Raising taxes to reduce smoking prevalence in the US: a simulation of the anticipated health and economic impacts.
OBJECTIVE
To estimate health and economic outcomes of raising the excise taxes on cigarettes.


METHODS
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 the USA over 20 years. We also perform sensitivity analysis on price elasticity.


RESULTS
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.


CONCLUSIONS
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.
Ahmad
Sajjad
S
Department of Civil and Environmental Engineering, University of Nevada, 4505 Maryland Parkway, Las Vegas, NV 89154-4015, USA. sajjad.ahmad@unlv.edu
Franz
Gregor A
GA
D003198:Computer Simulation; D005102:Health Expenditures; D006296:Health Services / Q000706:statistics & numerical data; D006801:Humans; D017059:Models, Econometric; D015995:Prevalence; D011788:Quality of Life; D012907:Smoking / Q000191:economics* / Q000331:legislation & jurisprudence; D013660:Taxes / Q000191:economics* / Q000331:legislation & jurisprudence; D014481:United States