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HEALTH, HEALTH INEQUALITY, AND COST IMPACTS OF ANNUAL INCREASES IN TOBACCO TAX: MULTISTATE LIFE TABLE MODELING IN NEW ZEALAND

Thursday, 30th of July 2015 Print

HEALTH, HEALTH INEQUALITY, AND COST IMPACTS OF ANNUAL INCREASES IN TOBACCO TAX: MULTISTATE LIFE TABLE MODELING IN NEW ZEALAND

  • Tony Blakely, 
  • Linda J. Cobiac, 
  • Christine L. Cleghorn, 
  • Amber L. Pearson, 
  • Frederieke S. van der Deen, 
  • Giorgi Kvizhinadze, 
  • Nhung Nghiem,  …
  • Melissa McLeod, 
  • Nick Wilson

Excerpts below; full text, with figures, is at http://journals.plos.org/plosmedicine/article?id=10.1371/journal.pmed.1001856

 

Abstract

Background

Countries are increasingly considering how to reduce or even end tobacco consumption, and raising tobacco taxes is a potential strategy to achieve these goals. We estimated the impacts on health, health inequalities, and health system costs of ongoing tobacco tax increases (10% annually from 2011 to 2031, compared to no tax increases from 2011 [“business as usual,” BAU]), in a country (New Zealand) with large ethnic inequalities in smoking-related and noncommunicable disease (NCD) burden.

Methods and Findings

We modeled 16 tobacco-related diseases in parallel, using rich national data by sex, age, and ethnicity, to estimate undiscounted quality-adjusted life-years (QALYs) gained and net health system costs over the remaining life of the 2011 population (n = 4.4 million). A total of 260,000 (95% uncertainty interval [UI]: 155,000–419,000) QALYs were gained among the 2011 cohort exposed to annual tobacco tax increases, compared to BAU, and cost savings were US$2,550 million (95% UI: US$1,480 to US$4,000). QALY gains and cost savings took 50 y to peak, owing to such factors as the price sensitivity of youth and young adult smokers. The QALY gains per capita were 3.7 times greater for Māori (indigenous population) compared to non-Māori because of higher background smoking prevalence and price sensitivity in Māori. Health inequalities measured by differences in 45+ y-old standardized mortality rates between Māori and non-Māori were projected to be 2.31% (95% UI: 1.49% to 3.41%) less in 2041 with ongoing tax rises, compared to BAU. Percentage reductions in inequalities in 2041 were maximal for 45–64-y-old women (3.01%). As with all such modeling, there were limitations pertaining to the model structure and input parameters.

Conclusions

Ongoing tobacco tax increases deliver sizeable health gains and health sector cost savings and are likely to reduce health inequalities. However, if policy makers are to achieve more rapid reductions in the NCD burden and health inequalities, they will also need to complement tobacco tax increases with additional tobacco control interventions focused on cessation.

Editors Summary

Background

Worldwide, approximately 21% of the population aged 15 and above smoke cigarettes and other tobacco products. However, tobacco is a killer. Half of all tobacco users die because of cancer, lung disease, heart disease, or another tobacco-related disease. Tobacco caused 100 million deaths in the 20th century; if current trends continue, it could cause a many more deaths in the 21st century. In response to this global tobacco epidemic, individual countries are considering how to reduce or even end tobacco consumption (the “tobacco endgame”), and international bodies have drawn up various tobacco control directives. The World Health Organization, for example, has developed an international instrument for tobacco control called the Framework Convention on Tobacco Control (FCTC). Countries that are party to the FCTC agree to implement a wide range of measures designed to reduce tobacco use. For example, they agree to implement bans on tobacco advertising, promotion, and sponsorship and to protect people from tobacco smoke exposure in public spaces and indoor workplaces.

Why Was This Study Done?

An important tobacco control measure is the implementation of taxation policies aimed at reducing tobacco consumption, promoting cessation, and preventing young people from taking up smoking. But less is known about the impact on population health, health inequality (higher rates of illness and death in specific parts of the population), and health system costs of annual tobacco tax increases, a strategy that is being used or considered by many countries. Here, the researchers estimate the impact of annual tobacco tax increases compared with no tax increases in New Zealand using a mathematical approach called multistate life table modeling. In New Zealand, a country that collects data on disease incidence and mortality by sociodemographic status and has implemented annual tobacco taxation increases since 2010, there are marked health inequalities between indigenous Māori (15% of the population) and non-Māori residents. Smoking is a major cause of these existing health inequalities (as in many other countries)—33% of Māori smoke compared to 14% of New Zealand Europeans. A life table shows, for each age, the probability that a person of that age will die before his or her next birthday.

What Did the Researchers Do and Find?

The researchers estimated quality-adjusted life-years (QALYs; a measure of disease burden that includes both the quantity and quality of life lived) gained and net health system costs over the remaining life of New Zealands 2011 population exposed to annual 10% tobacco tax increases or to no tax increases by modeling 16 tobacco-related diseases in parallel using national data on all-cause mortality and morbidity (illness). Compared to the 2011 population exposed to no tax increases, 260,000 QALYs were gained among the population exposed to annual tax increases from 2011 to 2031 and followed up for the remainder of their lives. The net health system cost savings associated with this intervention were estimated at US$2,550 million over the remainder of the 2011 populations life. Both the health gains and cost savings began to accrue immediately but took five decades to peak. The QALY gains per capita associated with annual tobacco tax increases were 3.7-fold higher for Māori than for non-Māori because of higher smoking levels and price sensitivity among Māori (the tobacco purchasing behavior of Māori is affected more by the price of tobacco than non-Māori because they have less disposable income). Finally, projected health inequalities measured by the difference in mortality rates among Māori and non-Māori aged 45+ y were 2.3% lower in 2041 with ongoing tax rises than with no tax rises.

What Do These Findings Mean?

These findings suggest that in New Zealand (and probably in other similar populations), ongoing tobacco tax increases should deliver sizeable health gains and health system cost savings and should modestly reduce health inequalities. Notably, the health gains and cost savings will not peak for several decades because smoking is more common among younger age groups and the tobacco tax effect is greater among young people (who have limited disposable income) but young people do not benefit maximally from reduced rates of tobacco-related diseases for many decades. As with all modeling studies, the accuracy of these findings depends on the assumptions built into the model and the data fed into it. Overall, however, these findings support the use of annual increases of tobacco tax as a way to improve population health, save health system costs, and reduce health inequalities but suggest that policy makers will need to introduce other tobacco control interventions focused on smoking cessation among middle-age to older smokers if they want to achieve more rapid reductions in tobacco-related diseases and health inequalities.

Additional Information

This list of resources contains links that can be accessed when viewing the PDF on a device or via the online version of the article at http://dx.doi.org/10.1371/journal.pmed.1​001856.

Citation: Blakely T, Cobiac LJ, Cleghorn CL, Pearson AL, van der Deen FS, Kvizhinadze G, et al. (2015) Health, Health Inequality, and Cost Impacts of Annual Increases in Tobacco Tax: Multistate Life Table Modeling in New Zealand. PLoS Med 12(7): e1001856. doi:10.1371/journal.pmed.1001856

Academic Editor: Thomas E. Novotny, San Diego State University, UNITED STATES

Received: January 15, 2015; Accepted: June 16, 2015; Published: July 28, 2015

Copyright: © 2015 Blakely et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited

Data Availability: All relevant data are within the paper and its Supporting Information files.

Funding: The authors are supported by the BODE3 Programme, which is studying the effectiveness and cost-effectiveness of various tobacco control strategies and receives funding support from the Health Research Council of New Zealand (Project number 10/248). The second author (LJC) was also supported by a National Health and Medical Research Council Sidney Sax Public Health Fellowship (#1036771). No funding bodies had any role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.

Competing interests: The authors have declared that no competing interests exist.

Abbreviations:: ENDS, electronic nicotine delivery systems; APC, annual percentage change; ASH, Action on Smoking and Health; BAU, business as usual; CFR, case-fatality rates; CHD, coronary heart disease; COPD, chronic obstructive pulmonary disease; CPS II, cancer prevention study 2; DR, disability rate; FCTC, Framework Convention on Tobacco Control; LRTI, lower respiratory tract infection; NCD, noncommunicable disease; NZBDS, New Zealand Burden of Disease Study; QALY, quality-adjusted life-year; RR, relative risk; SD, standard deviation; SES, socioeconomic status; SNZ, Statistics New Zealand; SRD, standardized rate differences; SRR, standardized rate ratio; UI, uncertainty interval; YLD, years of life lived with disability

Introduction

Tobacco use is a leading risk factor for health loss internationally [1]. Therefore, reducing tobacco use is a leading strategy proposed for achieving the global “25 x 25 NCD [noncommunicable disease] mortality reduction targets” [2].

Tobacco taxation is an important tobacco control measure, with advantages that include (i) being a typically well-established function of government, (ii) having a strong evidence-base for effectiveness [3], and (iii) having the potential benefit of generating extra government revenue that can then fund other aspects of tobacco or NCD control.

We identified 11 relevant studies on tobacco tax in which both a health impact and a costing metric were estimated as outputs (see S1 Text). Most of these studies were for developed countries (six out of 11), four were for developing countries, and one was a mix. All studies reported overall health gains from tobacco tax increases, and these were reported as either very cost-effective or were cost saving. However, study methodologies varied greatly, e.g., in the use of different discount rates and the different considerations around which costs were included. Some studies considered cost offsets from tobacco-related diseases only, and only two studies considered these as well as the health costs associated with extra life lived as a result of the tax intervention (despite the latter probably being the most appropriate [4]). Also, none of the studies considered repeated annual tobacco tax increases (even though these are increasingly used internationally, e.g., in New Zealand (every year from 2010 to 2015 and planned to 2016 [5]), Australia (four increases legislated from 2013 [6]), and Germany (five increases in 2001–2006 [7]). Indeed, to achieve marked reductions in tobacco-related disease, repeated tax increases over many years are probably necessary.

Only three of the 11 relevant studies we identified considered differences in health gain by sex, and for all these the gain was greater for men. Also, only one study considered socioeconomic status (SES) [8], finding that the quality-adjusted life-years (QALYs) gained per person were greatest in the lowest (least-educated) SES group.

Our background literature search (detailed in S1 Text) also identified six systematic reviews on the impact of tobacco prices/taxes on equity that had been published since 2005. The two most recent such reviews indicated that tobacco price/tax increases tended to have a positive impact on equity (i.e., reduction in inequalities in smoking prevalence by SES) for both adults [9] and youth [10]. The four other reviews also reported this same general pattern, albeit more tentatively. However, despite this body of work on equity, we could not identify quantitative assessment of the health gain (e.g., mortality rate differences by socioeconomic group) that might arise as a result of regularly increased tobacco taxes.

These knowledge gaps in how tobacco taxes might work matter for governments that are seeking incremental reductions in the tobacco epidemics in their country but are particularly relevant to those aiming to achieve a tobacco “endgame” (e.g., Finland [11], Ireland [12], Scotland [13], multiple Pacific Island states [14], and New Zealand [15] currently have official endgame targets). The latter countries particularly need to know how much of the potential health gain from eliminating tobacco in a country can be achieved through tobacco tax increases relative to “business as usual” (BAU) tobacco control measures.

New Zealand is a relatively informative setting in which to address the knowledge gaps outlined above. It has rich data on disease incidence and mortality by sociodemographics, including attribution of publicly funded health care costs to individually linked health datasets. The country is also characterized by marked health inequalities between the indigenous Māori (15% of the total population) and non-Māori, with much higher Māori smoking prevalence (33% compared to 14% for New Zealand Europeans in 2013 [16]), all-cause mortality rates over twice as high for Māori [17], and a life expectancy gap of 7.3 y between Māori and non-Māori in 2010–2012. Smoking is a major cause of health inequalities in New Zealand [18,19], as is true in many other settings internationally. Furthermore, New Zealand has an endgame goal for smoking [15] and is also implementing a program of regular tobacco tax increases (as detailed above). Other than this particular program, it is a fairly typical high-income country in terms of utilizing many other tobacco control measures, such as tight restrictions on tobacco marketing, smoke-free laws for indoor environments (including bars and restaurants), restrictions on tobacco displays in retail outlets, provision of pictorial warnings on tobacco packaging, the episodic (albeit low-budget [20]) use of mass media campaigns, and the provision of subsidized smoking cessation support such as a national Quitline service.

Given this background, the objectives of this paper were to estimate the future impact of annual tobacco tax increases of 10% per annum from 2011 to 2031 (as per a continuation of the current New Zealand strategy), compared to no tax increases from 2011 (defined as the BAU comparator in this paper), on the magnitude and timing of (i) health gains, (ii) changes in net health system expenditure, and (iii) changes in health inequalities (while incorporating uncertainty).

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