A recent analysis shows that even a small tax on sugar-sweetened beverages can significantly reduce obesity-related healthcare costs and help narrow health disparities. Simulations suggest that implementing a sugar-sweetened beverage tax in California could prevent more than 260,000 obesity cases and save 4.5 billion USD in healthcare costs over the next decade.
On Thursday, researchers from the Harvard T.H. Chan School of Public Health released findings predicting the health and economic effects of a two-cent-per-ounce sales tax on sugar-sweetened beverages (SSBs) in California over a ten-year period.
The researchers chose sugary beverages as their policy Target because, unlike solid foods, these drinks increase calorie intake without providing satiety. They also show the most pronounced consumer response to price changes, making them the food category where consumption reductions and weight changes are most clearly observed when taxed.
Using the CHOICES (Childhood Obesity Intervention Cost-Effectiveness Study) microsimulation model, the researchers projected changes from 2023 to 2032. They conducted simulations involving approximately 43.3 million California residents aged two and older.
Assuming the tax would be fully reflected in consumer prices, they estimated that the average price of sugary beverages would rise by 22.7%. The study excluded diet drinks, 100% fruit juices, and milk. Researchers traced the long-term effects of price increases to reduced consumption, changes in weight, and shifts in disease incidence and healthcare costs.
The analysis found that implementing a sugary beverage tax could prevent 266,000 adult obesity cases and 42,700 cases among children and adolescents in 2032 alone. Over ten years, the cumulative effect could result in a total reduction of 2.02 million years spent in obesity. This could also prevent 6,320 deaths, increase quality-adjusted life years (QALY) by 114,000, and add 21,700 total life years.
The policy’s cost-effectiveness was substantial. The total administrative and operational costs of implementing the sugary beverage tax over ten years were estimated at around 40.4 million USD, averaging about 0.93 USD per person. In contrast, the healthcare cost savings were much larger, with an estimated 112 USD in obesity-related healthcare costs saved for every 1 USD invested. The researchers described this as a cost-saving policy across all cost-effectiveness metrics.
Changes in consumption were also notable. In the first year of the tax, average spending on sugary beverages decreased by 32.5 USD per adult and 25.7 USD per child. The researchers explained that even with the tax, overall household expenditure would likely decrease due to reduced consumption.
Researchers attributed this to higher consumption of sugary beverages and higher body mass index (BMI) among low-income and minority groups, leading to greater weight changes even with similar reductions in consumption.
The tax revenue potential was also significant. Researchers estimated that implementing a two-cent sugar beverage tax in California could generate approximately USD 1.6 billion in annual tax revenue. Previous city-level sugary beverage tax examples show that this revenue has been used for nutrition education, improving access to healthy foods, youth sports programs, and local health initiatives.
The researchers emphasized that expanding the sugary beverage tax from the city level to the state level is crucial to this analysis. While city-level taxes may lead consumers to travel to nearby areas to purchase beverages, a state-level tax reduces this incentive and amplifies the policy’s effects.
However, it’s important to note that this study is based on simulations rather than actual policy outcomes. Factors such as inter-regional purchasing shifts, long-term dietary changes, and industry responses may differ in reality. Nonetheless, the researchers concluded that the accumulated evidence on pricing, consumption, and weight changes supports the sugary beverage tax as a viable public health policy tool.
This study was published in the American Journal of Preventive Medicine.
