Cigarette taxation and price differentials in 195 countries during 2014–2018

IntroductionRaising tobacco prices via increased taxation may be undermined by tobacco industry tactics to keep budget cigarettes on the market. Price differentials between budget and premium cigarettes allow smokers to trade down in the face of average price rises thus attenuating health benefits. This study examines global trends of price differentials and associations with taxation.MethodsEcological analysis of country-level panel data of 195 countries’ price differentials was performed and compared against total, specific excise, ad valorem and other taxation. Price differentials were expressed as the difference between budget cigarette and premium pack prices (as % of premium pack prices). Two-level linear regression models with repeated measurements (2014, 2016 and 2018) nested within each country assessed the association between country-level taxation structures and price differentials, adjusted for year, geographical region and income group.ResultsWorldwide, median price differential between budget and premium 20-cigarette packs was 49.4% (IQR 25.9%–70.0%) in 2014 and 44.4% (IQR 22.5%–69.4%) in 2018 with significant regional variation. The largest price differentials in 2018 were in Africa, with the lowest in Europe. Total taxation was negatively associated with price differentials (−1.5%, 95% CI −2.5% to −0.4% per +10% total taxation) as was specific excise taxation (−2.5%, 95% CI −3.7% to −1.2% per +10% specific excise tax). We found no statistically significant association between ad valorem taxation and price differentials.ConclusionTotal levels of taxation and specific excise taxes were associated with smaller price differentials. Implementing high specific excise taxes may reduce price differentials and improve health outcomes.

The sensitivity of hospital coding to prices: evidence from Indonesia

This study examines a newly introduced DRG system in Indonesia. We use secondary data for 2015 and 2017 from Jaminan Kesehatan Nasional (JKN), a patient level dataset for Indonesia created in 2014 to record public and private hospitals’ claims to the national health insurance system to investigate whether there is an association between changes in tariffs paid and the severity of inpatient activity recorded in hospitals. We find a consistent small, positive and statistically significant correlation between changes in tariffs and changes in concentration of activity, indicating discretionary but limited coding behaviour by hospitals. The results indicate that reducing price differentials may mitigate discretionary coding, but that the benefits of this are limited and need to be compared to the potential risk of having to rebase all prices upwards.

A note on change in persistence of U.S. city prices

This paper seeks to explain the high persistence in U.S. price differentials found in Cecchetti, S. G., N. C. Mark, and R. J. Sonora. 2002. “Price Index Convergence Among United States Cities.” International Economic Review 43: 1081–99, by means of the concept of change in persistence. To that end, have computed recently developed tests by Kejriwal, M., P. Perron, and J. Zhou. 2013. “Wald Tests for Detecting Multiple Structural Changes in Persistence.” Econometric Theory 29: 289–323, allowing for multiple changes in persistence under the alternative hypothesis. We conclude that change in persistence cannot be ruled out for some city price differentials.