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How E-Cigarettes Can Financially Rescue Medicaid

Smoking is well-established as the cause of a number of serious health problems. Often, the burden of these side effects falls heavily upon the government – and more specifically, Medicaid. The government, therefore, has a strong incentive to take an active role in reducing the financial consequences of smoking.

Evidence suggests that electronic cigarettes can substantially reduce the health risks associated with tobacco cigarettes. In a newly updated policy study, Richard B. Belzer, an independent consultant to R Street in regulation, risk, economics and information quality, analyzes the expected savings to Medicaid in the first ten years after switching from traditional tobacco products to electronic cigarettes.

In the full study, Belzer examines and calculates the estimated savings that can be reasonably expected if a number of adult Medicaid enrollees switch. Over 25 years, he estimates that the savings to Medicaid will be approximately $2.8 billion per 1 percent of enrollees. The updated addendum estimates the savings for the first ten years after the switch from tobacco to electronic cigarettes at $410 million—where the median state saves approximately $5 million.


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