Policymakers have long sought to reduce the economic damage due to the negative health impact of smoking. They have used tactics ranging from cigarette excise taxes to subsidizing nicotine replacement therapies. To be sure, smoking prevalence has fallen over time, but there is more that can be done, especially given the fact that so much of the healthcare burden of smoking falls on the already strained Medicaid system.
As with any innovation, no one could have predicted the sudden arrival into the marketplace of the e-cig in 2006. Since e-cigs fulfill both the chemical need for nicotine and physical stimuli of smoking the demand for e-cigs has grown dramatically. The promise of a relatively safe way to smoke has the potential to yield enormous healthcare savings. The most current academic research verifies the harm reduction potential of e-cigs.
As shown in this study, the potential savings to Medicaid significantly exceeds the state revenue raised from the cigarette excise tax and tobacco settlement payments by 87%. As such, the rational policy decision is to adopt a non-interventionist stance toward the evolution and adoption of the e-cig until hard evidence proves otherwise. While cigarette tax collections will fall as a result, Medicaid spending will fall even faster. This is a win-win for policymakers and taxpayers.