Sugar-Sweetened Beverage Fee: A Model to Address Health Disparities in Hawai‘i

Abstract

Sugar-sweetened beverage (SSB) consumption is associated with increased risk of obesity, diabetes, and other chronic diseases. SSB consumption is also a health equity issue, as rates of consumption and related chronic diseases vary by race, ethnicity, and income in Hawai‘i. The COVID-19 pandemic has highlighted the need for greater investment in public health and the well-being of communities experiencing health disparities because individuals with chronic diseases are more likely to develop complications from the virus. It has also created economic hardships for the people of Hawai‘i, especially the state's most vulnerable populations. Amid this health and economic crisis, an opportunity exists to implement an SSB fee in Hawai‘i. An SSB fee would impose a fee on SSB distributors that would be passed on to consumers in the form of price increases that influence purchasing behavior. Jurisdictions with SSB taxes or fees have seen reductions in SSB purchases and consumption and have generated millions of dollars in revenues to support health initiatives and reduce socioeconomic disparities. Models predict that a $0.02 SSB fee in Hawai‘i could generate $60.5 million and significantly reduce healthcare costs and chronic diseases. This commentary will present an SSB fee policy as a viable model for Hawai‘i to reduce SSB consumption, lower chronic disease risks, and generate needed revenues to support health, reduce inequities, and rebuild the state's economy.

Sugar-sweetened beverages (SSBs) are beverages with added sugars or other caloric sweeteners, such as high fructose corn syrup.¹ SSBs are one of the largest contributors of added sugars to the American diet.² In 2014, American youth consumed 7.3% of their daily calories from SSBs,³ while adults consumed 6.5%.⁴ SSB consumption alone exceeds the United States (US) Dietary Guideline Advisory Committee's recommendation that no more than 6% of a person's daily calories should come from added sugars.⁵ SSBs offer calories with little nutritional value⁵ and do not satiate the appetite like food.⁶ Additionally, SSB consumption is associated with increased risk of obesity, diabetes, heart disease, and cancer, some of the leading causes of morbidity and mortality globally.^7,8

In Hawai‘i, SSB consumption is a major concern for both its health and economic impacts. A 2012 study found that nearly half of Hawai‘i adolescents surveyed drank SSBs 1 or more times daily, and nearly all drank SSBs at least once weekly.⁹ Among Hawai‘i adults, 12.5% report drinking 1 or more sodas daily.¹⁰ This daily consumption contributes to Hawai‘i's high overweight and obesity rates for both adults (57.6%)¹¹ and teens (28.4%),¹² which cost the state $470 million annually in direct healthcare expenses in 2009.¹³ Further, Hawai‘i's diabetes-related direct healthcare costs were calculated at more than $1.3 billion in 2017,¹⁴ despite the fact that only about a quarter of Hawai‘i adults reported being diagnosed with diabetes, pre-diabetes, or gestational diabetes.¹⁵ Additionally, there are persistent racial and ethnic disparities in rates of SSB consumption,¹⁰ obesity,¹¹ and other chronic diseases^16–18 that are of great concern for the state.

SSB Consumption and Health Equity

Native Hawaiian and Pacific Islander (NHPI) adults in Hawai‘i report higher rates of daily SSB consumption (15.8% and 19.9%, respectively),¹⁰ as well as higher obesity rates.¹¹ National data show similar trends; people of underserved communities, specifically black and Hispanic communities, consume SSBs at higher rates than their white and Asian peers.^3,4 Children in low-income families of all races are more likely to consume SSBs compared to those in high-income families.¹⁹ Additionally, the high prevalence of fast-food chains and lack of fresh produce retailers in low- and middle-income communities have been associated with increased risk of cardiovascular disease.²⁰

Analyses of beverage industry marketing expenses indicate higher investments in low-income communities of color, compounding on the industry's harmful practices that prioritize marketing and sales over public health.^21–24 SSB companies also dedicate millions of marketing dollars to minority communities by sponsoring cultural festivals, professional conferences, and athletes and celebrities of color.²⁵ In Hawai‘i, the beverage industry has exploited local culture, portraying SSBs at popular local beaches and framing them as a way to “live Aloha.”²⁶ As a result, SSBs are a normalized part of local culture and are regularly consumed at family gatherings.²⁷

In addition to targeted marketing, NHPI and Filipino adults in Hawai‘i experience other risk factors for chronic disease—overweight/obesity,¹² tobacco use,^28,29 physical inactivity,³⁰ food and housing insecurity,³¹ and obesogenic neighborhoods³²—at higher rates than many other racial/ethnic groups. These risk factors contribute to higher levels of chronic disease experienced by these populations. National data show that NHPI adults experience higher rates of heart disease than Asians and higher rates of hypertension than both Asian and white adults.³³ In Hawai‘i, data show that NHPI and Filipino adults have higher rates of diagnosed diabetes than white adults across nearly all age groups.¹⁷ Chronic diseases are also seen at alarming rates among young NHPI and Filipinos.¹⁸ A recent study found that among children ages 5–9 who were hospitalized in Hawai‘i between 2015 and 2016, a greater proportion of those with chronic conditions were NHPI and Filipino than other races/ethnicities.¹⁸ This is significant because chronic diseases are risk factors for hospitalization and severe COVID-19 (i.e., admission to intensive care units, invasive mechanical ventilation, or death) not only for adults,³⁴ but also for children.³⁵ In fact, cases of severe COVID-19 among pediatric patients have been concentrated in youth with underlying conditions.³⁵

The pandemic has further highlighted significant racial and ethnic disparities with health risks related to SSB consumption because vulnerable populations, many of whom have high rates of obesity, diabetes, and/or certain other health conditions, have experienced worsened health outcomes from COVID-19.³⁴ According to the Centers for Disease Control and Prevention, people of color have higher rates of COVID-19 cases,³⁶ hospitalizations,³⁷ and deaths than white individuals.³⁸ Hawai‘i data show similar patterns across racial and ethnic groups, as Pacific Islander and Filipino populations have 27% and 21% of cases but comprise only 4% and 16% of the state's population, respectively.³⁹ The disproportionate impact of COVID-19 on NHPI and Filipino populations underscores pervasive inequities in the social determinants of health in Hawai‘i, including inequities in access to healthcare, paid sick leave, high-paying jobs, and affordable nutritious foods. These social determinants of health contribute to the high chronic disease rates experienced by these communities.^40,41

An SSB Fee: A Promising Solution

Organizations such as the American Academy of Pediatrics⁴² and World Health Organization⁴³ recommend SSB taxes or fees to reduce SSB consumption and related health disparities. SSB taxes or fees are levied on distributors and passed on to consumers through higher prices at the point of sale, where purchasing decisions are made.⁴⁴ SSB taxes and fees are functionally the same, only differing in how they are administered. Although taxes are most common, the bills drafted in Hawai‘i to date have proposed an SSB fee to be administered by the Hawai‘i State Department of Health.⁴⁵

More than 40 countries and 7 US jurisdictions have SSB taxes.⁴⁶ These locations have seen reduced SSB purchases and consumption after tax implementation and have generated millions of dollars to address health and socioeconomic inequities.^46–49 Revenues have been used for fresh produce deliveries to low-income families, school nutrition education programs, diabetes prevention programs, dental care for low-income populations, job readiness training, and more.^46,49,50 Recently, some of these locations reallocated their funding to specifically address critical needs resulting from COVID-19. San Francisco, California directed $1.65 million in SSB tax revenues to aid low-income populations facing food insecurity,⁵¹ and Seattle, Washington spent $5 million to fund grocery vouchers for families enrolled in food assistance programs.⁴⁹

Hawai‘i SSB fee proponents recommend a $0.02 per ounce fee, which would result in a $0.24 increase in the purchase price of a 12-ounce SSB and generate an estimated $60.5 million dollars annually.⁵² This is critical funding that could be used to support public health, reduce inequities, and rebuild Hawai‘i's economy, which has been crippled during the pandemic. For example, revenues could be used to expand funding for Hawai‘i's DA BUX Double Up Food Bucks Program, which provides Supplemental Nutrition Assistance Program (SNAP) users with vouchers to double their dollars when purchasing local fresh produce.⁵³ This subsidy offsets the higher costs of fresh produce compared to sugary foods,⁵⁴ incentivizes SNAP users to purchase more fresh produce,⁵⁵ and supports local grocers and farmers.⁵³ Revenues could also be used to improve the quality of school physical education programs, provide preventive dental benefits for adults Med-QUEST clients, and offer job training opportunities for those impacted by COVID-19.

In addition to generating substantial revenues, a $0.02 per ounce fee in Hawai‘i is projected to save $59.3 million in healthcare costs over 10 years through anticipated reductions in SSB consumption and the prevention of new cases of obesity and diabetes.⁵⁶ This is an important benefit of the fee, considering the high obesity- and diabetes-related direct healthcare costs facing the state annually.^13,14 This would also benefit Hawai‘i's private employers, who are required by the Prepaid Health Care Act to pay at least half of their employees' health insurance premiums.⁵⁷ Models also project that over the fee's first year, there would be differential decreases in SSB consumption and childhood obesity by race and ethnicity, with NHPI and Filipino SSB consumption and Native Hawaiian childhood obesity rates decreasing the most.⁵⁶

Despite these benefits, none of the SSB fee bills introduced in Hawai‘i have passed. Arguments against the fee include concerns of job losses in the local beverage industry.⁴⁵ This is a serious concern considering Hawai‘i's high unemployment rate, which skyrocketed from the pre-pandemic low of 2.4% to 15.1% in September 2020.⁵⁸ However, a recent study following impacts of Philadelphia's SSB tax showed no significant job losses, neither in key industries that sell SSBs, nor overall unemployment.⁵⁹ Some of the reasons that employment rates are unaffected are that consumers shift purchases to other beverages, such as water or diet drinks,⁶⁰ and revenues that are reinvested in the local community create jobs across multiple sectors.^59–61 Another opposition argument is that this is a regressive tax, overburdening low-income populations, who will have to spend a larger portion of their income on the additional fee than high-income populations.⁶¹ However, fee supporters argue that these laws are actually progressive because of the disproportionate burdens low-income populations and communities of color experience from targeted marketing by the beverage industry,^21,22 rates of SSB consumption,^19,22 and prevalence of SSB-related chronic disease.⁶² Additionally, models predict that these groups will see the greatest health gains from an SSB fee.⁵⁶ Although health impact data from SSB taxes are not yet available, examination of purchases in Mexico before and after the tax showed reductions in SSB purchases across all socioeconomic status groups, with the largest reductions among the lowest socioeconomic group.⁶³ Similarly, intercept surveys conducted in low-income communities in Berkeley, California showed self-reported consumption decreased by 52% after the tax.⁴⁸ Additionally, utilizing SSB fee revenue to reduce health inequities, with feedback from NHPI, Filipino, and low-income communities can amplify benefits to these communities.⁴⁶

The economic and health benefits of an SSB fee are significant. As Hawai‘i braces for extreme budget shortfalls and a prolonged economic recovery,⁶⁴ lawmakers have an opportunity to implement an SSB fee to reduce SSB consumption and chronic disease risks, significantly save on healthcare costs, and generate revenue to reduce health and socioeconomic inequities during austere post-COVID-19 times. The challenge for lawmakers will be ensuring funds are used to these ends and not solely used to fill budget gaps that perpetuate the status quo. As COVID-19 has so somberly emphasized, the state's current systems neglect our most vulnerable residents.^40,65,66 Furthermore, public support for an SSB fee hinges on how the revenues would be used. Hawai‘i Public Health Institute's public polling found that 81% of people surveyed would strongly or somewhat support a fee if the revenues were earmarked for health improvement programs for Hawai‘i's keiki.⁶⁷ However, if the use of the funds was unspecified, support dropped to 62%. This is critical for Hawai‘i lawmakers to recognize, as without public support, an SSB tax can be repealed soon after enactment, as occurred in Cook County, Illinois.⁶⁸ Examination of the repeal showed that a key issue was that the tax was framed as being used to close budget gaps and that none of the funds were explicitly dedicated to public health.⁶⁸ Alternatively, successful taxes in other jurisdictions have established community advisory boards to ensure funds are used for public interest projects to reduce health disparities,⁴⁶ and thus have maintained public support and remained in effect.

As lawmakers consider an SSB fee, they should also draw lessons from tobacco taxes. Hawai‘i's tobacco prevention and control efforts, including the tobacco tax, have successfully reduced smoking rates and cigarette sales.⁶⁹ This is a public health triumph, but has led to concerns about decreasing tax revenues and sustaining efforts funded through them. Contrary to opposition arguments, tobacco taxes are actually a stable form of revenue for states' public health efforts and sharp declines in revenue from year-to-year are uncommon.⁷⁰ Also, states that have substantially increased tobacco taxes over time have generated revenues that exceed the losses from decreased sales.⁷⁰ Similarly, if the SSB fee is effective, consumption, the associated health consequences, and revenues will decrease over time. Lawmakers should heed these lessons, understanding that while SSB consumption will decline, fee increases can be used to maintain revenue streams and fee effectiveness. Additionally, any declines in tax revenues will be offset by reduced health care costs and improved health equity for Hawai‘i's vulnerable populations.

Conclusion

The links between SSB consumption and chronic diseases are well documented, as are the disparate rates of chronic disease by race, ethnicity, and income in Hawai‘i. As the State of Hawai‘i rebuilds its economy and emerges from this pandemic, it has the opportunity to enact an SSB fee to reduce SSB consumption, prevent chronic disease, generate revenues to support health, and address the root causes of Hawai‘i's disparities.

Abbreviations

COVID-19

Coronavirus Disease 2019

NH

Native Hawaiian

NHPI

Native Hawaiian and Pacific Islander

PI

Pacific Islander

SNAP

Supplemental Nutrition Assistance Program

SSB

Sugar-Sweetened Beverages

Conflicts of Interest

No conflicts of interest are reported by the authors of this paper.

Disclosures

The University of Hawai‘i at Mānoa's Office of Public Health studies and the Hawai‘i Public Health Institute receive funding from the Hawai‘i State Department of Health's Chronic Disease Prevention and Health Promotion Division to work on Physical Activity and Nutrition Policies. The Hawai‘i Public Health Institute also received grant funding in 2021 from a private funder to work on an SSB fee. Mr. Takeda is an employee of Sharecare, Inc., which receives funding from HMSA to work on Blue Zones Project - Hawai‘i.