The Case for the Obesity Tax

Recently, New York Governor David Paterson promoted a plan for legislation that would have levied a 15% tax on sodas and other drinks with high sugar content and containing less than 70% fruit juice. Proponents of the ‘Obesity Tax’ argued that the measure would help reduce the prevalence of obesity in New York State. The revenue generated was to be reinvested into public health programs and obesity prevention measures. Citing the success of other similar public health initiatives, including anti-smoking measures such as hefty sales taxes placed on the purchase of cigarettes, supporters were optimistic that this policy would have comparable effects in terms of reducing the consumption of soda and other high-sugar beverages, particularly in children.

Responses to the proposed ‘Obesity Tax’, however, were mostly negative and likely compounded by the Governor’s current negative approval ratings. The tax faced opposition from individuals, associations, and other organizations, including the New York State Restaurant Association and the National Restaurant Association. Disapproval took the form of the expected outrage over legislation which would dictate personal habits and beliefs that the ‘Obesity Tax’ would prove to be an ineffective public health measure. Others felt that, in contrast to successful cigarette taxes that have progressively increased the price of cigarettes by larger margins, a 15% tax on soda would fail to produce any changes in consumption. This latter criticism helped paint the Governor’s legislation as merely a disingenuous attempt to meet New York State budget shortfalls under the guise of a compassionate public health policy. And maybe that is exactly what it was, as the Governor recently performed an about face and replaced the “Obesity Tax” and other revenue measures with money from the federal stimulus package.

Yet the current political climate and unpopular governors notwithstanding, there is a larger point that can be gleaned from this debate. Public health measures that attempt to dissuade unhealthy behavior, whether through consumer tax or mandatory disclosure of nutritional information, are economically, politically, and morally justified. In addition to the promotion of healthy individual living, the basic goals of public policies like the ‘Obesity Tax’ include decreasing both the incidence of chronic illnesses and the amount spent on health care treatment for preventable diseases. In fact, as I will discuss below, reducing health care expenditures on the treatment of preventable chronic diseases should be a critical element of any plan aimed at improving the current health care system in the United States.

Independent of political, geographic, or economic backgrounds, many will agree that one of the tenets of improving the quality of and access to health care in United States is a decrease in rising health care costs. Health care spending has been trending upward and now makes up 17% of US GDP. This rise in spending is not necessarily problematic, particularly if it coincides with an increase in the total number of people receiving health care coverage. However, the percentage of individuals receiving health care benefits in the United States has been moving in the opposite direction. There are many contributing factors to this rise in health care spending, including, medical liability costs and superfluous medical procedures, an aging population, and an increase in the incidences of (and, hence, resources allocated to) chronic disease.

The rise in health care spending for chronic illness is staggering and can be attributed to just a handful of conditions. Although the scientific data varies, one study by Kenneth Thorpe, PhD, Chair of the Department of Health Policy and Management at Emory University and former Deputy Assistant Secretary for Health Policy in the Clinton Administration, found that just five medical conditions accounted for a 31% increase in health care spending in a period spanning from 1987 to 2000. All five of these – heart disease, pulmonary disorders, mental disorders, cancer, and hypertension – are conditions associated with obesity. Furthermore, a related study found that an increase in the prevalence of obesity accounted for a 12% growth in health care spending during a similar time period. It stands, then, that any public health policy attempting to reduce the prevalence of a chronic health condition – especially obesity – should be granted serious consideration. The policies’ potential benefit of reduced spending on preventable conditions is economically and morally compelling since resources could be redistributed to efforts such as improving access, quality improvement, and patient safety. Bearing these potential benefits in mind, critics of the ‘Obesity Tax’ should shy away from criticism based on futility and aimed at legislative defeat and instead focus on removing potential roadblocks, pitfalls, or imperfections within the policy in order to facilitate the policy’s desired outcomes.

Overall, despite the political realities surrounded Governor Paterson’s proposed tax, decreasing the amount of health care spending on preventable chronic conditions is required if current efforts at health care reform are to achieve goals such as raising the number individuals with affordable access to health care and improving the overall quality of care. Ideally, a measure such as the “Obesity tax” would reduce the cases of preventable chronic disease and contribute to the diversion of limited resources away from the treatment of preventable chronic disease to other critical areas, thereby making health care more cost effective and efficient. While Governor Paterson’s “Obesity Tax” as written may or may not effectively achieve these goals, as long as public health measures such as this one have reasonable and shared objectives – in this case, a decrease in health care spending through a reduction in overall obesity – criticism should be more constructive and aimed at improving a specific policy’s effectiveness rather than merely defeating it in the name of narrowly defined interests. We should not be satisfied with defeating a public health policy that has a laudable goal, but rather in ensuring that a public health policy effectively works to achieve that goal.