Excerpt from the Executive Summary:

Smoking has been estimated to increase health care costs in the United States by $167.5 billion annually (Xu et al. 2015). In Kentucky, smoking adds $2.5 billion in health care expenditures each year. Most of these costs were paid by public programs such as Medicaid and Medicare. While these costs are significant, they represent only a portion of the costs that smoking imposes on society. Smoking also leads to poorer labor market outcomes. Smokers are more likely to be unemployed, earn lower wages, and die prematurely than non-smokers. These negative labor market effects reduce economic activity and lower tax revenues, adding to the social costs and fiscal impact that smoking imposes.

Past research shows that smokers generally earn four to eleven percent less than similar nonsmokers. Some of this wage penalty is due to the negative health consequences of smoking. Smoking can reduce workers’ health, causing them to be less productive, have higher health insurance costs, and incur greater rates of absenteeism. As a result, smokers tend to earn lower wages. However, the wage penalty might also reflect differences between those who decide to smoke and those who do not rather than being caused directly by smoking.

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Prepared for: Department for Public Health Cabinet for Health and Family Services

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