Settling the Bill

You can buy a pack of cigarettes at any convenience store for about $4. But what does it really cost, and who ultimately pays the price?

Those questions are at the heart of a long-running lawsuit in St. Louis Circuit Court, where hospitals are suing tobacco companies for the costs of caring for uninsured smokers.

The case was filed in 1998. If all goes well, it could go to trial in 2010. A recent Post-Dispatch article followed the litigation along its tortuous track.

The hospitals claim they've lost about $1 billion since 1993 by providing health care to smokers. Whether or not that figure is correct — and proving it will be a challenge — smoking certainly exacts an enormous cost on the health care system.

The U.S. Centers for Disease Control and Prevention estimates that smoking led to the premature deaths of an average of 438,000 Americans each year between 1997 and 2001; hundreds of thousands more were sick with serious and expensive illnesses. Smoking is linked to heart disease, high blood pressure, lung and stomach cancer, leukemia and dozens of other diseases.

The CDC also estimates that smoking causes about $75 billion in direct medical costs each year, an average of $3,561 per smoker. Smoking rates are significantly higher among low-income groups, the very people who are least likely to be insured.

Tobacco companies counter the hospitals' claim by arguing that smokers, not the hospitals, are the ones harmed by smoking. Hospitals can't collect for damages they didn't suffer.

Given how hard tobacco companies have fought suits filed by smokers, it takes incredible chutzpah for the firms to argue that the "smokers are the ones who are hurt." But that doesn't mean the argument is without substance.

Hospitals receive what are called "disproportionate share" payments through Medicaid for treating uninsured patients.

Even if sick smokers didn't pay for their care directly, hospitals presumably have been reimbursed for at least some of the costs of their care.

State governments, which pay nearly half the cost of Medicaid, already have sued and settled with tobacco companies to recover their share of the Medicaid costs of caring for uninsured smokers. If hospitals have a reasonable loss claim at all, it would be only for the difference between what it cost them to care for uninsured patients, minus those disproportionate share payments they received.

By the way, it's worth pointing out that hospitals don't automatically forgive the bills of uninsured patients. They work aggressively to collect them and presumably succeed to some degree. Those revenues also would have to be deducted from the hospitals' claimed losses.

One reason the St. Louis case has languished for so long is that tobacco companies asked the plaintiff hospitals to provide the names and medical records of the uninsured patients whose care is the subject of the suit. Whatever one thinks of tobacco companies that is not an unreasonable request.

The hospitals initially balked, then turned over the records of every indigent patient they treated — including the records of many patients who weren't treated for tobacco-related illness at all.

Judge Michael P. David, who is presiding over the case, subsequently fined hospitals for providing the wrong documents and ordered them to turn over the relevant records.

While the case drags on, hospitals and health care providers around the country are watching to see if it might be worthwhile for them to sue the tobacco companies, too. For the tobacco companies, the costs of losing could be crippling.

There seems to be no question that somebody should have a pretty good legal claim on the billions of dollars of profits tobacco companies have made by peddling their deadly products. The question is who.

Don't expect an answer any time soon.

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