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1.  Cost-effectiveness of changes in alcohol taxation in Denmark: a modelling study 
Excessive alcohol consumption is a public health problem in many countries including Denmark, where 6% of the burden of disease is due to alcohol consumption, according to the new estimates from the Global Burden of Disease 2010 study. Pricing policies, including tax increases, have been shown to effectively decrease the level of alcohol consumption.
We analysed the cost-effectiveness of three different scenarios of changed taxation of alcoholic beverages in Denmark (20% and 100% increase and 10% decrease). The lifetime health effects are estimated as the difference in disability-adjusted life years between a Danish population that continues to drink alcohol at current rates and an identical population that changes their alcohol consumption due to changes in taxation. Calculation of cost offsets related to treatment of alcohol-related diseases and injuries, was based on health care system costs from Danish national registers. Cost-effectiveness was evaluated by calculating cost-effectiveness ratios (CERs) compared to current practice.
The two scenarios of 20% and 100% increased taxation could avert 20,000 DALY and 95,500 DALY respectively, and yield cost savings of -€119 million and -€575 million, over the life time of the Danish population. Both scenarios are thus cost saving. The tax decrease scenario would lead to 10,100 added DALY and an added cost of €60 million. For all three interventions the health effects build up and reach their maximum around 15–20 years after implementation of the tax change.
Our results show that decreased taxation will lead to an increased burden of disease and related increases in health care costs, whereas both a doubling of the current level of alcohol taxation and a scenario where taxation is only increased by 20% can be cost-saving ways to reduce alcohol related morbidity and mortality. Our results support the growing evidence that population strategies are cost-effective and should be considered for policy making and prevention of alcohol abuse.
PMCID: PMC3914680  PMID: 24405884
Cost-effectiveness; Taxation; Alcohol; Public health; Health effects; Health care costs; Simulation modelling
2.  Cost-Effectiveness of an Opportunistic Screening Programme and Brief Intervention for Excessive Alcohol Use in Primary Care 
PLoS ONE  2009;4(5):e5696.
Effective prevention of excessive alcohol use has the potential to reduce the public burden of disease considerably. We investigated the cost-effectiveness of Screening and Brief Intervention (SBI) for excessive alcohol use in primary care in the Netherlands, which is targeted at early detection and treatment of ‘at-risk’ drinkers.
Methodology and Results
We compared a SBI scenario (opportunistic screening and brief intervention for ‘at-risk’ drinkers) in general practices with the current practice scenario (no SBI) in the Netherlands. We used the RIVM Chronic Disease Model (CDM) to extrapolate from decreased alcohol consumption to effects on health care costs and Quality Adjusted Life Years (QALYs) gained. Probabilistic sensitivity analysis was employed to study the effect of uncertainty in the model parameters. In total, 56,000 QALYs were gained at an additional cost of €298,000,000 due to providing alcohol SBI in the target population, resulting in a cost-effectiveness ratio of €5,400 per QALY gained.
Prevention of excessive alcohol use by implementing SBI for excessive alcohol use in primary care settings appears to be cost-effective.
PMCID: PMC2682644  PMID: 19479081
3.  Alcohol Taxes and Birth Outcomes 
This study examines the relationships between alcohol taxation, drinking during pregnancy, and infant health. Merged data from the US Natality Detailed Files, as well as the Behavioral Risk Factor Surveillance System (1985–2002), data regarding state taxes on beer, wine, and liquor, a state- and year-fixed-effect reduced-form regression were used. Results indicate that a one-cent ($0.01) increase in beer taxes decreased the incidence of low-birth-weight by about 1–2 percentage points. The binge drinking participation tax elasticity is −2.5 for beer and wine taxes and −9 for liquor taxes. These results demonstrate the potential intergenerational impact of increasing alcohol taxes.
PMCID: PMC2898024  PMID: 20623000
alcohol taxes; infant health; low birth weight; APGAR Score
4.  Effects of alcohol taxes on alcohol-related disease mortality in New York State from 1969 to 2006 
Addictive behaviors  2012;37(7):783-789.
The relationship of increased alcohol taxes to reductions in alcohol-related harm is well established. Few studies, however, have examined the effects of sudden decreases in alcohol tax rates or effects of narrow tax changes limited to specific beverage types. In the current study, we: (1) examine whether tax increases on spirits have similar effects in reducing alcohol-related disease mortality as increasing taxes on all types of alcoholic beverages simultaneously, and (2) evaluate effects of beer-specific tax decreases in New York State on mortality.
We used a time-series, quasi-experimental research design, including non-alcohol deaths within New York State and other states’ rates of alcohol-related disease mortality for comparison. The dataset included 456 monthly observations of mortality in New York State over a 38-year period (1969–2006). We used a random-effects approach and included several other important covariates.
Alcohol-related disease mortality declined by 7.0% after a 1990 tax increase for spirits and beer. A spirits-only tax increase (in 1972) was not significantly associated with mortality but a data anomaly increased error in this effect estimate. Small tax decreases on beer between 1996 and 2006 had no measurable effect on mortality. Doubling the beer tax from $0.11 to $0.22 per gallon, a return to New York State’s 1990 levels, would decrease deaths by an estimated 250 deaths per year.
Excise tax increases on beer and spirits were associated with reductions in alcohol-related disease mortality. Modifying tax rates on a single beverage type does not appear to be as effective as doing so on multiple alcoholic beverages simultaneously. In New York, small decreases in beer taxes were not significantly associated with alcohol-related disease mortality.
PMCID: PMC3647353  PMID: 22436591
Alcohol; Mortality; Tax; New York; Policy
5.  Modeling the Cost-Effectiveness of Health Care Systems for Alcohol Use Disorders: How Implementation of eHealth Interventions Improves Cost-Effectiveness 
Informing policy decisions about the cost-effectiveness of health care systems (ie, packages of clinical interventions) is probably best done using a modeling approach. To this end, an alcohol model (ALCMOD) was developed.
The aim of ALCMOD is to estimate the cost-effectiveness of competing health care systems in curbing alcohol use at the national level. This is illustrated for scenarios where new eHealth technologies for alcohol use disorders are introduced in the Dutch health care system.
ALCMOD assesses short-term (12-month) incremental cost-effectiveness in terms of reductions in disease burden, that is, disability adjusted life years (DALYs) and health care budget impacts.
Introduction of new eHealth technologies would substantially increase the cost-effectiveness of the Dutch health care system for alcohol use disorders: every euro spent under the current system returns a value of about the same size (€ 1.08, ie, a “surplus” of 8 euro cents) while the new health care system offers much better returns on investment, that is, every euro spent generates € 1.62 in health-related value.
Based on the best available evidence, ALCMOD's computations suggest that implementation of new eHealth technologies would make the Dutch health care system more cost-effective. This type of information may help (1) to identify opportunities for system innovation, (2) to set agendas for further research, and (3) to inform policy decisions about resource allocation.
PMCID: PMC3222169  PMID: 21840836
Alcohol-related disorders; early intervention; health care systems; cost-effectiveness
6.  Interactions between cigarette and alcohol consumption in rural China 
The objective of this paper is to analyze interdependencies between cigarette and alcohol consumption in rural China, using panel data for 10 years (1994–2003) for rural areas of 26 Chinese provinces. There have been many studies in which cigarette and alcohol consumption have been considered separately but few to date for China on interactions between the consumption of these two products. Taxes are often recommended as a tool to reduce alcohol and cigarette consumption. If cigarettes and alcohol are complements, taxing one will reduce the consumption of both and thus achieve a double public health dividend. However, if they are substitutes, taxing one will induce consumers to increase consumption of the other, offsetting the public health benefits of the tax. Our results indicate that the demands for both cigarettes and alcohol are very sensitive to the price of alcohol, but not to the price of cigarettes or to income. This suggests that taxes on alcohol can have a double dividend. On the other hand, an increase in cigarette taxes may not be effective in curbing cigarette or alcohol consumption in rural China.
PMCID: PMC2834775  PMID: 19449158
Interactions; Cigarette and alcohol consumption; Habit persistence; Rural China; Dynamic panel data; D12; I18; R22
7.  Raising Taxes to Reduce Smoking Prevalence in the US: A Simulation of the Anticipated Health and Economic Impacts 
Public health  2007;122(1):3-10.
To estimate health and economic outcomes of raising the excise taxes on cigarettes.
We use a dynamic computer simulation model to estimate health and economic impacts of raising taxes on cigarettes (up to 100% price increase) for the entire population of USA over 20 years. We also perform sensitivity analysis on price elasticity.
A 40% tax-induced cigarette price increase would reduce smoking prevalence from 21% in 2004 to 15.2% in 2025 with large gains in cumulative life years (7 million) and quality adjusted life years (13 million) over 20 years. Total tax revenue will increase by $365 billion in that span, and total smoking-related medical costs would drop by $317 billion, resulting in total savings of $682 billion. These benefits increase greatly with larger tax increases, and tax revenues continue to rise even as smoking prevalence falls.
Increasing taxes on cigarettes is a unique policy intervention that reduces smoking prevalence, generates additional tax revenue, and results in significant savings in medical care costs.
PMCID: PMC2246022  PMID: 17610918
Smoking; Tax; simulation; QALYs; system dynamics; health impacts; economic impacts; price elasticity
8.  The Effectiveness of Tax Policy Interventions for Reducing Excessive Alcohol Consumption and Related Harms 
A systematic review of the literature to assess the effectiveness of alcohol tax policy interventions for reducing excessive alcohol consumption and related harms was conducted for the Guide to Community Preventive Services (Community Guide). Seventy-two papers or technical reports, which were published prior to July 2005, met specifıed quality criteria, and included evaluation outcomes relevant to public health (e.g., binge drinking, alcohol-related crash fatalities), were included in the fınal review. Nearly all studies, including those with different study designs, found that there was an inverse relationship between the tax or price of alcohol and indices of excessive drinking or alcohol-related health outcomes. Among studies restricted to underage populations, most found that increased taxes were also signifıcantly associated with reduced consumption and alcohol-related harms. According to Community Guide rules of evidence, these results constitute strong evidence that raising alcohol excise taxes is an effective strategy for reducing excessive alcohol consumption and related harms. The impact of a potential tax increase is expected to be proportional to its magnitude and to be modifıed by such factors as disposable income and the demand elasticity for alcohol among various population groups.
PMCID: PMC3735171  PMID: 20117579
9.  Effects of alcohol taxes on alcohol-related mortality in Florida: Time-series analyses from 1969–2004 
Over a hundred studies have established the effects of beverage alcohol taxes and prices on sales and drinking behaviors. Yet, relatively few studies have examined effects of alcohol taxes on alcohol-related mortality. We evaluated effects of multiple changes in alcohol tax rates in the State of Florida from 1969–2004 on disease (not injury) mortality.
A time-series quasi-experimental research design was used, including non-alcohol deaths within Florida and other states’ rates of alcohol-related mortality for comparison. A total of 432 monthly observations of mortality in Florida were examined over the 36-year period. Analyses included ARIMA, fixed-effects, and random effects models, including a noise model, tax independent variables, and structural covariates.
We found significant reductions in mortality related to chronic heavy alcohol consumption following legislatively induced increases in alcohol taxes in Florida. The frequency of deaths (t=−2.73, p=.007) and the rate per population (t=−2.06, p=.04) declined significantly. The elasticity effect estimate is −0.22 (t=−1.88, p=.06), indicating a 10% increase in tax is associated with a 2.2% decline in deaths.
Increased alcohol taxes are associated with significant and sizable reductions in alcohol-attributable mortality in Florida. Results indicate that 600–800 lives per year could be saved if real tax rates were returned to 1983 levels (when the last tax increase occurred). Findings highlight the role of tax policy as an effective means for reducing deaths associated with chronic heavy alcohol use.
PMCID: PMC2965314  PMID: 20659073
Alcohol taxes; Florida; Time-series; Alcohol Policy; Mortality
10.  Taxing Sin and Saving Lives: Can Alcohol Taxation Reduce Female Homicides? 
Social science & medicine (1982)  2011;73(1):169-176.
With costs exceeding $5.8 billion per year, violence against women has significant ramifications for victims, their families, the health care systems that treat them, and the employers who depend on their labor. Prior research has found that alcohol abuse contributes to violence against both men and women, and that stringent alcohol control policies can reduce alcohol consumption and in turn some forms of violence. In this paper, we estimate the direct relationship between an important alcohol control measure, excise taxes, and the most extreme form of violence, homicide. We use female homicide rates as our measure of severe violence, as this measure is consistently and accurately reported across multiple years. Our results provide evidence that increased alcohol taxes reduce alcohol consumption and that reductions in alcohol consumption can reduce femicide. Unfortunately, a direct test of the relationship does not have the power to determine whether alcohol taxes effectively reduce female homicide rates. We conclude that while alcohol taxes have been shown to effectively reduce other forms of violence against women, policy makers may need alternative policy levers to reduce the most severe form of violence against women.
PMCID: PMC3806875  PMID: 21664738
female homicide; violence; domestic violence; intimate partner violence; alcohol use; substance use; policy; taxes; consumption
11.  The Effects of Prices on Alcohol Use and its Consequences 
Alcohol Research & Health  2011;34(2):236-245.
Over the past three decades, economists and others have devoted considerable effort to assessing the impact of alcoholic-beverage taxes and prices on alcohol consumption and its related adverse consequences. Federal and State excise taxes have increased only rarely and, when adjusted for inflation, have declined significantly over the years, as have overall prices for alcoholic beverages. Yet studies examining the effects of increases of monetary prices (e.g., through raising taxes) on alcohol consumption and a wide range of related behavioral and health problems have demonstrated that price increases for alcoholic beverages lead to reduced alcohol consumption, both in the general population and in certain high-risk populations, such as heavier drinkers or adolescents and young adults. These effects seem to be more pronounced in the long run than in the short run. Likewise, price increases can help reduce the risk for adverse consequences of alcohol consumption and abuse, including drinking and driving, alcohol-involved crimes, liver cirrhosis and other alcohol-related mortality, risky sexual behavior and its consequences, and poor school performance among youth. All of these findings indicate that increases in alcoholic-beverage taxes could be a highly effective option for reducing alcohol abuse and its consequences.
PMCID: PMC3860576  PMID: 22330223
Alcoholic beverage; alcoholic-beverage distribution laws; alcoholic-beverage sales; alcoholic-beverage tax; alcoholic-beverage price; price elasticity; supply and demand; policy on alcoholic beverages; economic theory of alcohol and other drug (AOD) use; problematic AOD use
12.  Economic gains and health benefits from a new cigarette tax scheme in Taiwan: a simulation using the CGE model 
BMC Public Health  2006;6:62.
This study evaluates the impact of an increase in cigarette tax in Taiwan in terms of the effects it has on the overall economy and the health benefits that it brings.
The multisector computable general equilibrium (CGE) model was used to simulate the impact of reduced cigarette consumption resulting from a new tax scheme on the entire economy gains and on health benefits.
The results predict that because of the new tax scheme, there should be a marked reduction in cigarette consumption but a notable increase in health benefits that include saving between 28,125 and 56,250 lives. This could save NT$1.222~2.445 billion (where US$1 = NT$34.6) annually in life-threatening, cigarette-related health insurance expenses which exceeds the projected decrease of NT$1.275 billion in Gross Domestic Product (GDP) because of reduced consumption and therefore tax revenue.
Overall, the increased cigarette excise tax will be beneficial in terms of both the health of the general public and the economy as a whole.
PMCID: PMC1459137  PMID: 16529653
13.  The possible impact of an alcohol welfare surcharge on consumption of alcoholic beverages in Taiwan 
BMC Public Health  2013;13:810.
The abuse of alcoholic beverages leads to numerous negative consequences in Taiwan, as around the world. Alcohol abuse not only contributes to cardiovascular disease, hypertension, diabetes and cancer, but it is also an underlying cause of many other serious problems, such as traffic accidents, lost productivity, and domestic violence. International leaders in health policy are increasingly using taxation as an effective tool with which to lower alcohol consumption. In this study, we assessed how consumption patterns in Taiwan would be affected by levying a welfare surcharge on alcoholic beverages of 20%, 40% or 60% in accordance with the current excise tax. We also assessed the medical savings Taiwan would experience if consumption of alcoholic beverages were to decrease and how much additional revenue a welfare surcharge would generate.
We estimated the elasticity of four types of alcoholic beverages (beer, wine, whisky and brandy) using the Central Bureau of Statistics (CBS) Demand Model. Specifically, we estimated alcohol’s price elasticity by analyzing the sales prices and time statistics of these products from 1974 to 2009.
Alcoholic beverages in Taiwan have the following price elasticities: beer (−0.820), wine (−0.955), whisky (−0.587), brandy (−0.958). A welfare surcharge tax of 40% in accordance with the excise tax would decrease overall consumption of beer, wine, whisky and brandy between 16.24% and 16.42%. It would also generate New Taiwan Dollar (NT$) revenues of 5.782 billion to 5.993 billion. Savings in medical costs would range from NT$871.07 million to NT$897.46 million annually.
A social and welfare surcharge of 40% on alcoholic beverages in Taiwan would successfully lower consumption rates, decrease medical costs, and generate revenue that could be used to educate consumers and further decrease consumption rates. Consequently, we strongly recommend that such a tax be imposed in Taiwan.
PMCID: PMC3847341  PMID: 24010885
Alcohol prices; Welfare surcharge on alcoholic drinks; Price elasticity; Welfare surcharge revenues
14.  Food Taxes: A New Holy Grail?  
In an effort to reduce the growing prevalence of overweight and obesity, food taxes have been introduced in several European countries, the so-called ‘obesitax’. As yet little evidence is at hand, policy measures are being taken to counterweight the consumption of unhealthy food or the increasing diet-related diseases. Several questions need to be discussed, starting from a general perspective: can food taxes become an appropriate and just policy measure to reduce overweight and obesity and therefore increase consumer’s health? The implementation of an effective and fair food tax is an exercise riddled with uncertainty. Not only is there a need for evidence on the health and economic impact of food taxes, we also have to think about a conceptual and ethical discussion concerning the balance between health imperatives and public health on the one hand, and social and ethical standards on the other hand.
PMCID: PMC3937921  PMID: 24596843
Social Inequality; Food Tax; Obesity; Responsibility
15.  Estimating the long-term effects of in vitro fertilization in Greece: an analysis based on a lifetime-investment model 
To quantify the economic effects of a child conceived by in vitro fertilization (IVF) in terms of net tax revenue from the state’s perspective in Greece.
Based on previous international experience, a mathematical model was developed to assess the lifetime productivity of a single individual and his/her lifetime transactions with governmental agencies. The model distinguished among three periods in the economic life cycle of an individual: (1) early life, when the government primarily contributes resources through child tax credits, health care, and educational expenses; (2) employment, when individuals begin returning resources through taxes; and (3) retirement, when the government expends additional resources on pensions and health care. The cost of a live birth with IVF was based on the modification of a previously published model developed by the authors. All outcomes were discounted at a 3% discount rate. The data inputs – namely, the economic or demographic variables – were derived from the National Statistical Secretariat of Greece and other relevant sources. To deal with uncertainty, bias-corrected uncertainty intervals (UIs) were calculated based on 5000 Monte Carlo simulations. In addition, to examine the robustness of our results, other one-way sensitivity analyses were also employed.
The cost of IVF per birth was estimated at €17,015 (95% UI: €13,932–€20,200). The average projected income generated by an individual throughout his/her productive life was €258,070 (95% UI: €185,376–€339,831). In addition, his/her life tax contribution was estimated at €133,947 (95% UI: €100,126–€177,375), while the discounted governmental expenses for elderly and underage individuals were €67,624 (95% UI: €55,211–€83,930). Hence, the net present value of IVF was €60,435 (95% UI: €33,651–€94,330), representing a 182% net return on investment. Results remained constant under various assumptions for the main model parameters.
State-funded IVF may represent good value for money in the Greek setting, since it has positive tax benefits for the government, notwithstanding its beneficial psychological effect on infertile couples.
PMCID: PMC3694799  PMID: 23818800
cost; benefit analysis; net tax revenue; lifetime productivity; infertility
16.  Is the Demand for Alcoholic Beverages in Developing Countries Sensitive to Price? Evidence from China 
Economic literature in developed countries suggests that demand for alcoholic beverages is sensitive to price, with an estimated price elasticity ranging from −0.38 for beer and −0.7 for liquor. However, few studies have been conducted in developing countries. We employ a large individual-level dataset in China to estimate the effects of price on alcohol demand. Using the data from China Health and Nutrition Survey for the years 1993, 1997, 2000, 2004 and 2006, we estimate two-part models of alcohol demand. Results show the price elasticity is virtually zero for beer and only −0.12 for liquor, which is far smaller than those derived from developed countries. Separate regressions by gender reveals the results are mainly driven by men. The central implication of this study is, while alcohol tax increases can raise government revenue, it alone is not an effective policy to reduce alcohol related problems in China.
PMCID: PMC3138015  PMID: 21776220
alcoholic beverage; drinking; alcohol demand; price elasticity; beer; liquor
17.  Taxing Sugar-Sweetened Beverages: Not a “Holy Grail” but a Cup at Least Half Comment on “Food Taxes: A New Holy Grail?”  
In this commentary, we argue for the implementation of a sugar-sweetened beverage (SSB) tax as a tool to help address the global obesity and diabetes epidemics. Consumption of SSBs has increased exponentially over the last several decades, a trend that has been an important contributor to the obesity and diabetes epidemics. Prior evidence demonstrates that a SSB tax will likely decrease SSB consumption without significantly increasing consumption of other unhealthy food or beverages. Further, this tax is unlikely to have effects on income inequality and should not contribute to weight-based discrimination. A SSB tax also should raise revenue for government entities that already pay, through health care expenditures and health programs, for the consequences of excess SSB consumption.
PMCID: PMC3937927  PMID: 24596861
Sugar-Sweetened Beverages; Tax; Economics; Obesity; Overweight
18.  Cost-effectiveness of a programme of screening and brief interventions for alcohol in primary care in Italy 
BMC Family Practice  2014;15:26.
As alcohol-related health problems continue to rise, the attention of policy-makers is increasingly turning to Screening and Brief Intervention (SBI) programmes. The effectiveness of such programmes in primary healthcare is well evidenced, but very few cost-effectiveness analyses have been conducted and none which specifically consider the Italian context.
The Sheffield Alcohol Policy Model has been used to model the cost-effectiveness of government pricing and public health policies in several countries including England. This study adapts the model using Italian data to evaluate a programme of screening and brief interventions in Italy. Results are reported as Incremental Cost-Effectiveness Ratios (ICERs) of SBI programmes versus a ‘do-nothing’ scenario.
Model results show such programmes to be highly cost-effective, with estimated ICERs of €550/Quality Adjusted Life Year (QALY) gained for a programme of SBI at next GP registration and €590/QALY for SBI at next GP consultation. A range of sensitivity analyses suggest these results are robust under all but the most pessimistic assumptions.
This study provides strong support for the promotion of a policy of screening and brief interventions throughout Italy, although policy makers should be aware of the resource implications of different implementation options.
PMCID: PMC3936801  PMID: 24502342
Public health interventions; Alcohol; Primary care; Cost-effectiveness
19.  The synergistic effect of cigarette taxes on the consumption of cigarettes, alcohol and betel nuts 
BMC Public Health  2007;7:121.
Consumption of cigarettes and alcoholic beverages creates serious health consequences for individuals and overwhelming financial burdens for governments around the world. In Asia, a third stimulant – betel nuts – increases this burden exponentially. For example, individuals who simultaneously smoke, chew betel nuts and drink alcohol are approximately 123 times more likely to develop oral, pharyngeal and laryngeal cancer than are those who do not.
To discourage consumption of cigarettes, the government of Taiwan has imposed three taxes over the last two decades. It now wishes to lower consumption of betel nuts. To assist in this effort, our study poses two questions: 1) Will the imposition of an NT$10 Health Tax on cigarettes effectively reduce cigarette consumption? and 2) Will this cigarette tax also reduce consumption of alcoholic beverages and betel nuts? To answer these questions, we analyze the effect of the NT$10 tax on overall cigarette consumption as well as the cross price elasticities of cigarettes, betel nuts, and alcoholic beverages.
To establish the Central Bureau of Statistics demand function, we used cigarette, betel nut, and alcoholic beverage price and sales volume data for the years 1972–2002. To estimate the overall demand price elasticity of cigarettes, betel nuts, and alcoholic beverages, we used a seemingly unrelated regression analysis.
We find that the NT$10 health tax on cigarettes will reduce cigarette consumption by a significant 27.22%. We also find that cigarettes, betel nuts, and alcoholic beverages have similar inherent price elasticities of -0.6571, -0.5871, and -0.6261 respectively. Because of this complementary relationship, the NT$10 health tax on cigarettes will reduce betel nut consumption by 20.07% and alcohol consumption by 7.5%.
The assessment of a health tax on cigarettes as a smoking control policy tool yields a win-win outcome for both government and consumers because it not only reduces cigarette consumption, but it also reduces betel nut and alcoholic beverage consumption due to a synergistic relationship. Revenues generated by the tax can be used to fund city and county smoking control programs as well as to meet the health insurance system's current financial shortfall.
PMCID: PMC1913507  PMID: 17592627
The fraction of GDP devoted to health care in the United States is the highest in the world and rising rapidly. Recent economic studies have highlighted the growing value of health improvements, but less attention has been paid to the efficiency costs of tax-financed spending to pay for such improvements. This paper uses a life cycle model of labor supply, saving, and longevity improvement to measure the balanced-budget impact of continued growth in the Medicare and Medicaid programs. The model predicts that top marginal tax rates could rise to 70 percent by 2060, depending on the progressivity of future tax changes. The deadweight loss of the tax system is greater when the financing is more progressive. If the share of taxes paid by high-income taxpayers remains the same, the efficiency cost of raising the revenue needed to finance the additional health spending is $1.48 per dollar of revenue collected, and GDP declines (relative to trend) by 11 percent. A proportional payroll tax has a lower efficiency cost (41 cents per dollar of revenue averaged over all tax hikes, a 5 percent drop in GDP) but more than doubles the share of the tax burden borne by lower income taxpayers. Empirical support for the model comes from analysis of OECD country data showing that countries facing higher tax burdens in 1979 experienced slower health care spending growth in subsequent decades. The rising burden imposed by the public financing of health care expenditures may therefore serve as a brake on health care spending growth.
PMCID: PMC3197707  PMID: 21608156
21.  The Impact of a 25 Cent-Per-Drink Alcohol Tax Increase: Who Pays the Tab? 
Excessive alcohol consumption causes 79,000 deaths annually in the U.S., shortening the lives of those who die by approximately 30 years. Although alcohol taxation is an effective measure to reduce excessive consumption and related harms, some argue that increasing alcohol taxes places an unfair economic burden on “responsible” drinkers and socially disadvantaged persons.
To examine the impact of a hypothetical tax increase based on alcohol consumption and socio-demographic characteristics of current drinkers, individually and in aggregate.
Data from the 2008 Behavioral Risk Factor Surveillance System survey was analyzed from 2010–2011 to determine the net financial impact of a hypothetical 25 cent-per-drink tax increase on current drinkers in the U.S. Higher-risk drinkers were defined as those whose past-30 day consumption included binge drinking, heavy drinking, drinking in excess of the U.S. Dietary Guidelines, and alcohol-impaired driving.
Of current drinkers in the U.S., 50.4% (or approximately 25% of the total U.S. population) were classified as higher-risk drinkers. The tax increase would result in a 9.2% reduction in alcohol consumption, including an 11.4% reduction in heavy drinking. Compared with lower-risk drinkers, higher-risk drinkers paid 4.7 times more in net increased annual per capita taxes, and paid 82.7% of net increased annual aggregate taxes. Lower-risk drinkers paid less than $30 in net increased taxes annually. In aggregate, groups who paid the most in net tax increases included those who were white, male, between the ages of 21 and 50, earning ≥$50,000 per year, employed, and had a college degree.
A 25 cent-per-drink alcohol tax increase would reduce excessive drinking, and higher-risk drinkers would pay the substantial majority of the net tax increase.
PMCID: PMC3794433  PMID: 22424251
22.  Cigarette smuggling in Europe: who really benefits? 
Tobacco Control  1998;7(1):66-71.
Cigarette smuggling, now on the increase, is so widespread and well organised that it poses a serious threat to public health. This threat comes from two principal directions. First, smuggling makes cigarettes available cheaply, thereby increasing consumption. A third of annual global exports go to the contraband market, representing an enormous impact on consumption, and thus causing an increase in the burden of disease, especially in poorer countries. It is also costing government treasuries thousands of millions of dollars in lost tax revenue. Second, the tobacco industry uses smuggling politically, lobbying governments to lower tax, arguing that smuggling is caused by price differences. This paper shows that the claimed correlation between high prices and high levels of smuggling does not exist in western Europe. In fact, countries such as Norway and Sweden, with expensive cigarettes, do not have a large smuggling problem, whereas countries in the south of Europe do. Cigarette smuggling is not caused principally by "market forces". It is mainly caused by fraud, by the illegal evasion of import duty. The cigarettes involved are not the cheap brands from southern European countries, for which there is no international market. It is the well-known international brands such as Marlboro and Winston. We propose much tighter regulation of cigarette trade, including an international transport convention, and a total ban on transit trade—sale by the manufacturers to dealers, who sell on to smugglers.

PMCID: PMC1759658  PMID: 9706757
23.  Using a Health Informatics System to Assess Effect of a Federal Cigarette Tax Increase on Readiness to Quit Among Low-Income Smokers, Louisiana, 2009 
Health informatics systems are a proven tool for tobacco control interventions. To address the needs of low-income groups, the Tobacco Control Initiative was established in partnership with the Louisiana State University Health Care Services Division to provide cost-effective tobacco use cessation services through the health informatics system in the state public hospital system.
In this study we used a Web-based, result-reporting application to monitor and assess the effect of the 2009 federal cigarette tax increase. We assessed readiness to quit tobacco use before and after a cigarette tax increase among low-income tobacco users who were outpatients in a public hospital system.
Overall, there was an increase in readiness to quit, from 22% during the first week of February to 33% during the first week of April, when the tax went into effect. Smokers who were female, 31 or older, African American, and assessed at a clinic visit in April were more likely to report readiness to quit than were men, those aged 30 or younger, those who were white, and those who were assessed at a clinic visit in February.
A health informatics system that efficiently tracks trends in readiness to quit can be used in combination with other strategies and thus optimize efforts to control tobacco use. Our data suggest that a cigarette tax increase affects smokers’ readiness to quit and provides an opportunity to intervene at the most beneficial time.
PMCID: PMC3976230  PMID: 24698530
24.  Cost-effectiveness of counseling and pedometer use to increase physical activity in the Netherlands: a modeling study 
Counseling in combination with pedometer use has proven to be effective in increasing physical activity and improving health outcomes. We investigated the cost-effectiveness of this intervention targeted at one million insufficiently active adults who visit their general practitioner in the Netherlands.
We used the RIVM chronic disease model to estimate the long-term effects of increased physical activity on the future health care costs and quality adjusted life years (QALY) gained, from a health care perspective.
The intervention resulted in almost 6000 people shifting to more favorable physical-activity levels, and in 5100 life years and 6100 QALYs gained, at an additional total cost of EUR 67.6 million. The incremental cost-effectiveness ratio (ICER) was EUR 13,200 per life year gained and EUR 11,100 per QALY gained. The intervention has a probability of 0.66 to be cost-effective if a QALY gained is valued at the Dutch informal threshold for cost-effectiveness of preventive intervention of EUR 20,000. A sensitivity analysis showed substantial uncertainty of ICER values.
Counseling in combination with pedometer use aiming to increase physical activity may be a cost-effective intervention. However, the intervention only yields relatively small health benefits in the Netherlands.
PMCID: PMC3495195  PMID: 23006466
Economic evaluation; Prevention; Modeling; Counseling; Pedometer use; Physical activity; Primary care
25.  Cost-Effectiveness of the Diabetes Care Protocol, a Multifaceted Computerized Decision Support Diabetes Management Intervention That Reduces Cardiovascular Risk 
Diabetes Care  2009;33(2):258-263.
The Diabetes Care Protocol (DCP), a multifaceted computerized decision support diabetes management intervention, reduces cardiovascular risk of type 2 diabetic patients. We performed a cost-effectiveness analysis of DCP from a Dutch health care perspective.
A cluster randomized trial provided data of DCP versus usual care. The 1-year follow-up patient data were extrapolated using a modified Dutch microsimulation diabetes model, computing individual lifetime health-related costs, and health effects. Incremental costs and effectiveness (quality-adjusted life-years [QALYs]) were estimated using multivariate generalized estimating equations to correct for practice-level clustering and confounding. Incremental cost-effectiveness ratios (ICERs) were calculated and cost-effectiveness acceptability curves were created. Stroke costs were calculated separately. Subgroup analyses examined patients with and without cardiovascular disease (CVD+ or CVD− patients, respectively).
Excluding stroke, DCP patients lived longer (0.14 life-years, P = NS), experienced more QALYs (0.037, P = NS), and incurred higher total costs (€1,415, P = NS), resulting in an ICER of €38,243 per QALY gained. The likelihood of cost-effectiveness given a willingness-to-pay threshold of €20,000 per QALY gained is 30%. DCP had a more favorable effect on CVD+ patients (ICER = €14,814) than for CVD− patients (ICER = €121,285). Coronary heart disease costs were reduced (€−587, P < 0.05).
DCP reduces cardiovascular risk, resulting in only a slight improvement in QALYs, lower CVD costs, but higher total costs, with a high cost-effectiveness ratio. Cost-effective care can be achieved by focusing on cardiovascular risk factors in type 2 diabetic patients with a history of CVD.
PMCID: PMC2809259  PMID: 19933991

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