Effect of the Arizona tobacco control program on cigarette consumption and healthcare expenditures

Abstract

This research investigates the relationship between per capita tobacco control expenditures, cigarette consumption, and healthcare expenditures in the state of Arizona. Arizona's tobacco control program, which was established in 1994, concentrates on youth uptake of smoking and avoids public policy and commentary on the tobacco industry. We use a cointegrating time series analysis using aggregate data on healthcare and tobacco control expenditures, cigarette consumption and prices and other data. We find there is a strong association between per capita healthcare expenditure and per capita cigarette consumption. In the long run, a marginal increase in annual cigarette consumption of one pack per capita increases per capita healthcare expenditure by $19.5 (SE $5.45) in Arizona. A cumulative increase of $1.00 in the difference between control state and Arizona per capita tobacco control expenditures increases the difference in cigarette consumption by 0.190 (SE 0.0780) packs per capita. Between 1996 and 2004, Arizona's tobacco control program was associated with a cumulative reduction in cigarette consumption of 200 million packs (95% CI 39.0 million packs, 364 million packs) worth $500 million (95% CI: $99 million, $896 million) in pre-tax cigarette sales to the tobacco industry. The cumulative healthcare savings was $2.33 billion (95% CI $0.37 billion, $5.00 billion) and the cumulative reduction in cigarette. Arizona's tobacco control expenditures are associated with reduced cigarette consumption and healthcare expenditures, amounting to about 10 times the cost of the program through 2004. This return on investment, while large, was less than the more aggressive California program, which did not limit its focus to youth and included tobacco industry denomalization messages.

Figure 1

Dynamic predictions of per capita healthcare expenditure and difference in cigarette demand between control states and Arizona describe the observed data. (top) Arizona, h_AZ,t from equations (1) and (3) using predicted values of difference in cigarette consumption between control states and Arizona. (bottom) Predicted difference in per capita healthcare expenditure using predicted values of difference in cigarette consumption between control states and Arizona, (s_c,t−s_AZ,t) from equations (2) and (4). Symbols: observed values (black circles), predicted long-run cointegrating relationship (dotted line), predicted values from dynamic predictions using cointegrating and ECM equations (solid line).

Figure 2

Arizona per capita healthcare expenditures were lower than predicted (top panel) and the differences between control state and Arizona per capita cigarette consumption larger than predicted (bottom panel) without the Arizona tobacco control program (light lines). (top): Arizona h_AZ,t, from equations (1) and (3) using predicted difference in control state and Arizona cigarette consumption from equations (2) and (4). (bottom) Difference in control state and Arizona cigarette consumption, (s_c,t−s_AZ,t) from equations (2) and (4). Symbols: observed values (black circles), predicted values from dynamic predictions using the cointegrating and ECM equations (thick solid line), predicted values without the Arizona tobacco control educational expenditures set to zero (thin black line).

Figure 3

Predicted annual reductions in direct healthcare expenditure in Arizona (top) and difference cigarette consumption between Arizona and control states (bottom) attributable to the Arizona tobacco control program. Light lines show 95% confidence intervals.