuaries is an educational, research and professional organization dedicated to serving the public and its 18,000 members. The SOA's vision is for actuaries–business professionals who analyze the financial consequence of risk–to be recognized as the leading professionals in the modeling and management of financial risk and contingent events. The SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems involving uncertain future events.