Policy Brief
Institute for Health Policy
The University of Texas School of Public Health
The State of Tobacco Control
in Texas - 2007
By
Igor Gorlach* and Eduardo J. Sanchez MD, MPH†
#2007: 1.1
October 25, 2007
Summary
Tobacco use is the leading cause of preventable death in Texas and the United States, as well as a major factor in the sharp rise of health care cost. Among public policies that reduce tobacco use are taxes, clean air legislation, and comprehensive tobacco prevention programs. This paper provides an overview of Texas tobacco control policy in the context of scientific evidence and legislation in other states. The paper concludes with a number of policy options for further tobacco control and prevention.
* Igor Gorlach is a Graduate Assistant at the Institute for Health Policy.
† Dr. Sanchez is the Director of The Institute for Health Policy and a Professor of Health Policy at the University of Texas School of Public Health. Dr. Sanchez served as the Texas Health Commissioner in 2002-2006.
The Cost of Tobacco Use in Texas
Tobacco use is the leading cause of preventable illness and death in Texas and the US.[1],[2] Texas is paying for the effects of tobacco use in lives, productivity, and dollars. In 2004 alone, tobacco use claimed over 24,000 Texan lives, effecting heart disease, cancer, stroke, birth defects, and chronic lower respiratory disease. In addition, Texans spent $5.83 billion on tobacco-caused medical costs, of which $1.62 billion were provided by Medicaid. The productivity of the state has suffered even greater costs: $6.45 billion in 2004. Overall, the tobacco-caused financial burden in Texas amounts to over $12 billion dollar a year or $10 per pack of cigarettes sold.2
Who is smoking?
As of 2006, 21.2% of Texans use tobacco products.[3] According to the Youth Tobacco Survey and Texas School Survey, tobacco use initiation is most common among youth, with prevalence rising as grade level increases. The cigarette smoking rate in Texas is highest among males between the ages 18-24, primarily those earning less than $35,000 with 9-11 years of education.[4],[5] Geographically, tobacco use is most prevalent in rural areas and east and west Texas. Fort Worth-Arlington and Austin-Round Rock are the two metropolitan areas with highest tobacco use rates – 21.9% and 21.0% respectively. Finally, by ethnicity, Caucasians are generally more likely to smoke than Hispanics.3
Tobacco Control in Texas
State efforts and legislation regarding tobacco control have focused on tobacco taxation and youth access to tobacco products.
Tax. In 2007 the state tax on a pack of cigarettes was raised by $1 to $1.41. Texas has collected $491.9 million in cigarette tax revenue for FY2006.
Youth Access. According to Texas Department of State Health Services, the state’s sales-to-minors rate for FY2007 was 7.2%. Texas possesses a wide arsenal of restrictions on tobacco sales to minors, including a minimum age requirement, clerk intervention requirement, restrictions on vending machines and free distribution, retailer fines, unannounced inspections, and statewide enforcement.
Smoke-Free Air. While many communities in Texas, including El Paso, Austin, and Houston, passed local smoke-free air ordinances, state law only restricts smoking in schools, childcare facilities, and some public/cultural facilities. As a result of local regulation, 68% of Texans are protected by worksite smoking policies and 71% are protected by home smoking policies.1
Comprehensive Programs. Texas ranks 40th among all states in tobacco use prevention spending - $7 million in FY2006. These funds support the Texas Tobacco Prevention Initiative (TTPI). The program, made possible by the $17.3 billion awarded to Texas in the Texas Tobacco Settlement, was launched in 1999. The Texas Legislature appropriated interest from the $200 million Permanent Endowment for Tobacco Education and Enforcement to the Texas Department of Health (TDH, now Department of State Health Services) to prevent tobacco use and promote cessation. TDH initiated a pilot study in 18 east Texas and Houston communities to determine the effectiveness of several tobacco control intervention methods, including school, community, cessation, enforcement, and mass media. The pilot demonstrated that a comprehensive tobacco prevention program achieved significant results (40% smoking rate decline in grades 6-7), while communities with less-intensive programs did not show a measurable reduction in tobacco usage among either adults or children.[6] Comprehensive programs, funded optimally at $3 per capita, were expanded to Beaumont, Houston, and Port Arthur areas with similar effective outcomes. As a result of budget reductions in FY2006-FY2007, only Beaumont and Port Arthur areas still receive comprehensive tobacco prevention and cessation activities. Several other areas in the state, including Montgomery County, Fort Bend County, and Harris County, receive tobacco prevention interventions at lower funding levels.
Texas Tobacco Settlement[7]
In 1998 the State of Texas signed a $15 billion settlement agreement with the tobacco industry. The payments stretch over a period of 25 years and remain subject to industry activity and profitability. The Texas Legislature allocated $1.5 billion dollars to create permanent endowments for higher education and health and human services, the interest on which currently provides funding for ongoing programs. Initial endowments are as follows:
Permanent Endowment / Amount (in millions)Health and Human Services / Tobacco education and enforcement / $200
Children and public health / $100
Emergency medical services and trauma care / $100
Rural health facility capital improvements / $50
Community hospital facility improvements / $25
Rural communities health care investment / $2.5
Higher Education / Health-related endowments for institutions of higher education / $595
Permanent health fund for higher education / $350
Nursing and allied health fund / $45
Minority health research and education / $25
In addition, the tobacco industry provided $2.3 billion for Texas counties and hospital districts. Of this amount, $450 million was deposited into a “lump sum trust account” and distributed to local political subdivisions. The remainder, approximately $1.8 billion, was deposited into the Tobacco Settlement Permanent Trust Account. Local political subdivisions receive pro-rata distributions from the investment on the trust annually, which are commensurate with unreimbursed health care provision. In 2007, nearly $71 million was allocated to Texas hospital districts (for $1.6 billion in unreimbursed health care expenditures), $36,400 was allocated to five Texas cities (for $1.5 million in unreimbursed care), and nearly $83 million was allocated to Texas counties (for $1.9 billion in unreimbursed health care expenditures). The amounts of unreimbursed health care expenditures and the payments have been on the rise since 2003.
Texas Tobacco Control Activity in 2007
Tax. Originating from the 79th legislative special session (3rd), the excise tax on tobacco has been raised by $1 to $1.41 per pack beginning January 2007. During the May 2006 debates, the Texas Senate passed an amendment earmarking 5% of the tax revenue to tobacco control and prevention. However, the House refused to accept the amendment, thus precluding any new funds for tobacco prevention programs. Rep. Cook introduced House Bill (HB) 11, authorizing the comptroller to require wholesalers and distributors to report data regarding sales of liquor and tobacco products, to help identify tax audit targets. The bill, estimated to increase state revenue by $289 million between FY2008-FY2012, will become effective on 9/1/07. Rep. Chisum introduced HB 1286, shifting the tax structure for ‘snuff’ to a weight-tax. The bill was estimated to generate $52 million in FY2009, yet it never left the Ways & Means Committee.
Youth Access. Senate Bill (SB) 448, by Sen. Uresti would raise the legal age to purchase tobacco product to 19. Despite a solid 26-4 vote in the Senate, the bill failed to go beyond the State Affairs Committee in the House. Sen. Averitt introduced SB 1252, authorizing retailers to use electronic fingerprint for age verification in addition to a government-issued identification. After an overwhelming support in the Senate (29-1), the bill was never put to vote in the House.
Smoke-Free Air. During the legislative session, Rep. Crownover and Sen. Ellis introduced identical indoor smoking bills in the House (HB 9) and the Senate (SB 368). The bill, as introduced, would prohibit smoking inside, and within 15 feet of, a public place or a place of employment, in a seating area of an outdoor arena, and in bleachers or grandstands for spectators at public events. As introduced, the bill would also authorize certain exceptions, including hotel and motel rooms. Upon consideration by the House, HB 9 has been amended to include several exemptions for localities and businesses, comprising an exemption for bar owners who offer health coverage for their employees, an exemption for establishments with ventilation systems, and an exemption for communities that have local smoke-free air ordinances, regardless of content. After eleven adopted amendments, the bill passed the House, yet never reached a vote in the Senate.
Comprehensive Programs. The Department of State Health Services requested approximately $53 million to expand the Texas Tobacco Initiative statewide in FY2008-FY2009. The amount was based on program evaluation, which concluded $3 per capita as the most effective spending target for tobacco prevention and cessation programs. The program was allocated $21 million instead – an increase of about $3 million a year. Of the funds appropriated, $3 million a year must be used for an interagency contract between DSHS and The Texas Education Agency to prevent the use of tobacco among students in grades 4-12. The Legislature has also included several other riders in the budget regarding the tobacco prevention program, stemming directly from the recommendations of the Legislative Budget Board. The riders require DSHS to allocate the granted funds on a competitive basis, use evidence-based programs that are explicitly recommended by the Centers for Disease Control and Prevention, and complete and publish a detailed report to the Legislature regarding the implementation, financing, and outcome of the program. In addition to DSHS efforts, SB 10 by Sen. Nelson provided financial incentives for Medicaid recipients to participate in smoking cessation programs. The bill passed both houses and was signed into law by Gov. Perry.
Evaluating Tobacco Control Policy Tools
Tax______
Effectiveness. According to the Surgeon General’s report (2000), increasing taxes on cigarettes is among the most effective ways to reduce smoking rates and quantity, especially among adolescents.[8],[9] Moreover, the report found that “substantial increases in the excise taxes on cigarettes… reduce the adverse health effects caused by tobacco in the long run.”9 The overall price elasticity for demand was found to be -0.4 to -0.57 (for every 10% tax increase, demand decreases by 4% to 5.7%).9,[10],[11]
Economic Analysis. There is a growing body of evidence that no current tobacco tax is sufficient to compensate for the public cost of tobacco use. Accounting for inflation, the tax has been declining over the years. While it is difficult to arrive at a scientific consensus regarding the optimal tax on tobacco use, a tax increase reduces demand best in states with low income mean. An excise tax on cigarettes is not regressive in nature, since those who are faced with the highest proportional cost are most likely to quit and enjoy the ‘savings’ of a smoke-free lifestyle.11 With a reduction in tobacco use, there will be some labor shifting in the economy; however, the tobacco industry employs a small fraction of the workforce, without a measurable effect on the economy as a whole.16
In Perspective. As of June 6th, 2007, Texas is ranked 16th among the fifty states in cigarette tax per pack. The mean tobacco tax for the states stands at $1.046.[12] Many states have earmarked a portion of the tobacco tax revenue to be used for tobacco prevention programs. Due to the wide range of state tax rates on cigarettes, smuggling has become a tax evasion issue. In order to address this loophole in policy, states may collaborate with neighboring states to establish a uniform tobacco tax rate. The Surgeon General also comments that “the average price of cigarettes and the average cigarette excise tax in this country are well below those in most other industrialized countries and that the taxes on smokeless tobacco products are well below those on cigarettes.”9
In 2005, the public support in Texas for an increase in tobacco tax by $1 was at 65%, with higher support for tobacco prevention earmarking.[13]
Smoke-Free Air Policy______
Effectiveness. Exposure to environmental tobacco smoke (ETS) causes numerous illnesses and/or death. In the US, for every eight smokers who die from smoking, one person dies from exposure to ETS.11 Smoking bans are the most effective method for reducing ETS exposure, although they do not eliminate exposure entirely.9 Smoking bans also have shown to help smokers quit or reduce smoking quantity, and establish a nonsmoking social norm.11
Economic Analysis. The effects of smoking bans on local business have been debated since the first state-wide smoking ban was introduced in California. A comprehensive review of the literature on the business effects of smoking bans (including a study on El Paso, TX) reveals no effect on bar and restaurant patronage or revenue.11
Another point of economic analysis touches on the role of local governments in establishing smoking bans. While the costs of ETS are incurred by the locality through direct exposure to ETS, the greater community suffers even greater costs through medical care dollars, medical insurance premiums, and overall productivity loss costs. Spillover of costs crosses local boundaries, providing economic justification for action on a state level.
In Perspective. The following are data regarding state smoking restrictions as of the 4th quarter of 2006:[14]
Smoking Restrictions in the 50 States and DC
Location / Banned 100% Smokefree / Separate Ventilated Areas / Designated Areas / Total Number of States with Any Restriction / No RestrictionsBars / 10 / 2 / 4 / 16 / 35*
Commercial Day Care Centers / 30* / 2 / 5 / 37 / 14
Enclosed Arenas / 18* / 3 / 13 / 34 / 17
Government Worksites / 23* / 6 / 18 / 47 / 4
Grocery Stores / 18* / 3 / 17 / 38 / 13
Home-based Day Care Centers / 28* / 2 / 1 / 31 / 20
Hospitals / 20* / 4 / 19 / 43 / 8
Hotels and Motels / 3 / 1 / 21 / 25 / 26*
Malls / 16* / 4 / 6 / 26 / 25
Prisons / 5 / 2 / 3 / 10 / 41*
Private Worksites / 18* / 4 / 13 / 35 / 16
Public Transportation / 27* / 3 / 13 / 43 / 8
Restaurants / 15 / 3 / 20* / 38 / 13
* includes Washington, DC
The public support for smoke-free restaurants in the US has been on the rise since 1992, with 58% favoring the policy in 2001-2002.[15]