Economic impact of Proposition 56 on Low-Income Californians
Location(s): United States
On November 8, 2016, California voters passed Proposition 56, increasing cigarette taxes by $2.00 per pack effective April 1, 2017. This tax increase will reduce the affordability of cigarettes especially for economically disadvantaged smokers and is expected to reduce cigarette smoking. Low-income people smoke at higher rates than high-income people. In 2013-2014, 15.7% of California adults who live under the Federal Poverty Level (FPL) were current smokers, while 9.4% of those who live above 300% FPL smoked. If low-income smokers are more responsive to the tax increase in quitting or reducing cigarette consumption, Proposition 56 may lead to reduced disparities in cigarette smoking and the resulting health burden for low-income Californians. The objective of this study is to evaluate the economic impact of the cigarette tax increase from Proposition 56 on low-income Californians by analyzing four specific aims.
Aim 1. Estimate the responsiveness of smoking prevalence, smoking intensity, and total cigarette consumption to cigarette price increases among low-income Californians. We hypothesize that low-income Californians are more price-responsive than high-income Californians.
Aim 2. Evaluate the impact of Proposition 56 on smoking prevalence, the proportions of current smokers who are light, moderate and heavy smokers, and cessation rates among low-income Californians; and assess whether these impacts differ from those for high-income Californians.
Aim 3. Estimate the impact of Proposition 56 on healthcare cost attributable to cigarette smoking and the amount paid by MediCal and Medicare for low-income Californians.
Aim 4. Examine whether low-income smokers minimize the price effect from Proposition 56 by using coupons or purchasing cheaper cigarettes from other states or via the internet, and compare the financial burden of cigarette spending before and after the implementation of Proposition 56.
Findings from this study will provide useful information on whether Proposition 56 will narrow the gap in smoking prevalence between low- and high-income Californians, whether it will save MediCal cost, and how much financial burden it will impose on low-income smokers in California. California has long been a leader in tobacco control and our experience with this major tobacco tax policy will help inform other state’s tobacco control policymakers.