During the last thirty years, health and health care have become a dominant economic issue in the United States as well as in many other developed countries. The enactment of strong laws regulating tobacco use has been a primary goal of the tobacco control movement. From the practical standpoint, the problem is now embedded between the laws that would protect the public from the negative effects of environmental tobacco smoke (ETS) and the potential to burden individual right to consume a legal product.

From the perspective of negative impact caused by smoking in public places on health and financial security of American population, enactment of legislation prohibiting smoking in public places must be implemented at the earliest. The majority of scholars, such as Bonita, Glantz and colleagues, points out failures of public policy associated with tobacco use (Bonita et al, 156; Glantz & Parmley, 2). Primarily, it is a failure to recognize the presence of negative externalities, and the second is the lack of perfect information.

Negative externalities occur when one person’s actions, in this case it is smoking in public places, impose costs on other persons without any compensation. Risk studies conducted by the EPA consistently rank indoor air pollution as “one of the most important environmental risks to the public’s health” (EPA, 7). Human exposure to indoor air pollutants is often substantially greater than outdoor exposure to the same substances (Glantz & Parmley, 3).

The aerosol particles from ETS are concentrated indoors and remain long after each cigarette has been extinguished. According to EPA, “these risks are of particular concern as people are estimated to spend up to 90% of their time indoors” (EPA, 8). ETS is associated with higher risk of lung cancers, heart diseases, and other health problems. Inhaling second hand smoke can set off allergic reactions among non-smokers, which in case of asthmatics are potentially fatal (The Better Health Channel, 2008).

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Smoking among pregnant women can retard fetal growth and cause spontaneous abortions. A second type of externalities can be called “financial externalities” because they cause a direct financial harm to non-smokers. The presence of smokers in a health insurance pool causes an increase of insurance premium for everybody, because the average smoker has higher medical expenses. Another transfer of funds from non-smokers to smokers occurs when government intervenes in the health insurance market.

Smokers who are eligible to participate in Medicare or Medicaid programs use these programs for treatment of their smoker’s related diseases. In this case, all taxpayers bear the financial consequences of smoker’s behaviour. Smoking in public places also increase fire hazard and the damages to both property and health caused by fire are often recovered from public funds. Smoking in public places has negative economic impact on business largely due to the amount of people having to take smoking breaks.

As Stewart points out, “employees that smoke had about two times more lost production time (LPT) per week than workers who never smoked a cost of $27 billion to employers” (Stewart, 1237). Employees feel that work takes up a large period of time and they must need a break in order to take a smoke and replenish their nicotine craving, which causes non smokers to want a break because they see smokers taking a break.

As evident from the arguments presented above, smoking in public places represents an important public policy problem, because it has a negative impact on public health and public economic well-being. If the current trend of smoking in public in the United States persists, health care expenditures and unnecessary losses of health capital in society will accelerate. Therefore, the policymakers should give this problem high priority, increase its efforts in tobacco use regulation, and start a more intensive search for effective interventions and methods for their evaluation.

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