Estimates Of The Economic Costs Of Tobacco Use In China

China is the world's largest cigarette producer and consumer.Tobacco use has caused huge health losses in China.The outline of the "healthy China 2030" plan,published by the communist party of China central committee and the state council,states that health is an inevitable requirement for promoting the all-round development of human beings and a basic condition for economic and social development.In addition,the opinions of the state council on the implementation of the action for a healthy China pointed out that by 2030,a healthy China should achieve a significant reduction in the premature death rate caused by major chronic diseases,a significant increase in the average healthy life expectancy and enter the ranks of high-income countries in terms of major health indicators of residents.Since smoking is the most preventable cause of death and prevention is the most cost-effective and effective health strategy,one of the main tasks of implementing healthy China is to implement tobacco control policy.However,at present,China's economy presents a new normal,with the growth of fiscal revenue slowing down and the expenditure pressure increasing.Therefore,the dependence of the central government on the tobacco industry will be more prominent.China's top political leadership and the state tobacco monopoly administration are both the country's most important stakeholders in tobacco development and tobacco control.The Chinese government has clearly declared that public health is a prerequisite for all future social and economic development,and is exploring ways to develop the country between the mission of safeguarding the health of the people and safeguarding the national revenue.Based on this background,this paper tries to solve the following two problems from the perspective of health.First,whether tobacco consumption has an impact on the health of Chinese residents.Second,if tobacco consumption has already had an impact on the health of Chinese citizens,we will explore what is the economic value of such a health impact and its financial impact on China.First,the empirical results of this paper show that tobacco consumption has a negative impact on health.Because of the cumulative and time-delay effects of tobacco use,these negative effects are either already evident or will occur in the future.Among them,active smoking has obvious negative effects on the health of residents,especially on adult males.The negative effects of family secondhand smoke exposure on the health of adults are not obvious,but significant for children.The problem of tobacco consumption in China,especially the high smoking rate among Chinese men,and the exposure of children to second-hand smoke are indeed a public health problem worthy of attention.Second,in addition to the huge health costs,tobacco use imposes social and economic costs of a certain scale for China.In terms of direct economic costs,the excess injury expenses caused by smoking in 2012,2014 and 2016 were about 830 yuan/person,1,500 yuan/person and 2,440 yuan/person respectively.In 2014 and 2016,about 510 yuan/person and 820 yuan/person were paid by the national public finance for excessive injuries and illnesses caused by smoking,increased by 60.78%.The indirect economic costs caused by active smoking in China are large in scale and growing fast.It increased by 107 per cent between 2010 and 2016.In 2016,the indirect economic cost of smoking,as measured by per capita disposable income,was about 400 billion yuan.The indirect economic cost of smoking,as measured by per capita GDP,exceeded 900 billion yuan.The indirect economic costs of passive smoking in China are small,but the situation is not encouraging.The indirect economic costs of passive smoking nearly doubled between 2010 and 2016.In 2016,the indirect economic cost of passive smoking,as measured by per capita disposable income,was about 73 billion yuan.The indirect economic cost of passive smoking,as measured by per capita GDP,is about 165 billion yuan.The health and economic losses caused by tobacco use add to the financial pressure and economic burden on China.In 2012,2014 and 2016,the direct economic costs(excess medical and health expenses)caused by tobacco consumption accounted for 2.73%,4.81% and 7.78% of the total health expenses,respectively.The growth rate of direct economic costs far exceeded the growth rate of the total national health expenses,and tobacco use drove the "additional" growth rate of health expenses.As tobaccorelated diseases continue to increase,more and more medical resources will be devoted to treating preventable diseases caused by tobacco use,which will result in the diversion of funds for other health service needs and priorities.Of the economic costs of tobacco use,66 per cent are borne by smokers themselves and 33 per cent by the government of China.In 2014 and 2016,the economic costs borne by smokers(the unreimbursed part)were 112.317 billion yuan and 239.204 billion yuan,respectively.The excess burdens borne by the national finance were 57.649 billion yuan and 121.309 billion yuan,respectively,which increased by 1.10 times in 2016 compared with 2014.In addition,from 2010 to 2016,the growth rate of indirect economic costs of tobacco use in China has exceeded the growth rate of GDP.Among them,the indirect economic cost of active smoking in China rose from 1.16% to 1.22% of GDP.The proportion of indirect economic cost of passive tobacco use in GDP basically maintained at 0.22%~0.23%,with a small change range.It is foreseeable that with the aging of the population and the improvement of China's medical insurance system,the medical expenditure burden of the Chinese government,medical insurance funds and residents will become increasingly heavy.The loss of productivity caused by tobacco consumption has also had an irreversible negative impact on the Chinese economy.Therefore,it is crucial to control the deadweight loss caused by unreasonable factors.Control tobacco consumption to achieve national health,and then promote the development of the national economy,which is a virtuous cycle,but also a major national strategic layout-healthy China-proposed the epoch topic.Accordingly,this paper proposes the following policy suggestions:First,continue to raise tobacco taxes.The harmfulness of tobacco products in public health,and market failures and inefficiencies in the economic field require government intervention.Among them,using policies to increase the retail price of tobacco products is the most effective means to reduce the consumption of tobacco products,and also a win-win policy.The State Council issued the "Opinions on the Implementation of Healthy China Action",which clearly stated that it would "study and use comprehensive measures such as taxation and price adjustment to improve the effectiveness of tobacco control." At present,China's cigarette tax burden is too low,cigarette payment capacity continues to increase,and cigarette consumption continues to increase after rebound.These practical problems indicate that China still needs to make unremitting efforts to increase tobacco taxes and tobacco prices.Second,simplify the tobacco tax system.In addition to raising tobacco taxes,a good tobacco consumption tax system design is also crucial for a country's public health and public finances.At present,China's cigarette consumption tax system is relatively complex.A multi-level tax rate of both ad valorem and specific volume of cigarette consumption tax is implemented.In addition,specific taxes are levied on both the production and wholesale links.However,in terms of achieving public health and achieving the goals set by Healthy China 2030,China should further simplify the cigarette consumption tax system,rely more on specific taxes,and impose a single tax rate on all cigarettes or tobacco products.Third,implement a special system for tobacco tax funds.The "Healthy China 2030 Planning Outline" clearly defines tobacco control as a national strategy.The implementation of this strategy must be guaranteed by financial funds.Therefore,starting from international experience,and the actual needs and long-term goals of China's "healthy China" national strategy,it is necessary to strengthen research and system design dedicated to tobacco consumption tax funds,and clearly define some of the increased cigarette tax purposes,including for payment of medical,social security,social assistance and social welfare related to people's livelihood.Fourth,design a differentiated medical insurance system.The smoking behavior of smokers has caused a heavy economic burden on China.However,under the generalized medical security system,the state and society still need to pay for the unhealthy behaviors of smokers.China's commercial insurance has begun to take into account the smoking status of the insured,and the design of China's medical insurance system should also take into account this,so as to achieve accurate protection.Therefore,in the context of basically achieving universal medical insurance,China needs to consider the heterogeneity of the insured groups when designing or revising medical insurance policies,to achieve "uniform but different",and to internalize external costs as much as possible.Consequently,reducing residents' unhealthy behavior from the source,controlling disease risk,reducing medical expenses,and ultimately improving social welfare.