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Air pollution is harmful to human health, but little is known about the costs of pollution-related health care. If such care imposes a significant burden on insurance companies and employers, they would have substantial stakes in improving air quality. Reduced medical spending could also benefit public programs such as Medicare and Medicaid. This study estimated the amount of medical spending by private health insurers and public purchasers, such as Medicare, that is related to air pollution. Specifically, the authors determined how much failing to meet air quality standards cost various purchasers of hospital care in California over 2005-2007. The results indicate that substantial reductions in hospital spending can be achieved through reductions in air pollution.

This work was sponsored by the William and Flora Hewlett Foundation. The research was conducted in RAND Health, a division of the RAND Corporation.

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