A Sugar-Sweetened Beverage Excise Tax in California: Projected Benefits for Population Obesity and Health Equity

Amid the successes of local sugar-sweetened beverage (SSB) taxes, interest in state-wide policies has grown. This study evaluated the cost effectiveness of a hypothetical 2-cent-per-ounce excise tax in California and its implications for population health and health equity.

Using the Childhood Obesity Intervention Cost-Effectiveness Study microsimulation model, tax impacts on health, health equity, and cost effectiveness over 10 years in California were projected, both overall and stratified by race/ethnicity and income. Expanding on previous models, differences in the effect of intake of SSBs on weight by BMI category were incorporated. Costing was performed in 2020, and analyses were conducted in 2021-2022.

The tax is projected to save $4.55 billion in healthcare costs, prevent 266,000 obesity cases in 2032, and gain 114,000 quality-adjusted life years. Cost-effectiveness metrics, including cost/quality-adjusted life year gained, were cost saving. Spending on SSBs was projected to decrease by $33 per adult and $26 per child overall in the first year. Reductions in obesity prevalence for Black and Hispanic Californians were 1.8 times larger than for White Californians, and reductions for adults with lowest incomes (<130% Federal Poverty Level) were 1.4 times the reduction among those with highest incomes (>350% Federal Poverty Level). The tax is projected to save $112 in obesity-related healthcare costs per $1 invested.

A state-wide SSB tax in California would be cost saving, lead to reductions in obesity and improvement in SSB-related health equity, and lead to overall improvements in population health. The policy would generate more than $1.6 billion in state tax revenue annually that can also be used to improve health equity.