From a societal perspective, paying people to quit smoking is highly cost-effective, because the benefits of smoking cessation are so great. That’s one of the main takeaways from a new study by Louise B. Russell and colleagues. At the same time, the study also helps to understand why employers might be reluctant to implement financial incentive programs in the workplace, given their shorter decision horizons and the fact that the benefits may accrue long after the employee leaves the company.
The study evaluates the cost-effectiveness of a randomized trial of financial incentives conducted with employees of CVS Caremark. The financial incentives, which ranged from $800 to $1,940 per quitter, led to much higher quit rates at six months. Although that sounds expensive, the life expectancy gains from quitting smoking are large so the cost might be worthwhile.
Using data from the trial, Russell and colleagues estimated life expectancy gains (in life-years), quality of life gains (in quality-adjusted life-years), health care costs, and employer costs. They compared two perspectives: the societal one, which includes all health gains and costs (regardless of payer) over participants’ remaining lifetimes, and the employer one, which includes only costs paid by the employer over a five-year time horizon.
Their findings are eye-opening. Compared to business-as-usual, the incentive programs were quite cost-effective from a societal point of view: $3,200-$6,500 per life-year. But would implementing the program be a good business decision? From the employer perspective (which also takes employee turnover into account), costs ranged from $256,600-$1,711,100 per life-year. Because quality of life gains are larger than life-expectancy gains in the early years, the cost is much lower, but still substantial.
This story is by Janet Weiner. Read more at Penn LDI.
