The federal government spends roughly $1 trillion on health care programs each year, so it is easy to imagine that policies that promote a healthier population could have a significant impact on the federal budget.
In a study released today, CBO uses a policy to discourage smoking—specifically, a 50 cent per pack increase in the federal excise tax on cigarettes—as an example for estimating the overall impact on the federal budget of a policy intervention to improve health. Of course, if lawmakers were to weigh raising that federal excise tax, or adopting other policies that would promote a healthier population, their decisions would depend on various considerations besides the effects on the federal budget.
CBO finds that an increase in the excise tax on cigarettes would have the following budgetary effects relative to current law:
Noelia Duchovny and Ellen Werble played the lead roles in the analysis. James Baumgardner wrote the summary. Ellen Werble wrote Chapter 1; coordinated the writing of Chapter 6, with contributions from numerous CBO analysts; and produced the estimates related to Medicaid and secondhand smoke. Mark Booth and Elias Leight (formerly of CBO) wrote Chapter 2. Noelia Duchovny wrote Chapters 3 and 5 and developed the modeling capability for health care spending and longevity described in those chapters. William Carrington wrote Chapter 4 and produced the estimates for labor earnings described in that chapter. In addition, numerous CBO analysts contributed during the past few years to various aspects of the estimates presented in the report.