Economic Costs Attributable to Smoking in China: Update and an 8-year Comparison, 2000–2008

Abstract

Objective

To estimate the health-related economic costs attributable to smoking in China for persons aged 35 and older in 2003 and in 2008 and to compare these costs with the respective results from 2000.

Methods

A prevalence-based, disease-specific approach was used to estimate smoking-attributable direct and indirect economic costs. The primary data source was the 2003 and 2008 China National Health Services Survey, which contains individual participant’s smoking status, healthcare utilization, and expenditures.

Results

The total economic cost of smoking in China amounted to $17.1 billion in 2003 and $28.9 billion in 2008 (both measured in 2008 constant US dollars). Direct smoking-attributable healthcare costs in 2003 and 2008 were $4.2 billion and $6.2 billion, respectively. Indirect economic costs in 2003 and 2008 were $12.9 billion and $22.7 billion, respectively. Compared to 2000, the direct costs of smoking rose by 72% in 2003 and 154% in 2008, while the indirect costs of smoking rose by 170% in 2003 and 376% in 2008.

Conclusion

The economic burden of cigarette smoking has increased substantially in China during the past decade and is expected to continue to increase as the national economy and the price of healthcare services grow. Stronger intervention measures against smoking should be taken without delay to reduce the health and financial losses caused by smoking.

INTRODUCTION

With 301 million current smokers in 2010, [1] China is the largest consumer of tobacco in the world. In 2010, 52.9% of Chinese men and 2.4% of women were current smokers. Despite numerous studies demonstrating that tobacco is harmful for health [2–5] and evidence showing that the overall mortality of smokers in China is significantly higher than that of never smokers, [6] most Chinese still lack understanding of the harmful effects of smoking. In 2010, only 23.2% of Chinese adults believed smoking causes stroke, heart attack, and lung cancer, and only 16.1% of current smokers planned to or were thinking about quitting in the next 12 months.[1]

At the same time, China is the world’s largest producer of tobacco. All cigarettes are produced by the state-owned tobacco monopoly company, and about 7.0% of China’s central government revenue was generated from tobacco profit and taxes.[7] Because of the economic interests of the tobacco industry, Chinese policymakers are unwilling to restrict promotion of tobacco products and to implement stricter legislation to protect non-smokers. To raise the general Chinese population’s awareness of the dangers of smoking and to increase the government’s incentive to implement the promises of the ratified World Health Organization’s Framework Convention on Tobacco Control, it is important to transform the data on the health effects of smoking into monetary values of financial losses to the society.

There is a paucity of national studies estimating the economic costs of smoking in China. Using a medical cost accounting method to calculate disease-specific medical costs, Chen et al.[8] estimated the total medical costs attributable to smoking in 1988 in China at 2.3 billion Yuan (US$0.28 billion using the exchange rate of 8.2784 Yuan to US$1). Jin et al.[9] estimated the total economic burden of smoking in China in 1989 at 27.1 billion Yuan ($3.27 billion using the exchange rate of 8.2784 Yuan to US$1), including 6.9 billion Yuan ($0.83 billion) of direct medical costs and 20.1 billion Yuan ($2.43 billion) of indirect morbidity and mortality costs. Sung et al.[10] estimated the economic costs of smoking in China in 2000 at $5.0 billion (based on the exchange rate of 8.2784 Yuan to US$1), of which $1.7 billion were direct healthcare costs of smoking and $3.3 billion were indirect morbidity and mortality costs. These three studies of the costs of smoking in China were conducted more than ten years ago. Due to China’s economic growth and the introduction of high-tech medical equipment, wage rates and healthcare expenditures in China have increased substantially during the last decade. Therefore, the economic burden of smoking in China is very likely to have increased dramatically as well. It is important to examine the trend of smoking-attributable costs during the last decade.

The objective of this paper is to provide the latest estimates for both direct and indirect costs of smoking in China by using data from the third and fourth waves of the China National Health Services Survey (NHSS) conducted in 2003 and 2008 and to compare these cost estimates with the respective 2000 estimates from the previous study by Sung et al.[10]

METHODS

We divided the economic costs of smoking into two components: direct costs and indirect costs. Direct costs include all healthcare expenditures for treating smoking-related diseases. Indirect costs include expenses for transportation, nutritious supplemental food, and caregivers during inpatient hospitalizations and outpatient visits due to treating smoking-related diseases, the value of lost productivity caused by smoking-related illness, and indirect mortality costs of premature deaths caused by smoking-related diseases. Healthcare services comprise outpatient visits, inpatient hospitalizations, and self-medication. We used the prevalence-based, disease-specific approach to measure the costs of smoking-related diseases and deaths in a given year (2003 or 2008) caused by current and past smoking. Three kinds of smoking-related diseases were included: cancer (ICD–10:C00–C97), cardiovascular diseases (ICD–10:I00–I99), and respiratory diseases (ICD–10:J00–J99). Because the average age at uptake for Chinese smokers was 21 years old, [11] and because smoking-related diseases usually occur after having smoked for a long time, we included only adults aged 35+ in the analysis.[12]

Smoking-attributable Fraction (SAF)

We calculated the SAF for each component of the economic burden of smoking by disease category, rural/urban district, gender, and age. Levin [13,14] developed the formula for “attributable risk” to examine the proportion of lung cancer cases attributable to cigarette smoking. Attributable risk was first renamed the smoking-attributable fraction (SAF) in a computer software program, Smoking-Attributable Mortality, Morbidity, and Economic Cost (SAMMEC).[15–17] The SAF is specified by the following epidemiological formula:

$${\mathit{SAF}}_{\mathit{irsa}}=\frac{\left({PN}_{\mathit{rsa}}+{PS}_{\mathit{rsa}}\times {RR}_{\mathit{irsa}}\right)-1}{\left({PN}_{\mathit{rsa}}+{PS}_{\mathit{rsa}}+{RR}_{\mathit{irsa}}\right)}$$ (1)

where PN and PS denote the prevalence rate of never smokers and smokers, respectively; RR denotes the relative risk of mortality for smokers compared to never smokers; the subscript i is for disease category, r is for rural or urban district, s is for gender, and a is for age, which is classified into two groups: ages 35–64 and ages 65+.

Data source

The primary data used in this paper were drawn from the third and fourth waves of the NHSS conducted by the Ministry of Health in China in 2003 and 2008, respectively. The surveys used standardized questionnaires to collect individual’s information including age, gender, education, employment status, disease histories, health risk behaviors, healthcare utilization and expenditures for disease-specific outpatient visits and self-medication (not surveyed in 2008) in the two weeks before the date of interview, as well as disease-specific inpatient hospitalizations and number of inpatient days in the 12 months before the date of interview. Multi-stage stratified random sampling procedures and methods were used to select the samples. A total of 193,689 and 177,501 respondents aged 0 and above were sampled in 2003 and 2008, respectively.

Smoking prevalence rates by rural/urban district, gender, and age came from the 2003 and 2008 NHSS in which all respondents aged 15+ were asked about their smoking status. We divided respondents into never smokers and smokers (including current and former smokers). We did not separate current smokers from former smokers because the relative risks (RRs) of mortality needed to calculate SAFs have not been estimated separately for former and current smokers in China. (Note that former smokers accounted for only a small proportion of ever smokers in China, ranging from 10.1% in 1998 to 8.6% in 2008. See more details in the Results section.) The RRs of the mortality for smoking came from a recent study by Gu et al.;[18] population data and disease-specific mortality rates in 2003 and 2008 were taken from China’s Health Statistical Yearbook;[19,20] per-capita family income, used to measure earnings for the indirect cost of mortality, was from the China Statistical Yearbook.[21,22] Life expectancy in 2003 came from the 2000 China Life Tables reported by the World Health Organization (WHO), while the 2008 life expectancy was from WHO’s 2008 China Life Tables.[23]

Direct costs

Direct costs include all the healthcare expenditures for treating smoking-related diseases. Three types of healthcare expenditures were available in the 2003 NHSS data: inpatient hospitalizations, outpatient visits, and self-medication. However, only two types of healthcare expenditures were available in the 2008 NHSS data: inpatient hospitalizations and outpatient visits. The smoking-attributable expenditure (SAE) for each subgroup stratified by disease category, urban/rural district, gender, and age was estimated by multiplying the SAF by the corresponding total healthcare expenditures according to the following formula:

$${\text{SAE}}_{\text{irsa}}=[{\text{PH}}_{\text{irsa}}\times {\text{QH}}_{\text{irsa}}+{\text{PV}}_{\text{irsa}}\times {\text{QV}}_{\text{irsa}}\times 26+{\text{PM}}_{\text{irsa}}\times {\text{QM}}_{\text{irsa}}\times 26]\times {\text{POP}}_{\text{rsa}}\times {\text{SAF}}_{\text{irsa}}$$ (2)

where PH is the average expenditure per inpatient hospitalization; QH is the average number of hospitalizations per person in 12 months; PV is the average expenditure per outpatient visit; QV is the average number of outpatient visits per person in two weeks; PM is the average medication expenditures per person with positive self-medication expenditures in two weeks; QM is the proportion of persons with positive self-medication expenditures in two weeks; POP is the population in 2003 or 2008. The definition of subscripts is the same as with equation 1.

To assure that the self-reported health expenditures are a good proxy for actual expenditures, we applied an adjustment factor, which was determined as follows. First, we estimated the average per capita health expenditure for each disease category by urban/rural district, gender, and age from the 2003 and 2008 NHSS data. Second, we multiplied this number by the population in 2003 and in 2008 for each subgroup and added all the expenditures across all subgroups to derive the estimated national health expenditures in 2003 and 2008. Finally, we calculated the adjustment factor by dividing the estimated national health expenditures by the official figures of national health expenditures[24] and then applied this adjustment factor to the estimated average expenditures from the NHHS data. The adjustment factor was 1.22 for 2003 and 1.30 for 2008.

Indirect morbidity costs

Smoking-attributable indirect morbidity costs (SAI) include transportation, nutritious supplemental food, and caregiver costs during the inpatient hospitalizations and outpatient visits due to treating smoking-related diseases, and the value of lost productivity caused by smoking-related illness. We measured lost productivity by the number of days absent from work. Because days lost from work were not asked in the 2003 and 2008 NHSS, we used inpatient hospitalization days as a proxy. The formula to estimate the SAI is as follows:

$${\text{SAI}}_{\text{irsa}}=[{\text{PHI}}_{\text{irsa}}\times {\text{QH}}_{\text{irsa}}+{\text{PVI}}_{\text{irsa}}\times {\text{QV}}_{\text{irsa}}\times 26+{\text{IDAY}}_{\text{irsa}}\times {\text{E}}_{\text{rsa}}\times {\text{Y}}_{\text{r}}]\times {\text{POP}}_{\text{rsa}}\times {\text{SAF}}_{\text{irsa}}$$ (3)

where PHI is the average expenditures for transportation, nutritious supplemental food, and caregivers per inpatient hospitalization; PVI is the average expenditure for transportation per outpatient visit; IDAY is the average number of annual inpatient days due to treating disease “i” per employed person; E is the proportion of the total population currently employed; and Y is daily earnings measured by per-capita family income in 2003 or 2008. Other notations are the same as in equations 1 and 2.

Indirect mortality costs

The indirect mortality costs were estimated by four steps. First, the number of smoking-attributable deaths (SAD) was estimated by multiplying the SAF by total number of deaths for each 5-year age group from age 35–39 to age 85+ by population subgroups. Second, the number of smoking-attributable years of potential life lost (SAYPLL) was estimated by the product of the SAD and the number of years of life expectancy remaining at the age of death by population subgroups. Third, the present value of forgone lifetime earnings (PVLE) was estimated by 5-year age groups based on a human capital approach developed by Max and colleagues.[25,26] A discount rate of 3% was used to convert a stream of earnings into its current worth. To consider the potential growth of future earnings, we assumed an annual productivity growth rate of 10%, approximately the average growth rate of GDP in China between 2003 and 2008. Fourth, smoking-attributable mortality cost (SAMC) was estimated by the product of the SAD and PVLE. The formulas we used to estimate SAD, SAYPLL, PVLE, and SAMC by disease category, urban/rural district, gender, and age group are:

$${\text{SAD}}_{\text{irsa}}=[{\text{DRATE}}_{\text{irsa}}\times {\text{POP}}_{\text{rsa}}]\times {\text{SAF}}_{\text{irsa}}$$ (4)

$${\text{SAYPLL}}_{\text{irsa}}={\text{SAD}}_{\text{irsa}}\times {\text{LE}}_{\text{sa}}$$ (5)

$${\text{PVLE}}_{\text{rsa}}=\sum _{m=a}^{maxa}[\mathit{SUR}{V}_{\mathit{rsa}}(m)][Y_r\times E_{rs}(m)]\times {(1+g)}^{m-a}/{(1+V)}^{m-a}$$ (6)

$${\text{SAMC}}_{\text{irsa}}={\text{SAD}}_{\text{irsa}}\times {\text{PVLE}}_{\text{rsa}}$$ (7)

where DRATE is death rate per 100,000 persons, LE is average number of years of life expectancy remaining at the age of death, SURV(m) is the probability that a person will survive to age m, maxa is the maximum 5-year age group (e.g., age 85+), Y is per-capita family income, E(m) is the proportion of the population of age m that is employed in the labor market, g is the growth rate of labor productivity, V is the discount rate, a is the age at death, and other notations are the same as in equations 1 and 2.

Comparison of cost estimates across years

All the cost estimates are expressed in 2008 constant US dollars. We first estimated the costs of smoking for 2003 and 2008 in terms of nominal Chinese Yuan. Then, the estimated 2003 costs of smoking were converted into 2008 constant Chinese Yuan by multiplying by 1.19 based on the Consumer Price Index (CPI) for 2003 and 2008 in China.[21] Finally, we applied the 2008 exchange rate of 6.9451 Yuan against US$ to convert the costs into 2008 US dollars. Since the 2000 costs of smoking were estimated in terms of 2000 US dollars, [10] we first converted them back into 2000 Chinese Yuan by multiplying by the 2000 exchange rate of 8.2784. Then, following the process described above, we multiplied them by the ratio of the 2008 CPI to the 2000 CPI in China (1.20) and the 2008 exchange rate of 6.9451.

RESULTS

In the last decade, China has experienced a rapid growth in the adult population aged 35+ and a significant increase in internal migration from rural to urban areas. The population of persons aged 35+ increased from 515.6 million in 2000 to 601.4 million (17% increase) in 2003 and to 724.2 million (40% increase) in 2008. In 2000, 63.8% of these adults lived in rural areas. That percentage dropped to 59.5% in 2003 and decreased further to 54.5% in 2008.[21,22,27] Because of the change in population mix, it is important to examine how smoking prevalence trends and patterns changed over the period, Table 1 shows prevalence rates of ever smokers among adults aged 35+ by urban/rural district, gender, age, and survey year according to the NHSS data. The prevalence rates for ever smokers decreased moderately from 38.0% (which included 34.5% as current smokers and 3.5% as former smokers) in 1998 [10] to 33.1% (30.6% as current smokers and 2.5% as former smokers) in 2003 to 31.4% (28.7% as current smokers and 2.7% as former smokers) in 2008. The quit rate, expressed as a proportion of ever smokers who are former smokers, remained low, decreasing slightly from 10.1% in 1998 to 8.6% in 2008. Male smoking rates remained much higher than female smoking rates. For males, rural smoking rates were higher than urban smoking rates; the opposite was found for females. Smoking prevalence rates in 2008 were lower than in 2003 across all subgroups by urban/rural, gender, and age except for females aged 35–64 in urban areas.

Table 1.

Ever smoking prevalence rate (%) among adults aged 35 and older in China, by urban/rural district, gender, age, and year

	2003	2008
Total	33.1	31.4
Female in rural	4.6	4.5
35~64	4.0	3.9
65+	7.8	7.2
Female in urban	5.3	4.7
35~64	3.5	3.7
65+	10.7	7.4
Male in rural	64.0	61.3
35~64	65.2	62.9
65+	58.0	54.0
Male in urban	56.1	53.0
35~64	60.3	58.1
65+	42.3	37.1

Table 2 shows the relative risks of mortality used in this study and the estimated SAFs calculated from equation (1). The relative risks of mortality for smokers were slightly higher for females and were highest for cancer. The SAFs were much smaller for females than males because smoking rates for females were much lower than for males. The SAFs in 2008 were lower than in 2003 except for females aged 35–64 in urban areas, a pattern mimicking that of smoking prevalence. Among the three disease categories, cancer showed the highest SAFs for both males and females in 2008, ranging from a high of 25.7% for rural males aged 35–64 to a low of 2.2% for urban females aged 35–64.

Table 2.

Disease-specific relative risk of mortality for ever smokers and smoking-attributable fractions (SAFs) in China, 2008, by disease, urban/rural district, gender, and age for adults aged 35 and older

	RR*		SAF (%)
	Male	Female	Urban				Rural
			Male		Female		Male		Female
			35~64	65+	35~64	65+	35~64	65+	35~64	65+
2003
Respiratory diseases	1.14	1.43	7.78	5.59	1.48	4.40	8.36	7.51	1.69	3.25
Cardiovascular diseases	1.17	1.21	9.30	6.71	0.73	2.20	9.98	8.98	0.83	1.61
Cancer	1.55	1.62	24.91	18.87	2.12	6.22	26.39	24.18	2.42	4.61
2008
Respiratory diseases	1.14	1.43	7.52	4.93	1.57	3.08	8.09	7.03	1.65	3.00
Cardiovascular diseases	1.17	1.21	8.99	5.93	0.77	1.53	9.66	8.41	0.81	1.49
Cancer	1.55	1.62	24.22	16.95	2.24	4.39	25.7	22.9	2.36	4.27

^*Source: Gu and Kelly et al. (2009) [18]

As shown in Table 3, in 2008, 552,280 deaths in China were attributed to smoking—495,053 males and 57,227 females; 154,745 in urban areas and 397,535 in rural areas—accounting for 8.9% of all deaths. By underlying cause of death, the majority of all smoking-attributable premature deaths were due to cancer (62%), followed by cardiovascular diseases (27%) and respiratory diseases (11%). The total number of smoking-attributable years of potential life lost (YPLLs) was 8.5 million person-years so the average years of life lost per death was 15.4 years. While cancer caused 62% of smoking-attributable deaths, it accounted for 92% of the total smoking-attributable YPLLs probably because most smokers who died of cancer died at a younger age than smokers who died from other causes. The death and YPLLs were calculated from equation (4) and (5).

Table 3.

Number of deaths and years of potential life lost (YPLLs ) attributable to smoking in China, 2008, by urban/rural district, gender, age, and disease among adults aged 35 and older

	Deaths	YPLLs
Male	495,053	7,785,011
Female	57,227	720,609
35~64	215,994	5,340,087
65+	336,286	3,165,533
Urban	154,745	2,396,498
Rural	397,535	6,109,122
Respiratory diseases	61,514	628,559
Cardiovascular diseases	147,792	1,882,707
Cancer	342,974	5,994,354
Total	552,280	8,505,620

Table 4 shows the economic costs of smoking in 2008 by component of costs, gender, age, urban/rural district, and disease. The total economic costs of smoking in 2008 amounted to $28.9 billion: $6.2 billion (21.5%) in direct costs, $22.0 billion (76.1%) in indirect mortality costs, and $0.7 billion (2.4%) in indirect morbidity costs.

Table 4.

Economic costs of smoking in China, 2008, by component of costs, urban/rural district, gender, age, and disease for adults of age 35 and older Unit: US $1000

	Direct medical cost		Subtotal	Indirect cost			Subtotal	Total
	Outpatient	Inpatient		Indirect morbidity cost		Indirect mortality costs
				Transportation and caregivers	Absence from work
Male	4,054,280	1,483,162	5,537,442	332,547	226,410	20,778,363	21,337,320	26,874,762
Female	485,233	178,926	664,159	50,741	35,842	1,226,432	1,313,015	1,977,174
35~64	2,453,321	985,257	3,438,578	252,682	218,471	20,202,605	20,673,758	24,112,336
65+	2,086,192	676,831	2,763,023	130,606	43,781	1,802,190	1,976,577	4,739,600
Urban	1,999,408	835,647	2,835,055	136,550	71,405	10,471,987	10,679,942	13,514,997
Rural	2,540,105	826,441	3,366,546	246,738	190,847	11,532,808	11,970,393	15,336,939
Respiratory diseases	761,862	172,042	933,904	77,121	113,266	833,698	1,024,085	1,957,989
Cardiovascular diseases	2,177,300	729,573	2,906,873	170,861	111,062	4,007,352	4,289,275	7,196,148
Cancer	1,600,351	760,473	2,360,824	135,306	37,924	17,163,745	17,336,975	19,697,799
Total	4,539,513	1,662,088	6,201,601	383,288	262,252	22,004,795	22,650,335	28,851,936

Exchange rate of the Chinese Yuan against US$=6.9451 in 2008 based on China Statistical Yearbook, 2009 [21]

The $28.9 billion of total economic costs in 2008 represented 0.7% of China’s GDP ($4,360.7 billion). According to the NHSS data, the economic cost of smoking on average was $21.70 for each Chinese (=$28.9 billion / 1.33 billion of total population) or $127.30 per smoker for the 227 million current smokers aged 35 and older in 2008. Because China’s total consumption of cigarettes in 2008 was 2,139 billion sticks (107.0 billion packs), [22] the total economic costs of smoking averaged $0.27 per pack, about 8.1% of the 2006 average retail price of Class A cigarettes per pack in China (26.7 Yuan or $3.35) and about 43% of the price of Class B cigarettes per pack (5.0 Yuan or $0.63).[28] A larger share of the total economic costs of smoking was borne by males than females ($26.9 billion versus $2.0 billion) and by the middle-aged group than the older age group ($24.1 billion versus $4.7 billion). Cancer comprised the highest proportion of the total economic costs in 2008: $19.7 billion (68.2%), followed by cardiovascular diseases at $7.2 billion (24.9%) and respiratory diseases at $2.0 billion (6.9%).

The $6.2 billion of direct costs of smoking in 2008 accounted for 3.0% of China’s national healthcare expenditures ($209.3 billion): 73% of the direct costs of smoking were spent on outpatient visits while 27% was spent on inpatient care.

8-Year Comparison

Table 5 shows that the absolute number of smoking-attributable deaths decreased from 2000 to 2003 and then continued to fall from 2003 to 2008. This drop in deaths was due mainly to the declining trends in smoking prevalence and the resulting decrease in SAFs during the 8-year period (see Tables 1–2 in this paper and Table 1 by Sung et al. (2006) [10]). For example, the SAF for cancer among urban males aged 35–64 declined from 28.9% in 2000 to 24.9% in 2003 and declined again to 24.2% in 2008. Compared to 2000, the smoking-attributable YPLLs in 2003 decreased by 15.8% because of the declining SAFs and the use of the same life expectancy data for both 2000 and 2003. However, the YPLLs rose between 2003 and 2008 even though the number of smoking-attributable deaths fell. This resulted because updated life expectancy data were available in 2008, [23] and they revealed a substantial increase in life expectancy among Chinese from 68.9 years for males and 73.0 years for females in 2000 to 72.1 years for males and 75.7 years for females in 2008.

Table 5.

Comparison of smoking-attributable deaths, years of potential life lost, and economic costs in 2000, 2003, and 2008

	2000	2003	2008	Percentage Change(%)2000 – 2003	Percentage Change (%)2000 – 2008
Mortality	688,512	574,107	552,280	−16.62	−19.79
YPLL	9,699,251	8,162,771	8,505,620	−15.84	−12.31
Direct costs	2,439,796	4,198,072	6,201,601	72.07	154.19
Outpatient visits	1,285,832	2,472,829	4,539,513	92.31	253.04
Inpatient hospitalization	936,051	651,875	1,662,088	−30.36	77.56
Self-medication	217,913	1,073,368	—	392.57	—
Indirect costs	4,761,023	12,871,102	22,650,335	170.34	375.75
Transportation and caregivers	175,169	149,348	383,288	−14.74	118.81
Absence from work	387,006	159,392	262,252	−58.81	−32.24
Mortality	4,198,848	12,562,362	22,004,795	199.19	424.07
Total	7,200,819	17,069,174	28,851,936	137.04	300.68

Exchange rate of the Chinese Yuan against US$=6.9451 in 2008 based on China Statistical Yearbook, 2009 [21]

Compared to 2000, the total economic costs of smoking rose by 137% in 2003 and 300.7% in 2008. From 2000 to 2003, the direct costs of smoking costs increased by 72%. Smoking-attributable inpatient hospitalization costs fell by 30%, perhaps because of the decrease in the hospitalization rate.[11] The smoking-attributable self-medication costs grew dramatically by 393% during this period. From 2000 to 2008, the direct costs of smoking increased by 154%, and smoking-attributable outpatient costs alone increased by 253%. Compared to 2000, indirect mortality costs of smoking increased by 199% in 2003 and by 424% in 2008; the smoking-attributable costs of absence from work were lower in both 2003 and 2008 probably because they were based on inpatient days instead of work loss days; the smoking-attributable costs for transportation and caregivers decreased slightly by 15% in 2003 but increased by 119% in 2008.

DISCUSSION

The total economic cost of smoking for 2008 in China was $28.9 billion, accounting for 0.7% of China’s GDP and averaging $127.30 per smoker. Among the different components of smoking-attributable costs, mortality costs ranked first, followed by outpatient expenditures. Alarmingly, 93.1% of the total economic cost of smoking in China was borne by males in 2008 because of their high smoking prevalence rate. Our results indicate that smoking is not only a matter of public health concern, which deserves attention, but it also has already exerted a huge financial burden on the Chinese economy.

The direct costs of smoking in 2008 accounted for 3.0% of total national health care expenditures in China.[21] This proportion is similar to that estimated by Sung et al. (3.1%).[10] Yet it is lower than the 4.3% in Vietnam, [29] 4.7% in India, [30] and 6~8% in the United States.[31] Our estimates for the total direct and indirect costs of smoking are very likely underestimated for several reasons.

First, our estimation for the costs attributable to smoking considered only the three major categories of smoking-related diseases. Smoking increases the risk of many other diseases such as hip fractures, gum diseases, nasal irritation, nuclear cataract and Graves’ ophthalmopathy, reproductive and erectile dysfunction problems, and peptic ulcers.[5] The omission of these diseases certainly results in underestimating the true costs of smoking.

Second, this study did not consider the economic burden from passive smoking. A recent study in Hong Kong found that this burden represented 23% of the total medical costs of active and passive smoking.[32] In China, 540 million persons (aged 0 and older) are exposed to passive smoking.[33] Thus, ignoring the economic impact of passive smoking underestimates the direct costs of smoking.

Third, the RR (relative risk of mortality) was an important element in estimating the SAF. The bigger this value, the larger the SAF (smoking-attributable fraction). In this study, we used the RRs from a prospective cohort study in a nationally representative sample of Chinese adults aged 40+ with baseline data collected in 1991 and follow-up evaluation collected in 1999–2000.[18] The study’s RR estimates for China were lower than those of other countries. For example, their RR estimate of lung cancer mortality in China for ever smokers relative to never smokers was 2.44 for males and 2.76 for females.[18] According to an American study, the corresponding RR estimate was 23.26 for current male smokers, 8.7 for former male smokers, 12.69 for current female smokers, and 4.53 for former female smokers.[34] The RR estimate of respiratory diseases in China for ever smokers was 1.14 for males and 1.43 for females; however, a recent nationally representative case-control study of smoking and mortality conducted in India estimated the corresponding RR in India to be 2.1 for males and 3.1 for females.[35]

Fourth, it is particularly worth noting that according to the 2008 NHSS data, 10.6% of Chinese aged 15 and older who reported having medical conditions in the previous two weeks did not get any treatment in China in 2008, and 27.2% of Chinese who reported a need for hospitalization during the previous year were not hospitalized.[27] The corresponding figures in 2003 were 13.1% and 29.6%, respectively. These data suggest that smoking-attributable diseases might have occurred among these two groups of people, yet they did not utilize healthcare services. If this potential demand for healthcare services is transformed into real demand, smoking will impose a greater healthcare burden on the economy.

Finally, this study did not consider days lost from work by relatives or informal caregivers who took care of the patients with smoking-related illness. In addition, due to the lack of work loss data, the productivity losses due to smoking-caused disability other than inpatient hospitalization days were not considered. Therefore, the actual indirect morbidity costs of smoking-attributable diseases should be higher than our estimates (see more discussion below).

Our 2003 and 2008 cost estimates can be directly compared to the 2000 costs estimated by Sung et al.[10] because both studies employed the same methodologies with two exceptions. First, our study used the RRs of mortality for smoking from a more recent study by Gu et al. (2009)[10] rather than from Liu et al. (1998)[36] as did Sung et al. If we had used the RRs data from Liu et al., [36] then the total economic cost of smoking in China in 2008 would be $23.0 billion instead of $28.9 billion, direct healthcare costs would be $5.2 billion instead of $6.2 billion, and indirect morbidity and mortality costs would be $17.8 billion instead of $22.7 billion. Therefore, part of the increases in the costs of smoking between 2000 and 2008 was due to the use of more recent RRs data, which we believe better capture the impact of smoking during the study period. Second, this study measured lost productivity by inpatient days as a proxy for work loss days [10] because the latter variable was not asked in the 2003 and 2008 NHSS. According to a published report based on the second wave of the NHSS data, [37] the annual average inpatient days in China were lower than the annual average work loss days by 23% for cancer, 41% for cardiovascular diseases, and 60% for respiratory diseases. Therefore, our estimates for the 2003 and 2008 indirect costs of absence from work could be underestimates by at least 23%.

During the eight years from 2000 to 2008, smoking-attributable deaths decreased by 20%, but the mortality costs of smoking increased by 836%. The decrease in smoking-attributable deaths is a consequence of the reduced smoking prevalence and the resultant decrease in SAFs plus the reduced mortality rates for cancer, cardiovascular, and respiratory diseases.[19,20] The increase in the mortality costs of smoking is due mainly to the substantial increase in labor costs measured by per capita family income, which doubled from 2000 to 2003 and quadrupled from 2000 to 2008 in urban districts and which increased by 10% from 2000 to 2003 and by 96% from 2000 to 2008 in rural districts.[21,22,27] The direct healthcare cost of smoking rose by 72% from 2000 to 2003 and by 154% from 2000 to 2008. This large increase occurred because China’s national healthcare expenditures increased dramatically from 550 billion Yuan in 2000 to 784 billion Yuan in 2003 and 1,454 billion Yuan in 2008 (all expressed in 2008 constant Yuan), as a result of introducing high-tech medical equipment, the rising prices of healthcare services, and the growth of the population aged 35+.[20] The increases in per capita family income and national healthcare expenditures were contributors to the prominent growth of China’s national economy during the last decade.

In summary, our results indicate that smoking imposes a substantial burden on Chinese society. We found that the economic burden of smoking increased substantially during the eight years from 2000 to 2008 and that the increase was due largely to China’s rapid economic growth. If China’s economy continues to grow, the economic costs of smoking in the future will escalate if smoking prevalence cannot be substantially reduced. In the era of fast economic growth in China, stronger tobacco control measures must be taken without delay. Although currently 7.0% of China’s central government total revenue is generated from tobacco profit and taxes ($64.8 billion in 2008), this share has been shrinking in recent years.[21] Tobacco’s contribution is expected to shrink more in the future with the growth in the national economy, high tech, and other industries as observed in developed countries. Regardless, policymakers should understand the negative impact of cigarette smoking on China’s financial burden. Raising tobacco excise taxes has been proven as the most effective tobacco control measure to reduce tobacco use while raising government tax revenue.[38] China currently levies a 76.7% tax rate at the producer level, equivalent to a 43.4% tax rate at the retail level, [39] which is a relatively low rate compared to cigarette tax rates around the world, the median of which is about 60%.[40] This relatively low rate suggests ample room for tobacco tax increases in China especially for Class B cigarettes. Moreover, our results show that the total economic burden of smoking averaged $0.27 per pack (or 43% of the Class B cigarette retail price per pack in 2006). As explained above, because our cost estimates are underestimated, the true burden of smoking could be much higher than $0.27 per pack. Therefore, the Chinese government should raise tobacco taxes on the retail price of Class B cigarettes without delay. Such an increase will help to offset the health-related financial losses to the society due to smoking and reduce cigarette smoking and its huge health-related financial burden. From an equity perspective, part of the tax revenues raised should be used to help remaining smokers quit and obtain health care for treating smoking-related illnesses that they may already have.

What this paper adds

This paper provides an update on the economic costs attributable to smoking in China.