Cost and Health Consequences of Air Pollution in California

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Breathing dirty air is bad for our health. The adverse effects are well known, ranging from minor restrictions in activity to emergency room visits for asthma, hospitalizations for respiratory and cardiovascular causes, and premature mortality. But who pays for pollution-related health care? If the care imposes substantial burdens on private insurers, employers, or public programs such as Medicare, then all of these payers have substantial stakes in improving air quality.

To explore this issue, RAND analysts estimated how failing to meet federal and state standards for particulate matter and ozone affected private and public insurer spending on hospital admissions for respiratory and cardiovascular causes, and ER visits for asthma, throughout California from 2005-2007. The study team used a model to predict pollution levels throughout California if federal standards had been met, examined actual patterns of hospital care to estimate pollution-related care delivered at specific hospitals, and used actual spending patterns to quantify who paid for this care.

The analysts identified substantial health and cost benefits from cleaner air. Nearly 30,000 hospital admissions and ER visits could have been avoided over the two-year period, with resulting savings of about $193 million. Because public insurers such as Medicare and Medi-Cal paid most of the pollution-related health care bill, they have a lot to gain from cleaner air. But employers and private insurers also have sizable financial interest in reducing air pollution.

The number of adverse health events that clean air would have prevented, and the resulting savings, varied across the state, depending on the local level of pollution. Use the mapping application to explore effects in any congressional district, compared with the state as a whole.

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