Health Care and Insurance and Environment and Media & Marketing

Smoke carries economic toll: Ban backers cite health, productivity costs

March 14, 2005

The annual cost of treating the secondhand-smoke-related illnesses of Marion County residents likely exceeds $16 million, a cost borne partly by businesses that provide their employees health insurance.

Businesses also shoulder harder-to-calculate costs in the form of lost productivity and absenteeism, according to a 2002 study for the Marion County Health Department believed to be the best estimate yet of the local impact of cigarettes.

But backers of the proposed City-County Council ordinance that would ban smoking in Indianapolis' bars and restaurants may need more than health and economic statistics to persuade some in the politically powerful hospitality industry.

"I still question where they get some of their numbers," said Hal Yeagy, owner of the Slippery Noodle Inn, which has survived two world wars and the Civil War on the twin vices of booze and cigarettes.

A ban "is changing fundamentally the way we do business."

Researchers acknowledge measuring the economic impact of smoking and exposure to secondhand smoke is controversial and difficult. People who've had heavy exposure to the chemicals in cigarette smoke have higher annual medical expenses but also tend to die sooner.

In its study, the Marion County Health Department estimated that employees who smoke cost Indianapolis businesses $260 million in 2000.

A national study, released by the Atlanta-based Centers for Disease Control and Prevention in 2002, found that each pack of cigarettes sold in the United States costs the nation $7.18 in medical costs and lost productivity.

In total, the study found, smoking costs the United States more than $157 billion a year-$75 billion in medical costs and $82 billion in lost productivity.

However, studies often have come to widely varying conclusions on economic costs. Before releasing the 2002 study, the CDC, relying on data from the 1980s and early '90s, had cited a much smaller impact, about $96 billion a year.

Easier to measure is the impact of smoking restrictions on restaurant and bar sales. On that front, businessmen like Yeagy face a head wind of data suggesting concerns of financial calamity are unfounded.

Numerous academic studies conducted in cities and states where smoking bans have been enacted show they have a negligible impact on sales. Several central Indiana establishments that voluntarily imposed bans say the same thing.

"It hasn't hurt our business," said Mary Guinn, who, with husband Stanley, owns and operates the 34-year-old Sweet Shop, a Greenfield doughnut shop that banned smoking in January after complaints from nonsmokers.

Smokers who used to hold court in the bakery early in the morning now go out to their car when they need to light up. Before, Guinn said, "You could smell the smoke on the doughnuts."

Researchers say a ban might even help bars and restaurants contain expenses, since, long term, their employees would be less likely to miss work and have fewer health problems.

"We know that secondhand smoke kills waiters, waitresses and bar owners," said Dr. Stephen Jay, a professor of medicine and public health at the Indiana University School of Medicine who worked on the Marion County Health Department study.

"If you're in a smoky environment and you work there for several years, you are significantly, significantly at risk of heart attack, lung cancer" and other illnesses, Jay said.

Even so, any near-term economic impact is difficult to quantify, in part because many workers in the hospitality industry lack coverage under companysponsored health care plans. In addition, any smoke-related health problems might not surface for years.

Secondhand smoke almost killed Nikki Haars, a former mental health specialist. About 90 percent of her clients smoked, either at her employer's office or when she counseled them at their homes.

She was diagnosed with lung cancer in 1996, at age 27.

"My doctor said I had the lungs of a smoker, but I never smoked a cigarette in my life," said Haars, who lives in Hamilton County.

IU's Jay isn't surprised. He said medical research has shown that cigarette smoke, with its 4,000 chemicals, has an almost immediate impact on the body. Some tests found that the delicate lining of blood vessels was irritated within seven minutes of exposure.

Many who die of secondhand smoke are ultimately felled by heart attacks-not lung cancer.

Take a man in his 50s who is slightly overweight and out of shape. He goes into a smoke-filled restaurant, gets boozed up and perhaps gets emotionally excited.

"You have a ticking time bomb," Jay said.

Jay points to the experience of physicians in Helena, Mont., where a smoking ban went into effect in 2002. In the first six months, doctors tracked a more-than-40-percent reduction in heart attacks. Then, after the ban was suspended due to a legal challenge, the heart attack rate climbed.

Trying to strike a correlation between smoking bans and health insurance premiums paid by businesses and their employees is more difficult.

While there are "huge" costs in the workplace from smoking and secondhand smoke, it's hard to demonstrate immediate cost savings from bans, said Dr. Ned Lamkin, president of the Indiana Employers Quality Health Alliance.

One reason: Insurers generally don't offer discounts for smoke-free workplaces.

"We do not offer a discount to a group health plan if they're smoke-free. When we rate a group, it's based on their claims experience," said Kelly Merryman, a spokeswoman for Indianapolis-based Anthem Blue Cross and Blue Shield.

Added Kelly McClarnon, an executive in the Insurance Benefits Division at Indianapolis-based City Securities Corp.: "There's a ton of documented empirical evidence that indicates that a group that has more smoking tends to do worse with health claims."

Nonetheless, he said, insurers "are going to take a wait-and-see attitude on rates."

That means a company going smoke-free might not see a savings on health insurance until years later, after the insurer has seen the policy translate into fewer claims.

For bars and restaurants, those longerterm savings might be even more elusive, since many employ large numbers of young smokers.

A ban "wouldn't change my rates," said Slippery Noodle's Yeagy. "Probably at least 75 percent of [my employees] smoke."

Indeed, to many in the hospitality industry, health-insurance concerns take a back seat to fears over plummeting sales. Advocates of a ban say that may be understandable, since many bar workers seem young and healthy.

But long term, bars and restaurants may pay a heavy toll for that mind-set, said Lamkin, president of the Indiana Employers Quality Health Alliance.

"If a waiter or waitress develops lung cancer 25 years down the line, do you think they're not going to come back on that employer for the exposure they had? There's going to be litigation over that," Lamkin said.

Cancer survivor Haars is incredulous that anyone is even arguing over whether smoking needs to be banned.

"It's really uncalled for because we protect the public from so many other things. We protect people from asbestos and other hazardous chemicals," she said. "I had other [career] options, but some people don't. I don't think anyone should be forced to make a choice over their health or a paycheck."
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