Cost Effectiveness of a Sugar-Sweetened Beverage Excise Tax in the U.S

Abstract

Introduction: Reducing sugar-sweetened beverage consumption through taxation is a promising public health response to the obesity epidemic in the U.S. This study quantifies the expected health and economic benefits of a national sugar-sweetened beverage excise tax of $0.01/ounce over 10 years.

Methods: A cohort model was used to simulate the impact of the tax on BMI. Assuming ongoing implementation and effect maintenance, quality-adjusted life-years gained and disability-adjusted life-years and healthcare costs averted were estimated over the 2015-2025 period for the 2015 U.S.

Population: Costs and health gains were discounted at 3% annually. Data were analyzed in 2014.

Results: Implementing the tax nationally would cost $51 million in the first year. The tax would reduce sugar-sweetened beverage consumption by 20% and mean BMI by 0.16 (95% uncertainty interval [UI]=0.06, 0.37) units among youth and 0.08 (95% UI=0.03, 0.20) units among adults in the second year for a cost of $3.16 (95% UI=$1.24, $8.14) per BMI unit reduced. From 2015 to 2025, the policy would avert 101,000 disability-adjusted life-years (95% UI=34,800, 249,000); gain 871,000 quality-adjusted life-years (95% UI=342,000, 2,030,000); and result in $23.6 billion (95% UI=$9.33 billion, $54.9 billion) in healthcare cost savings. The tax would generate $12.5 billion in annual revenue (95% UI=$8.92, billion, $14.1 billion).

Conclusions: The proposed tax could substantially reduce BMI and healthcare expenditures and increase healthy life expectancy. Concerns regarding the potentially regressive tax may be addressed by reduced obesity disparities and progressive earmarking of tax revenue for health promotion.

Appendix Figure 1.

Logic pathway linking excise tax on sugar-sweetened beverages (SSB) to change in DALYs and QALYs The estimated change in SSB consumption in response to the proposed tax is based on the review of own-price elasticities and average beverage prices published by the beverage industry. The primary scenario models the direct link between change in consumption and change in BMI based on RCTs and observational studies. Quality-adjusted life years (QALYs) gained and Disability Adjusted Life Years (DALYs) averted resulting from a change in gender- and age-specific BMI are calculated using the CHOICES multi-state Markov cohort model.