Will quitting smoking help Medicare solve its financial problems?

Although health promotion programs may increase the quality and length of life and worker productivity, they will increase the demands on Medicare's hospital insurance (HI) fund when those who benefit from such programs become eligible for Medicare. In this study, I develop and apply a procedure for estimating the net effect of quitting smoking on the HI fund. As the mortality rates of quitters begin to approach those for "neversmokers," contributions to the HI fund increase. The fund experiences a net decrease when these "additional quitters alive" begin to receive Medicare benefits. I found that the net effect of each male light smoker who quits at age 45 increases the present value (in 1980 dollars) of the HI fund's net expenses by between $204 and $2,745, depending on the discount and interest factors used.