Predicted Effect of California Tobacco Control Funding on Smoking Prevalence, Cigarette Consumption, and Healthcare Costs, 2012-2016

This report contains the results of a new model of the effect of the California tobacco control program on smoking behavior and healthcare expenditure, and forecasts four alternative funding scenarios for the California tobacco control program. We use time series regression analysis of aggregate data on tobacco control program funding, smoking behavior and health care expenditures in California compared to control states. The estimates measure the difference in smoking behavior and health care expenditures between California and the control states that can be attributed to differences in tobacco control funding. We use two different estimation methods to check the analysis and find that both produce almost identical results. If the current funding levels are continued at 5 cents per pack (established by 1988’s Proposition 99), the baseline scenario, then California smoking prevalence will stop declining increase from 12.9% to 13.3% between 2012 and 2016 and cigarette consumption per smoker will increase from 233 to 253 packs per year from 2012 to 2016. By 2016, prevalence and consumption per smoker would increase by 9% and 14% from the level in 2011, respectively. The contribution of smoking to healthcare costs in California will also begin to increase. Cutting the funding level by half would to 2.5 cents per pack initially result in $39 million less in cumulative tobacco control spending per year. This reduction in spending will result in an increase in both prevalence and cigarettes consumed per smoker. Prevalence rises from about 13% to 13.5% from 2012 to 2016 and cigarette consumption per smoker increases from 235 to 261 packs per year.By 2016, prevalence and consumption per smoker would increase by 10% and 17% from the level in 2011, respectively. Compared to the baseline scenario, there would be 134 million more packs of cigarettes sold (worth $508 million the tobacco industry in pre-tax sales) and a cumulative increase in total California healthcare costs between 2012 and 2016 would be $2.2 billion. An increase in funding by $0.20 per pack (to a total of $0.25 per pack) from the $1.00 tobacco tax increase (i.e., the proposed California Cancer Research Act initiative) would restore the decline in current smoking prevalence and cigarette consumption per smoker. Prevalence would decrease from about 11.2% to 10.9% between 2012 and 2016 and cigarette consumption per smoker would decrease from 199 to 189 cigarettes per year. By 2016, prevalence and consumption per smoker would decrease by 11% and 15% from the level in 2011, respectively. Compared to the baseline scenario, a total of 1.6 billion fewer packs of cigarettes would be smoked (worth $7.2 billion in pre-tax sales to the tobacco industry) and total healthcare costs would be reduced by $28.2 billion. An increase in per capita funding to the level recommended by the US Centers for Disease Control and Prevention (CDC)Best Practicesfor California ($12.12 per capita, or 56 cents per pack), would initiate a rapid decline in smoking prevalence and a drop in consumption. Doing so would require increasing annual funding for the California Tobacco Control Program from $77.8 million in 2009 to a about $481 million per year. Smoking prevalence would decrease from about 12% to 11.1% between 2012 and 2016 and cigarette consumption per smoker would decrease from 210 to 139 packs per year. By 2016, prevalence and consumption per smoker would decrease by10 % and 38% from the level in 2011, respectively. Compared to the baseline scenario, total cigarette consumption would fall by 1.7 billion packs (worth $6.5 billion in pre-tax sales to the tobacco industry) and reduce cumulative total healthcare costs by $31.6 billion. Table. Changes in current smoking prevalence and consumption per smoker, California healthcare costs and tobacco industry revenues between 2011 and 2016 under four scenarios Scenario Percent change between 2011 and 2016 Change in California Health Care Costs Change in Tobacco Industry Sales Prevalence Consumption per Smoker 1. Status quo (baseline): $0.05 per pack +9% +14% Baseline Baseline 2. Cut program in half: $0.025 per pack +10% +17% + $2.2 billion +$0.5 billion 3. Enact Calif Cancer Res Act: $0.25 per pack and $1 tax increase -11% -15% -$28.2 billion -$7.2 billion 4. CDC recommended funding: $12.12 per capita ($0.056 per pack) -10% -38% -$31.6 billion -$6.5 billion NOTE: See Addendum at the end of this report for updated values for these estimates. The forecast results indicate that if the current level of California tobacco control funding continues at the current 5 cents per pack, then smoking prevalence and consumption per smoker will slowly start to increase over time and estimated healthcare savings due to the reduction in smoking in California will be gradually eroded. In order to continue progress in reducing harmful smoking behaviors in California, per capita funding for tobacco control programs should be substantially increased. Increasing per capita funding with a $1 excise tax increase as proposed in the California Cancer Research Act that devotes an additional $0.20 per pack sold or increasing per capita funding to the level recommended for California by the CDC would reduce smoking behavior at rates similar to those seen in earlier years of the California program, together with the attendant large reductions in healthcare costs that the California Tobacco Control Program created.