I guess I'm not sure what they mean by "health care costs". The way I look
at it is: which is greater, the single premium for lifetime health
insurance for, say, a 40 year old smoker or the same for a 40 year old
non-smoker? I know the answer for life insurance. I can guess that for
health insurance the premium would be higher for the smoker, but I'm not so
sure. As I see it, the non-smoker is just deferring his period of ill
health for five or ten years, thereby lowering the NPV of the single
premium. On the other hand, those later expenses would have five or ten
years of inflation in them.
Here's one to ask your friends. Who lives longer, the average American male
non-smoker or someone who's been smoking three packs of Camel non-filters a
day for 80 years?
Regards,
Greg Cuzzi
To: casnet
cc: (bcc: Gregory A. Cuzzi)
From: "AEGISLAN/AEGIS/FLEMINK%Aegis" @ MCIMAIL.COM
Date: 10/10/97 12:26:58 PM
Subject: Health care costs
There was a little blurb in the WSJ today quoting the New England Journal
of
Medicine. Basically it says that if people stopped smoking today, health
care costs would go down at first but 15 years later would be higher than
at
present because smokers would live longer. I think they're saying that
health care costs go up as you get older and that having some people die
early helps to keep costs down.
Can any actuaries out there offer some good insights on this statement?
Kirk Fleming
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