The impact of smoking on medical care expenditure is analyzed, challenging the widespread belief that smoking imposes a large cost burden on health services systems. The results imply that lifetime expenditure is higher for nonsmokers than for smokers because smokers' higher annual utilization rates are overcompensated for by nonsmokers' higher life expectancy. Population simulation, taking into account the effects of past smoking on present population size and composition, suggests that 1976 expenditure would have been the same if no male born since 1876 had ever smoked. The male population would have been larger, particularly at older ages, increasing medical care expenditure, but this increase would have been offset by lower annual medical care utilization rates. Thus the results imply that smoking does not increase medical care expenditure and, therefore, reducing smoking is unlikely to decrease it.
