MONEY Health Care

What Consumers Should Know About Rising Health Care Costs

A conversation with Steven Brill, author of "America's Bitter Pill," on what the Obamacare did—and didn't do—for consumers.

In 2013, Steven Brill brought new clarity to the American health care system with his award-winning TIME cover story, “Bitter Bill: Why Medical Bills Are Killing Us.” Now he’s out with a new book on the same theme: “America’s Bitter Bill: Money, Politics, Backroom Deals, and the Fight to Fix Our Broken Healthcare System.” In it, Brill explores how the American health insurance system has evolved, the special interests that shaped the Affordable Care Act, the slow and troubled implementation of health care reform, and challenges we still face. He spoke to MONEY reporter Kara Brandeisky about his book and the key takeaways for health care consumers. (TIME and MONEY are sister Time Inc. publications and share a website. This conversation has been edited for length.)

MONEY: Your book is a comprehensive look at how the Affordable Care Act came to be. But it starts with this personal story about the experience you had as a health care consumer. How did your own open-heart surgery influence the way you thought about health care policy?

BRILL: Well, it sort of drove home something that I knew intellectually, which is that if—when—you’re a consumer in the health care marketplace, it’s not like being a consumer in any other kind of marketplace. We like to live in the illusion—or some people do—that health care can be bought and sold on the market the way any other product can because consumers can make a choice and they know what they’re doing and all the rest of it.

And the fact is that when I was lying there on that gurney, I didn’t know—and I didn’t care—what the price of anything was. I had no idea what I needed. I had no idea what the bills were going to be. When I got the bills, I had very little idea of what they meant—and I’m supposed to be, you know, an expert on this now. And when I got my explanations of benefits, not only did I have no idea, but—as you read in the book—the CEO of United Healthcare had no idea what it meant.

Who should Americans hold responsible for rising prices?

The members of Congress that, for example, passed a law that doesn’t allow Medicare to negotiate the price of prescription drugs. The members of Congress and local legislators and regulators that allow so-called nonprofit hospitals to enjoy very high profits and charge $77 for a box of gauze pads. It’s a matter of the United States deciding that it is going to join the rest of the developed world in controlling health care costs because it is not a free market that can function as a free market.

Obama said in his State of the Union that health care inflation is at its lowest rate in 50 years. [Former director of the White House Office of Management and Budget] Peter Orszag responded to your book, “The cost curve in health care is bending more drastically than I even believed possible in the fall of 2009.” What’s your response to that? Do you think we’re making enough progress at this point?

No, we’re not. And as the book recounts, Peter Orszag and his staff, until the very end, were writing memos complaining to the President and to the political staff that there’s next to nothing in this law that’s going to control costs. So he sort of is on both sides of the issue. And, you know, Peter wrote another piece in Bloomberg several months ago complaining that the law’s panel that was set up to judge comparative effectiveness is doing nothing to judge the comparative effectiveness of expensive treatments, and it’s time that we do something about that.

But saying health care inflation is low is not saying that costs are coming down. It’s just that health care inflation is now maybe two or three times overall inflation in the United States. And all that data that they cite are from the years 2011, ’12, and ’13, which are all before the core of Obamacare, the exchanges, even went into effect at the beginning of 2014. So I don’t know what they’re talking about.

But more important, if you take the trouble to read the law, all 965 pages of it, you will be hard-pressed to find anything except at the edges that does anything to address cost. There’s nothing in there that addresses prescription drug costs. There’s nothing in there that addresses what hospitals can charge and profits of hospitals, except for one provision that allows the IRS to restrict the billing collection practices of nonprofit hospitals for people who need financial aid.

And that is a provision—it’s very important. It’s a big deal. Senator Grassley, a Republican from Iowa, is the one who added that provision to the law. And that provision could have taken effect in March of 2010 when the law was passed, and it took the Obama Administration nearly five years, just until very recently, to write the regs to put that into effect. I could have written those regs in an hour and a half.

I thought some of the saddest stories in your book were about sick people who were burdened with outrageous bills because the Affordable Care Act regulations weren’t in effect yet or they hadn’t been written. What took so long?

You tell me. One of the motifs of the book is that the Obama people, from the President on down, are maybe really good at policy, but they’re just really bad at the nuts and bolts of governing. There is no explanation for why it would take five years to write that provision. It is not complex. It’s either that they were still in the grip of the hospital lobby or they were just not paying attention, just the way they weren’t paying attention to launching a website that would work.

You went and talked to Americans who could benefit from health insurance reform, and you found that they were pretty misinformed about some of the basic tenets of the law. What were some of the biggest misconceptions you encountered?

Well, it starts with the notion that this is a government takeover of health care. It’s exactly the opposite. It’s a plan that has its roots in something that Richard Nixon proposed in the 1970s that is a government subsidy of the private health care marketplace. Basically the government is subsidizing millions of Americans—which I think is a good thing—to go buy health care from private insurance companies who are going to insure them for services provided by private health care providers: hospitals, drug companies, medical device makers. So it buttresses the private sector. It certainly doesn’t interfere with it, let alone take it over. That’s one misconception.

The other misconception—and this is the Administration’s fault—is that a lot of the reporting talks about the premiums and says the premiums are $1,000 a month for a certain kind of plan. Well, they are, except for the fact that 87% of the people who are going on the exchanges are getting a subsidy, so that if you’re a family making $60,000 a year, a family of four, that $1,000 a month premium might actually cost you $300 because the government is chipping in a $700 subsidy.

The Obama Administration was really reluctant to talk about that because they were embarrassed that this was a major income-redistribution program, which is what it is. Once upon a time, the Democrats would have been proud of that. Now they’re really gun shy about it. As I point out in the book, just the Medicaid expansion in the law called for more people to get free health care—to get money from the government for health care—than the entire welfare program that Ronald Reagan ran against in 1980. And yet you didn’t see much about that. The Administration didn’t talk about it, and the press didn’t write about it.

In your original TIME story [“Bitter Pill”], chronicled how these hospitals were charging these outrageous prices, and hospital executives are making multimillion dollar salaries. So I think readers might be surprised that in your book, you say a solution is to let these hospital systems get even bigger and start insuring patients, as well. How did you come to that conclusion?

Well, because you’ve only described half of the solution. I say let them do that, but then treat them like the oligopolies or monopolies that they are, and stringently regulate their profits, their prices, even the salaries of their executives. In other words, if they’re going to be monopolies and oligopolies, and they’re going to keep their tax exemption as nonprofits, you can take a much different regulatory stance. I mean, it is totally beyond me that we have antitrust laws on the books that are supposed to regulate monopolies, and yet, Yale New Haven Health System, which is a monopoly by anybody’s definition when it comes to providing health care in New Haven, is not regulated.

And so my answer is, well, not only regulate Yale New Haven, but tell them to sell health insurance. In other words, if I live in New Haven, I’d rather buy my health insurance from Yale New Haven because it’s a great brand, it’s a great hospital. They’ve bought up so many of the doctors and clinics in and around New Haven. They own the Bridgeport Hospital. They own everything. So I could go to them and say, “Here’s my $10,000 a year for my health insurance. You keep me healthy.” And if that happens, they have no incentive to over-test or over-bill or keep me in the hospital an extra day because they’d only be charging themselves for that because they’d be the insurance company. And that all works fine again if there is real regulation, there are ombudsmen in place who really make sure that they don’t skimp on care now that they’ve gotten my $10,000.

But I think that is a realistic solution because it’s happening anyway. All these hospital systems are expanding and buying up doctors’ practices. Something like 70% of the doctors in the country are in practices owned or affiliated with the hospitals, owned by the hospitals or having some financial relationship with the hospitals.

And you also seem hopeful that tort reform could help drive down health care costs.

It would do a decent share of it, because it’s not about malpractice rates. It’s about the fact that if you go into an emergency room today and just use the word “head” as in “I have a headache,” “I fell on my head,” or even “I have to head to the bathroom,” if you use the word “head” you’re getting a CAT scan. And indeed, if you go on Google—or at least it used to be true, I haven’t done it lately—and type in “emergency room CAT scans,” all the ads on the right-hand side will be for trial lawyers. And so hospitals either have the excuse or the reason to over-test. And in the United States, we use CAT scans and MRIs three or four times as much per capita than they do in Germany, in France, in Japan and all those other places. And again, our results are no better.

[Since you’re a lawyer] I’m curious how specifically you think the system could be reformed.

Just have higher bars to lawsuits, penalize the frivolous suits, make it easier to get them thrown out. You could even have special courts which have doctors sitting as jurors. There are all kinds of proposals. The idea is not to make it impossible for someone to collect for actual malpractice, but to drive away the current system where in many places if there’s any kind of a bad result in a hospital or in a doctor’s practice, there’s a lawsuit and people have to settle it to keep going. And what doctors will do and hospitals will do is again they’ll say to someone who talks about a head, “Let’s give him a CAT scan so if anything bad happens we can always say, ‘Hey, we gave him a CAT scan,’ ‘We gave him an MRI. We did all this. We did belts and suspenders.’” That’s your defense. And that’s a very expensive defense for a lawsuit that doesn’t even necessarily happen.

You told [NPR’s] Terry Gross that as costs continue to rise you think there’s going to come a point where “something is going to snap” because “we can’t pay for this.” I wonder if you could talk a little bit more about what that breaking point might look like for consumers.

Well, we’re getting to a point where, in your own health insurance, your deductible keeps going up, your co-pays and your coinsurance keep going up, the amount you have to chip in for prescription drugs keeps going up. And that’s not because the insurance company profits are going up. It’s because their costs are going up, and so they have to keep raising their premiums and your employer can’t afford those premiums.

At some point, that’s going to become—I mean, I think it is becoming—unsustainable for people who even have good health insurance. And by the same token, it’s unsustainable for the federal government to be subsidizing ever-increasing insurance premiums for people who are buying insurance on the exchanges. So there’s nothing in the law that does anything about the core costs, the hospital costs, the drug costs. And it’s going to keep going up, and the share that the taxpayers are paying and that individuals are paying is going to go up even faster. And I think at some point, someone is going to organize a campaign around this.

Fifty years from now, how do you think historians will view the Affordable Care Act and what it did for consumers?

As a milestone, as an important milestone. Because at the bottom line, it went a long way toward erasing a national embarrassment, or disgrace even, which is that we’re the only developed country that hasn’t made some provision for all or most of our citizens to have access to health care. Now, in theory at least, every American has access to an insurance policy that will be affordable—although it’s not as affordable as it should be—and that will cover them part of the way so that they won’t either not get care and therefore have their health in peril, or even their lives in peril, or be sued into bankruptcy if they end up in the emergency room with a $9,000 bill for a bunch of CAT scans and an hour and a half of waiting.

Is there anything else that you hope consumers will take away from your book?

Well, I think consumers reading the book will certainly have a better understanding of how to read their own health care bills, how to complain about them, how to try to do something about them, how to ask the right questions. So there’s a consumer-friendly aspect of the book, too, I think.

What are the “right questions”?

“Why did I need that?” “What did that cost you?” Well, the first thing is, “What does that mean?” since most hospital bills are in code. It took me months to figure out what different hospital bills meant. But now there’s enough of a movement around that, after my article and after the stuff that Libby Rosenthal did [in her New York Times series, “Paying Till It Hurts”], that hospitals are finding they have to answer those questions.

And the power of embarrassment is not to be dismissed. If you start asking your hospital, “What is that mucus control device on the bill that’s $18?” And they say, “Well, that’s the box of tissues you got.” They may say, “You know what? Forget the mucus control device. We’ll take that off the bill.”

TIME Health Care

California Says E-Cigarettes a Health Risk

TIME.com stock photos E-Cig Electronic Cigarette Smoke
Elizabeth Renstrom for TIME

Department of health advises Californians to stay away from e-cigs

The California Department of Public Health (CDPH) has come out against electronic cigarettes (e-cigarettes), releasing a new report on Wednesday outlining their risks.

“E-cigarettes contain nicotine and other harmful chemicals, and the nicotine in them is as addictive as the nicotine in cigarettes,” CDPH director and state health officer Dr. Ron Chapman said in a statement about his report. “There is a lot of misinformation about e-cigarettes. That is why, as the state’s health officer, I am advising Californians to avoid the use of e-cigarettes and keep them away from children of all ages.”

The news comes as the California state legislature considers a ban on the devices in public places, as well as new measures against selling them to minors.

According to CDPH, e-cig use among Californians aged 18 to 29 has gone up from 2.3% in 2012 to 7.6% in 2013 and young adults in California are three times more like to use e-cigs than people over age 30. California poison centers are also seeing an increase in calls related to exposures to the liquids inside e-cigarettes. Calls increased from 19 in 2012 to 243 in 2014.

MORE: What to Know About the Science of E-Cigarettes

Nationwide, similar increases are being observed, with data from the 2013 National Youth Tobacco Survey showing that the percentage of middle school and high school students who have tried e-cigarettes doubled from 3.3% in 2011 to 6.8% in 2012.

The new report touches on the harm to brain development from exposure to nicotine during adolescence; dangerous chemicals found in some e-cigarette aerosol; and the fact that e-cigs are not FDA-approved devices for smoking cessation.

The report can be added to a growing amount of data on the risks and potential benefits of e-cigarettes. Earlier this month, a study published in the New England Journal of Medicine showed that e-cigarettes may be producing harmful chemicals known to cause cancer in humans.

You can read the full report, here.

TIME Health Care

Battle Over Paid Surrogacy Opens New Front

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Getty Images

The bill is personal for this New York senator

In many states, hiring a woman to carry and give birth to a child for you is illegal. But democratic New York Senator Brad Hoylman is fighting to change that in his home state. On Wednesday, he and the New York State assembly re-filed a bill called the Child-Parent Security Act to legalize compensated surrogacy in New York, and provide protections that ensure surrogates are entering into legal agreements and there’s no question that the intended parents of the child have full rights.

For him, the issue is personal and political.

New York forbids compensated surrogacy and is the only state where criminal penalties can be imposed on people who enter into a paid surrogacy agreement. That means that couples who want to use a surrogate to have a child that they’re genetically related must travel to a state where the practice is legal in order to do so.

That’s what Hoylman and his husband David Sigal did. Their daughter Silvia, now 4, was born via a surrogate in California, where compensated surrogacy is legal and parental rights are established prior to the birth of the child. “It added a lot of time and expense and uncertainty to having a child as a gay couple,” says Hoylman. “California has codified legal protections for surrogate families, and I would like to see that replicated in New York.”

Twenty-two states allow the practice and four states—New York, Michigan, Nebraska, New Jersey—as well as Washington, D.C., forbid it . The remaining states don’t have any rulings on the matter, meaning it’s technically not illegal but there are no laws to protect people should something go wrong, such as legal arguments over who has parental rights.

“I’ve had reports of surrogate children being born in New York illegally,” says Hoylman. “It’s a bit of a wild west scenario.”

Paid surrogacy, whether in one’s home state or elsewhere, is still costly. Basic fees for a surrogate mother can range from $32,000 to $40,000, with medical bills, legal fees, finding an egg donor and paying for insurance on top of it. For couples who travel out of state for a legal arrangement, there’s the added cost of travel throughout the pregnancy. All told, out-of-state surrogacy arrangements can cost around $100,000 on average.

One of the reasons many states are still wary of paid surrogacy is because of a 1988 ruling in New Jersey over “Baby M.” In a traditional surrogacy scenario, a woman named Mary Beth Whitehead agreed to be the paid surrogate for William and Elizabeth Stern, whom she found in a newspaper advertisement. But after giving birth, Whitehead changed her mind and tried to take the child back. Ultimately, the court gave custody to the Sterns, but Whitehead was given legal visitation rights. After that, paid surrogacy was outlawed in New Jersey, and others followed suit.

But thanks to in vitro fertilization, surrogacy today looks very different than it did a decade ago. Experts now recommend gestational surrogacy, where a surrogate fetus is implanted with an embryo made from donor sperm and egg—as opposed to tradition surrogacy, where the surrogate is inseminated with sperm. In the latter case, the carrier is genetically related to the child. Hoylman’s bill does not endorse that form.

Hoylman’s bill establishes the concept of “intended parentage” so that regardless of how a child was conceived, intended parents get rights. For example, in many cases, if a lesbian couple has a child via a sperm donor, the non-biological mother must adopt the child, something Hoylman says women find “embarrassing.”

For now, Hoylman says he has to prove that compensated surrogacy can work in New York.

“I was in the delivery room with my daughter and not everyone has that vantage point,” says Hoylman. “I am mindful that this is a longer term project.”

TIME public health

Paying People Could Help Them Quit Smoking

Peter Dazeley—Getty Images

Researchers offered women more than $1,000 to get them to stop smoking

Paying people to quit their bad health habits may be a powerful way to address public health issues like smoking, according to a new study in the BMJ. In the study, pregnant women were more than twice as likely to quit smoking when offered financial incentives than when they were given regular counseling.

“If financial incentives are effective and cost effective they may well have the future potential to sit with vaccines as an important preventive healthcare intervention strategy,” the study says.

The research, which looked at more than 600 pregnant women in the United Kingdom, offered women up to $1,200 dollars in shopping vouchers for following steps to quit smoking. Nearly a quarter of women who were offered the money successfully quit smoking. In the control group, a separate group of women received free nicotine therapy and were counseled on how to quit. Less than 9% of those women were able to kick the habit.

Read More: What I Learned From My $190,000 Surgery

That success gap remained when researchers followed up a year with the women in both groups who had quit. Fifteen percent of the women who had been paid to quit had stayed away from cigarettes, while only 4% of the counseling group quitters had done the same.

Using financial incentives to encourage better health behavior has been explored in depth in recent years by public health experts, but many remain skeptical due to underlying ethical concerns. Some have argued that such incentives are coercive and diminish a person’s sense of personal responsibility. But the researchers in this study argue that it can help in more ways than one; getting additional funds before a child’s birth helps the people who need financial assistance the most at the time they need help.

“In the developed world there is now a clear socioeconomic gradient in smoking, with tobacco use concentrated among the poorest in society,” the study says. “Receipt of financial incentives can contribute to needed household income in advance of the arrival of a baby in low income households.”

MONEY alternative assets

How Real Estate Can Boost Your Income in Retirement

REITs have been hot for a while. But there's still a corner of the market that has room for growth.

This is the third in a series of five articles looking at the most popular bond alternatives and the safest ways to use them to improve your income prospects when rates are low. Adapted from “Reaching for Yield” in the January/February issue of MONEY magazine.

High demand over the past year for the traditionally lofty yields on ­real estate investment trusts—the trusts are required to pay out 90% of their profits—has led to spectacular returns. Among the most popular REIT funds, for example, iShares Real Estate Fifty ETF and longtime MONEY 50 member Cohen & Steers Realty both gained more than 27% in 2014.

The rally has resulted in skimpy payouts for new investors: REIT index funds were yielding about 3% by year-end, far below their 7.5% historical average.

That’s led many analysts, such as Brad Thomas, editor of The Intelligent REIT Investor newsletter, to urge investors to be very picky about where they put new money. One pocket of opportunity now, he says, can be found in health care REITs, which specialize in leasing space to nursing homes, hospitals, and other medical facilities and will profit from the aging of the population. While their high P/Es may be off-putting—some are selling at more than 40 times earnings—a better way to assess REITs is to look at their funds from operations, or FFO. Whereas reported earnings treat depreciation on real estate holdings as an expense that lowers results, FFO adds depreciation back, which more accurately reflects the value of a trust’s property. Using that metric, health care ­REITs look relatively inexpensive, trading at 14.5 times FFO, compared with the industry’s average of 15.5.

Your best strategy: While you’re usually better off investing via mutual funds and ETFs, there are none now that substantially overweight health care trusts. That’s why ­Thomas and Morningstar senior REIT analyst Todd Lukasik instead favor individual health care REITs.

Both, for example, are fans of Ventas VENTAS VTR -0.582% , which owns about 1,500 senior housing communities, skilled nursing facilities, and similar properties in the U.S. and Britain and was recently selling for 15 times FFO. Ventas raised its dividend 9% in December, giving it a yield around 4%. They also like HCP Inc. HCP, INC. HCP -0.1671% , which owns $22 billion worth of medical-related property. It is selling for 12 times FFO and yields 4.5%.

More in this series:
The Smart Way to Invest in Dividend Stocks
High-Yield Bonds: Where to Look for Quality Junk
How to Boost Returns When Interest Rates Totally Stink

TIME Congress

House GOP Pulls Anti-Abortion Bill on Roe v. Wade Anniversary

The House Republican leadership reversed course on plans to vote on an anti-abortion bill deemed too restrictive by many female lawmakers in its conference, exposing internal party divisions as activists mark the 43rd anniversary of Roe v. Wade with the March for Life.

The bill—the Pain Capable Unborn Child Protection Act—would ban abortions after the 20th week of a pregnancy. Even though a similar bill was passed two years ago, Republican lawmakers raised concerns that this bill included a controversial clause requiring that a woman had to report the rape to police before she could get an abortion. The House will now hold another symbolic vote on a different, old bill that bans taxpayer funding of abortions.

“The reporting requirements I think were problematic,” said Missouri Republican Rep. Vicky Hartzler, who met with House GOP Whip Steve Scalise to air out her concerns this week. “Statistics show that a lot of women who are raped do not report it.”

Hartzler said she hoped that the bill would come back up with altered language that could garner more support. It’s unclear whether or not the current bill could have passed.

The American Congress of Obstetricians and Gynecologists has opposed similar legislative proposals based on fetal pain as “not based on sound science.” The bill would be aimed at a minority of abortions, since 92 percent are performed within the first 13 weeks, according to the U.S. Centers for Disease Control and Prevention.

Conservatives supported the bill in its entirety and expect the leadership to bring it back in some form. Susan B. Anthony List, the March for Life Education and Defense Fund, and Concerned Women for America Legislative Action Committee officials said they were “disappointed” that there wouldn’t be a vote and would work with the House GOP leadership “to ensure the maximum number of votes” in the future. Conservative RedState activist Erick Erickson called Republican Rep. Renee Ellmers of North Carolina, a key figure in opposing the bill’s rape reporting language, the “GOP’s Abortion Barbie.”

“There was a lot of discussion in our retreat [last week] about this and some of the new people did not want to make this the first bill they voted on because the millennials have a little bit of a different take on it,” said Republican Rep. Ted Yoho of Florida. “But you will see it come back because the American people agree with it two to one. It’s a hideous practice. It needs to stop.”

The conservatives’ confidence that the bill will be resurrected would disappoint Democrats like Oregon Rep. Peter DeFazio, who said that now there is “some grain of hope that the Republican leadership is no longer going to be totally constrained by the wishes of their right-wing friends.”

Other Democrats said the abortion issue plays directly into their “war on women” narrative.

“It’s almost as though they’re creating the strategy for us, bringing up these bills,” New York Rep. Joseph Crowley, vice chairman of the House Democratic Caucus told the Hill.

“In contrast to talking about job creation and bigger paychecks, they’re putting a bill on the floor that undermines the health of of America’s women,” said House Minority Leader Nancy Pelosi in a press conference Thursday. “The bill is worse than the bill they pulled from the floor yesterday. That affected thousands of women, maybe, this affects millions of women. It not only affects their health, it affects the personal decisions of how they spend their own money on health insurance.”

Moderate Republicans such as Pennsylvania Rep. Charlie Dent agreed with Pelosi that the GOP should be talking about pocketbook issues instead.

“I would prefer that our party spend less time focusing on these very contentious social issues because that distracts us from broader economic messages where I think we have a much greater appeal to the larger public,” he said.

TIME Addiction

Typical American Smokers Burn Up at Least $1 Million During Their Lifetimes

Alaska smokers will spend over $2 million

American smokers spend at least $1 million dollars on cigarette-related expenditures over their lifetimes, according to a state-by-state analysis done by the financial consultancy company WalletHub.

The most expensive state for smokers is Alaska, where the habit costs over $2 million dollars on average. For a bargain, move to South Carolina, but that still comes in at nearly $1.1 million.

“I and most people really just think of the cost of cigarettes and taxes on the packs, but if you think about the healthcare costs, which can totally be avoided, healthcare insurance premiums, and in the workplace, bias against smokers, that can … add up,” said WalletHub spokeswoman Jill Gonzalez.

The study’s “average smoker” is someone who smokes one pack a day starting from the age of 18 (legal age to buy) and ending at 69 (the average age of death for a smoker).

So, if you’re looking for another excuse to quit, perhaps take a quick peak down millionaire’s row.

MONEY health

Smoking Can Cost You $1 Million to $2 Million in a Lifetime

smoking cigarette wrapped in money on ashtray
John Knil—Getty Images

Your pack-a-day habit isn't just destroying your lungs, but your bank account as well—more than you ever imagined.

According to the American Lung Association, tobacco kills nearly half a million Americans annually and costs the nation $333 billion per year in health-care expenses and lost productivity to boot. But it’s hard for the average person—specifically, the average smoker—to wrap one’s brain around such an enormous figure.

Coming to the rescue, timed to coincide with the CDC’s Tobacco Awareness Week, is a new state-by-state analysis from WalletHub detailing the lifelong financial costs of smoking for an individual. Because the average price of a pack of cigarettes varies widely around the country—$5.25 in Virginia, $8 in Michigan, $12.85 in New York—the lifetime outlay varies greatly from state to state as well. In all cases, though, the data gathered by WalletHub show that smoking is incredibly costly in addition to being potentially deadly.

The total cost per smoker is estimated at $1,097,690 in South Carolina—and it’s the least expensive state in the nation. A Kansas City Star headline noted that the “cost of smoking is cheap in Missouri … relatively,” as the state ranks as the eighth least expensive on WalletHub’s list, with the total cost for a lifetime of smoking running “only” $1,177,230. At the high end of the spectrum, there’s Rhode Island, Massachusetts, New York, and Connecticut, where the habit costs more than $1.9 million per person in a lifetime. Priciest of all is Alaska, which crosses the $2 million mark.

For a little perspective, federal data estimates that the cost of raising a child to age 18 is about $250,000—a big chunk of change, but only a small fraction of expenses reportedly incurred by smokers.

Right about now, the average smoker (or just the average reader with a healthy degree of skepticism) is probably thinking: hogwash. The process of coming up with such wild figures must involve a fair amount of smoke and mirrors, so to speak, right?

Let’s have a look at what WalletHub did, exactly. By far, the largest expense incorporated into the per-person total is the “tobacco cost per smoker,” measured at $786,346 in South Carolina, up to roughly $1.5 million in Alaska. WalletHub came up with that figure by multiplying the average price of a pack of cigarettes in each state by the number of days in 51 years. Fair enough. There are cheaper ways to go about buying cigarettes, like buying smokes by the case, but many people purchase by the pack.

What’s trickier is the way that WalletHub pumped up its tobacco cost estimates by calculating “the amount of return a person would have earned by instead investing that money in the stock market over the same period. We used the historical average market return rate for the S&P 500 minus the inflation rate during the same time period to reflect the return in present-value terms.” In other words, the assumption is that money not spent on cigarettes would have been dutifully and wisely invested over those same 51 years.

Similar assumptions have also been used in the now (mostly) discredited “latte factor,” which is the theory that holds that people can wind up with millions in the bank by cutting back on everyday expenses like a daily latte. Among other reasons, this line of thinking is questionable because people don’t necessarily invest money that they don’t spend on some product or service—they’re more likely to simply spend that money on something else.

WalletHub also includes other costs that many smokers never think about, factoring in added health care expenses (with state-by-state data from the CDC) and an 8% hit on income due to smoking, as determined in a study by the Federal Reserve Bank of Atlanta.

Add up all of these and a few other estimated expenses, and over the course of a half-century, the cost to the pack-a-day smoker runs $1 million to $2 million, according to WalletHub. Are the figures overblown? Well, perhaps a bit. There’s a good argument to be made that the data were construed to come up with totals that are as big and headline-worthy as possible. (After all, they got our attention.)

Nonetheless, even if the figures are on the inflated side, it’s an undeniable reality that the smoking habit costs big bucks over a lifetime. And oh yeah, it can make your lifetime a lot shorter. Let’s not forget that.

MONEY Benefits

Why Some Same-Sex Couples May Have to Marry Now

Same-sex wedding toppers on top of aspirin bottle
Sarina Finkelstein (photo illustration)—Getty Images (2)

With same-sex marriage legal in 35 states and D.C., a few employers are starting to roll back back health insurance and other benefits for domestic partners.

Until recently, same-sex couples could not legally marry. Now, some are finding they must wed if they want to keep their partner’s job-based health insurance and other benefits.

With same-sex marriage now legal in 35 states and the District of Columbia, some employers that formerly covered domestic partners say they will require marriage licenses for workers who want those perks.

“We’re bringing our benefits in line, making them consistent with what we do for everyone else,” said Ray McConville, a spokesman for Verizon, which notified non-union employees in July that domestic partners in states where same-sex marriage is legal must wed if they want to qualify for such benefits.

Employers making the changes say that since couples now have the legal right to marry, they no longer need to provide an alternative. Such rule changes could also apply to opposite-sex partners covered under domestic partner arrangements.

“The biggest question is: Will companies get rid of benefit programs for unmarried partners?” said Todd Solomon, a partner at McDermott Will & Emery in Chicago.

It is legal for employers to set eligibility requirements for the benefits they offer workers and their families — although some states, such as California, bar employers from excluding same-sex partners from benefits. But some benefit consultants and advocacy groups say there are legal, financial and other reasons why couples may not want to marry.

Requiring marriage licenses is “a little bossy” and feels like “it’s not a voluntary choice at that point,” said Jennifer Pizer, senior counsel at Lambda Legal, an organization advocating for gay, lesbian and transgender people.

About two-thirds of Fortune 500 companies offer domestic partner benefits, but only a minority is changing the rules to require tying the knot, said Deena Fidas, director of the workplace equality program at the advocacy group Human Rights Campaign.

Because same-sex marriage isn’t legal in all states, “many employers operating in multiple states … are retaining their partner benefit structures,” said Fidas.

Most companies making the changes, including Verizon, are doing so only in those states where same-sex couples can get married. And most give workers some time to do it.

“We gave them a year and a quarter to get married,” said Jim Redmond, spokesman for Excellus BlueCross BlueShield, which made the change for employees shortly after New York allowed same-sex unions.

Employers that offer domestic partner benefits — for both same-sex and opposite-sex partners — generally allow couples in committed relationships to qualify for health and other benefits upon providing documents, such as financial statements, wills, rental agreements or mortgages, proving they are responsible for each other financially.

Such benefits were particularly important before the federal health law barred insurers from rejecting people with pre-existing medical conditions.

“We had clients over the years who were living with HIV … the only health insurance they had, or had hope of getting was their partner’s, through a job,” said Daniel Bruner, director of legal services at the Whitman-Walker Health clinic in Washington D.C. “Now folks have more health insurance options.”

After the Supreme Court ruled the federal Defense of Marriage Act unconstitutional in 2013, the portion of the health insurance premium paid by employers on behalf of the same-sex spouse was no longer taxable under federal rules, although state taxes often applied where such marriages were not legal. When state marriage laws change, so do those tax rules.

In Arizona, Dena Sidmore and her wife, Cherilyn Walley are saving more than $300 a month in taxes on the health insurance from Walley’s state job, which covers them both. The savings came after the state’s same-sex marriage bar was thrown out by the courts in October.

They didn’t marry for benefits. They already had coverage under domestic partner requirements affecting Arizona state workers. They simply wanted to be married. Indeed, they tied the knot in September 2013, after driving all night to Santa Fe, N.M., where same-sex marriage was legal.

“It was lovely,” Sidmore said of the ceremony at the courthouse. But for her, the real change came when Arizona’s bar on same-sex marriage was overturned by the courts. She remembers thinking: “This is real. It’s not just a piece of paper.”

After the courts lifted the same-sex marriage ban, Arizona dropped its domestic partner program. State workers had until the end of last year to marry if they wanted to keep a partner on benefits.

Sidmore has no objection to employers requiring a marriage license for benefits because “spousal benefits require marriage,” although she thinks there should be exceptions for older residents who might face the loss of pensions or other financial complications if they remarry.

Benefit experts recommend that employers consider what it might mean for workers if benefits are linked to marital status — especially those that operate in states where same-sex marriage is not legal.

While some couples, like Sidmore and Walley, may be willing to travel to tie the knot, others may not want to, or may be unable to afford it. Additionally, some workers may fear if they marry, then move or get transferred to a state where same-sex marriage is barred, they would face discrimination.

Joe Incorvati, a managing director at KPMG in New Jersey, married his partner, Chuck, in 2013 when it became an option. “We’d been together for 38 years, so it just seemed natural,” he said.

KPMG offers domestic partner benefits and does not require employees to be married for eligibility. While he’s comfortable in New Jersey, Incorvati said it could be a problem if his company wanted to transfer him to a state where same sex marriage is not legal.

Even though his work benefits would remain the same, “Would I have the same rights as in New Jersey?” Incorvati asked. “The answer may be no.”

Kaiser Health News (KHN) is a nonprofit national health policy news service.

TIME Health Care

Administrator Who Oversaw Roll-Out of Obama’s Health Care Law Steps Down

Obamacare Marilyn Tavenner
From left, Marilyn Tavenner, Administrator of CMS, Department of Health and Human Services, Jonathan Gruber of MIT, and Ari Goldman, testify at a House Oversight and Government Reform Committee hearing titled "Examining Obamacare Transparency Failures," in Washington on Dec. 09, 2014. Tom Williams—CQ-Roll Call/Getty Images

Marilyn Tavenner says she's leaving with "sadness and mixed emotions"

(WASHINGTON) — Medicare chief Marilyn Tavenner — who oversaw the rocky rollout of the president’s health care law — says she’s stepping down at the end of February.

In an email Friday to staff at the Centers for Medicare and Medicaid Services, Tavenner says she’s leaving with “sadness and mixed emotions.”

Tavenner survived the 2013 technology meltdown of HealthCare.gov, but was embarrassed last fall when she testified to Congress that 7.3 million people were enrolled for coverage. That turned out to be an overcount that exaggerated the total by about 400,000.

Calling Tavenner “one of our most esteemed and accomplished colleagues,” Health and Human Services Secrerary Sylvia M. Burwell said the decision to leave was Tavenner’s.

Principal deputy administrator Andy Slavitt will take over as acting administrator.

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