Are Fat Taxes All the New Rage?

The world’s first fat tax is finally here. Well, it’s not actually here (New Jersey’s Star Ledger Newspaper took the time to say “fat chance” to such a plan working in the U.S.), but it has been officially enacted in Denmark.

The tax applies to all foods that have a saturated fat content greater than 2.3%. The tax rate is 16 Danish kroner per kilogram of saturated fat (roughly $1.29 per pound). Danish officials expect the tax to generate somewhere between 1.5  billion and 2.75 billion Danish kroner annually. According to the Danish Agriculture and Food Council, a family with two adults and two children that does not change their eating habits can expect to pay an extra 1000 kroner a year (a little less than $200).

Interestingly enough, the goal of the tax is not to target obesity. The obesity rate in Denmark is 13.4%, which is 2.1% less than the European average. The last time the U.S. had obesity rates as low as Demark was in the 1970s. Instead, the fat tax is aimed at increasing the Danish life expectancy of 79 by three years over the next decade.

This type of legislation is not new for Danes. Denmark was actually the first country to institute a ban on trans fats in 2003, and last year the country instituted a 25% tax on sugary items like ice cream, chocolate and sweets. Sin taxes for soda, alcohol and cigarettes also exist. Advocates of these taxes note the benefit to preventative health and also the advantage of filling the government’s coffers. According to the secretary general of the European Public Health Alliance, Monika Kosinska,

“Denmark will not only increase general health amongst the population but will also ease the burden on the public health care system and increase its resources at a time of recession when [European] Member States are cutting public expenditure.”

Benefits aside, the criticisms of the new tax are numerous. In an article for The Atlantic, Edward Tenner notes the rich irony that Denmark, one of the world’s foremost producers of butter, cheese and bacon, is the first country to implement a tax on fat. Critics include, of course, the numerous producers of affected foods like butter, milk, cheese, meat and oil. One CEO of a Danish meat manufacturing company called the tax a bureaucratic nightmare.

Producers are required to pay the tax, and these costs will be passed on to consumers, suggesting that more Danes will shop abroad. Denmark’s central association of margarine producers (MIFU), has already filed a complaint with the European Union (EU) Commission arguing that the tax is noncompliant with EU free trade rules.

Other critics note that the tax may not be high enough to actually change behavior.

Given the similarity to soda taxes (previously discussed on this blog), it’s worth referring to a 2009 article published in the New England Journal of Medicine by Kelly Brownell and his team. They considered the public health and economic benefits of taxing high-sugar beverages and found that the 5% soda taxes that many U.S. states have enacted are too small to affect consumption. Their team proposed that a sugar tax on beverages would have to be much higher to lower soda consumption, at around 1 cent per ounce of beverage.

A 2007 study by the Forum for Health Economics and Policy focused on the ability of a fat tax to change behavior and found that a 10% fat tax on dairy would not reduce consumption by even one percent. The authors suggest that the tax rate would have to be much higher, but even a 50% tax may only reduce fat intake by 3%.

Some critics have offered suggestions on how to better address the problem both of obesity and shortened life-spans. Dr. Mike Rayner, Director of Oxford University’s Health Promotion Research Group, argues that Danes may switch from high fat foods to other unhealthy foods. He proposes that the overall unhealthiness of food should be taxed instead, not just a single nutrient. Simultaneously lowering taxes on fruits and vegetables could promote a healthier behavior change.

Dr. Yoni Freedhoff, medical director of the Bariatric Medical Institute in Ottawa, points to the public health issue of obesity as a societal problem. He notes,

“If we want to have legislation that deals with this problem, perhaps legislation that would deal with advertisement to children and zoning laws for fast foods around school would be a better place to start than a tax that is simply going to raise money and will not, in fact, change anything.”

NYU professor Marion Nestle finds the fat tax to be troubling for a different reason. To see individual behavior change, she argues that we must change the behavior of corporations “that make and market unhealthful products, spending vast fortunes to make them available, desirable and socially acceptable.” She cites a recent Lancet article on food environment factors that sees food processing, cost and marketing as drivers of consumption. She concludes, “[G]overnments seriously concerned about reducing rates of chronic disease should also consider ways to regulate production of unhealthy products, along with the ways they are marketed.”

Despite the multitude of criticisms, several other European countries have expressed a desire to follow suit– including France, Finland, Romania, Sweden, Norway, and even Britain. Americans should also be watching this social health experiment. But given that our country’s favorite condiment is mayonnaise, maybe the Star Ledger is right– it may not be time for a U.S. fat tax just yet.

The Junk Food Marketing Debate: A First Amendment Right or Just Making Sure Kids Aren’t What They Eat?

Remember the Omnibus Appropriations Act of 2009 (H.R. 1105) that President Obama signed on March 11, 2009?   No?  Good, me neither, but my excuse is that I was busy applying to law schools.  If you and I had been paying closer/any (take your pick) attention, we would have seen that the Act included, among other things, a provision calling for the Federal Trade Commission, the Centers for Disease Control and Prevention, the Food and Drug Administration, and the Department of Agriculture to create an Interagency Working Group on Marketed Food to Children (”Working Group”) composed of representatives from each agency.  The Working Group would research and recommend standards for the marketing and advertising of food to children age 17 years and younger.   These recommendations would be presented to Congress down the road.

Well, a couple of years passed, but in April 2011 the Working Group released its 26-page “Preliminary Proposed Nutrition Principles to Guide Industry Self-Regulatory Efforts” for public comment (which you can submit by clicking here before July 14). The Working Group notes that

… in the FTC’s 2008 study on Marketing Food to Children and Adolescents, three food categories — breakfast cereal, restaurant foods, and snack foods — represented approximately 70% of food marketing expenditures directed to children under 12. Similarly, three categories of foods — carbonated beverages, restaurant foods, and non-carbonated beverages — represented 69% of the food marketing expenditures for adolescents ages 12-17 year….  [Overall] [t]he categories most heavily marketed to children and adolescents, ages 2 -17 years are: breakfast cereals; snack foods; candy; dairy products; baked goods; carbonated beverages; fruit juice and non-carbonated beverages; prepared foods and meals; frozen and chilled deserts; and restaurant foods. The Working Group is therefore recommending that the food industry focus its efforts on ensuring that any advertising or marketing of food products within these ten categories meet the nutrition principles set out below. (Emphasis added.)

The Working Group focuses on two nutritional principles “that both improve the nutritional quality of foods marketed to children and can be feasibly implemented by industry with sufficient time to accomplish reformulation,” namely, “Meaningful Contribution to a Healthful Diet” (Principle A)  and “Nutrients with Negative Impact on Health or Weight”  (Principle B).  Principle A ensures that foods marketed to children contain two or more of the following food groups: “fruit, vegetable, whole grain, fat-free or low-fat milk products, fish, extra lean meat or poultry, eggs, nuts and seeds, or beans.”  Principle B ensures that foods marketed to children have limited amounts of saturated fat, trans fat, sodium, and added sugars.  The Working Group makes sure to point out (several times in fact) that its recommendation are based on the 2010 Dietary Guidelines for Americans.

Really, this all sounds quite sensible, if not a little over-protective… but considering, as The Washington Post has reported, that Type 2 diabetes has significantly increased among people age 20 years and younger, what else can this country do to curb obesity and poor eating habits?  Even if we could reduce the cost of nutrient-rich and quality foods so that everyone could afford them, how do we neutralize the marketing of junk food to children?  In a report last month, NPR noted how

[the Working Group] broke from the past by seeking to include 12- to 17-year-olds in its guidelines. Traditionally, limits on marketing focused on the very young. But the government sought to expand them to older children, in part because they are heavy consumers of social media, cell phone messages and online games — the new frontier for ads.

That new frontier of advertising to children through online games — also known as “advergaming” (forgive my use of Wikipedia but Merriam-Webster doesn’t list the word) — includes Asylum 626 and Hotel 626, two advergames sponsored by Doritos.  As NPR reported,

“[w]hat we’re talking about are very complicated and very subtle forms of marketing that aren’t always clear as such,” says Kathryn Montgomery, a professor of communications at American University and an advocate for limiting food ads to teens.

[...]

Montgomery says such ads work subliminally and use friends to influence other friends.

But efforts to restrict ads to teens draw lots of opposition from the food and advertising industries. The industries say the overlap between teen and adult audiences makes the proposed restrictions impractical.

Critics, including the U.S. Chamber of Commerce, have questioned the constitutionality and logic of the Working Group’s nutritional proposals.  The Hill’s Healthwatch has reported that some critics see a First Amendment issue because

“[w]hat they’re doing is trying to simultaneously … suppress speech, while insulating it from judicial review,” said Northwestern law Professor Martin Redish, one of the panelists at a Chamber of Commerce discussion Thursday. “Because if these regulations were truly just advisory, there would be no case or controversy.”

[...]

“Industry’s rights are being violated here,” Redish said, “but there’s something deeper and darker that’s going on: The government is treating us like sheep.”

While constrained to commercial speech, Redish said that attitude has broader implications. People, he said, “can’t be sheep in the commercial realm and then all of a sudden, in the political realm, they’re free-thinking adults who can make basic choices.”

NPR has reported that other critics question the logic behind the proposal and the implicated age range.

Elaine Kolish directs an industry-funded program called the Children’s Food and Beverage Advertising Initiative. For the past five years this initiative sponsored its own voluntary standards that focus only on the 12-and-under set.

“You know, we let kids drive and we let them hold jobs when they’re 16. They can get married in some states, and they can join the military with permission, and they can be held criminally responsible for their actions in a number of situations,” she says. “So I think that the notion that you’d have to have nutrition standards that say you can’t let a kid see an ad for a french fry but you can let them join the military doesn’t really make a lot of sense.”

So where do we go from here?  Is industry self-regulation the answer to making products that better fit on MyPlate?  As I’ve noted in a previous post about McDonald’s Happy Meal toys, sometimes the answer can be stricter parenting (just say “no”).  Yet how can parents instill and maintain healthy eating habits in their kids when advertisements for unhealthy food bombard them through television, social media, and online games?

Childhood Obesity: A Problem Worth Solving

[Ed note: We are pleased to welcome Regina Ram to Health Reform Watch. Regina is finishing her first year as a law student at Seton Hall. She graduated from Drexel University with a B.S. in Biological Sciences and minors in Psychology and Anthropology. She completed a Masters in Public Health from Boston University in 2010 with a focus on Health Law, Bioethics and Human Rights. As a graduate student, Regina worked as a legislative advocate for Dana-Farber Cancer Institute and also supported a SAMHSA funded research program to integrate substance abuse treatment into primary care settings. As an undergraduate, she worked as a healthcare writer and authored emerging technology evidence reports on health devices and procedures.]

Just recently, the New York Times published an article describing the attempt of parents in Philadelphia to change the poor eating habits of the city’s children. A concerned group of parents in a North Philadelphia neighborhood takes turns standing outside of corner stores near a K-8 school in the mornings. They don safety vests and walkie-talkies, and their goal is to discourage kids from stopping at corner stores to buy snacks like soda and candy before school. The article likens the parents to foot soldiers fighting in a national battle over the diets of children.

As dramatic as that may sound, statistics from the Centers for Disease Control and Prevention (CDC) support the metaphor. Nationwide, obesity rates have more than tripled over the past 30 years in both children and adolescents. Long-term consequences include higher risk for heart disease, type 2 diabetes, stroke, several types of cancer, and osteoarthritis in adulthood. More immediate effects include social and psychological problems like stigmatization and poor self-esteem. Further, caring for these health conditions has significant economic effects on the U.S. health care system. All of these statistics portray a battle well worth waging.

But is a group of parents patrolling a convenience store at 8:00 A.M. going to stop childhood obesity? Probably not. Even if the program dissuades kids from buying morning snacks, that behavior is unlikely to continue once parents are gone. Is it a step in the right direction? Certainly. The Surgeon General’s report on overweight and obesity notes that “families and communities lie at the foundation of the solution to the problem.”

However, any successful solution to decrease childhood obesity rates has to involve parents and communities as components of more comprehensive interventions. The causes of obesity in children are multi-factorial, ranging from diet and exercise to genetic and social factors including socioeconomic status and the built environment. The wide array of contributing factors points to the need for an interplay between public and private action to address childhood obesity.

Outside of the home, schools are a key setting for public health efforts to reduce childhood obesity rates. In particular, the National School Lunch Program can be an effective tool in improving the diets of school-age children. Just this year, the U.S. Department of Agriculture announced recommendations to overhaul the nutrition criteria of food programs for the first time in 15 years. The recommendations include limiting salt intake and the use of starchy vegetables, offering only reduced fat milk and using whole grains. Introducing children to healthier foods can help them understand what to eat and why, and that goes much further towards changing future patterns of behavior.

External factors like marketing and advertising also weigh on children’s decisions to eat certain foods. Recent litigation cases (one noted by Jennifer Jascoll here on the HRW website) have focused on the effectiveness of this advertising on children, as well as the disproportionate impact of such advertising on children of lower socioeconomic status. A New York City Councilman recently proposed a bill to ban fast food toys for meals over 500 calories. Children are generally more vulnerable to social messages, and restricting marketing is a case where benefits clearly outweigh the costs.

While involved parents and communities like the one in Philadelphia are undoubtedly an asset, it is going to take a more orchestrated effort to decrease rates of childhood obesity. Parents need to be empowered to make healthy choices and encourage healthier lifestyles for their children. At the same time, schools need to be working hand in hand with the community to ensure that the messages given at school correspond with the messages children hear outside. However unwieldy the issue seems, any action is to be applauded as preferable to no action at all.

(Note: for a more in-depth discussion of the economic consequences of obesity, see Michael Ricciardelli’s article here on HRW)

Time To Tighten That Belt….

Keep an eye out for the April edition of the American Journal of Medicine.  In it, the Los Angeles Times and U.S. News Health Blog report that you will find a new study from the Centers for Disease Control and Prevention (CDC) which identifies the “diabetes belt.”  Almost 26 million Americans - that’s 8% of the population - have type-2 diabetes, the most common form of diabetes (as opposed to type-1) often connected with weight and physical activity.  In a county-by-county census, the CDC  identifies 644 counties in 15 states where the type-2 diabetes rates are higher (11%) than the national average (8.5%).  Ethnicity, age, weight, and a sedentary lifestyle were found to be key factors.

The Los Angeles Times describes the “belt” as stretching “down the southeastern seaboard, ’round the silty Mississippi Delta and following the Appalachian Mountains north across Tennessee, Kentucky and West Virginia” and including parts of Pennsylvania (but stopping short of New Jersey).  Dr. Lawrence Phillips, who studies diabetes at Emory University, told Reuters that

[s]ince diabetes is one of what we call the silent killer diseases … it’s important for the public to be aware that this is a problem….  What this does is to give health care providers ammunition. A provider can say, ‘We’re in the diabetes belt. All of these things are increased in part because of the way we live, and all of these things can be improved to a certain extent. Our risks can be decreased … by eating healthier and to the extent that we can, being less sedentary.’”

The “diabetes belt” appears to overlap with the decades-old “stroke belt” and the recently identified “heart failure belt.” Be sure to check out whether your home state falls within one of these belts.  And then remember to tighten yours.

Fast Food, Childhood Obesity & the Hidden Costs of that Free Toy

Late last month, a consumer advocate group called the Center for Science in the Public Interest (CSPI) announced its intention to sue McDonald’s for using toys to market Happy Meals to children.  In an open letter to McDonald’s, CSPI litigation director Stephen Gardner alleged the toys were part of an unfair and deceptive marketing tactic which gave children “pester power” and taught them unhealthy eating habits.  Mr. Gardner further alleged the company violated Massachusetts, New Jersey, Texas, and California consumer protection laws.  Apparently McDonald’s recent Shrek 3 toy promotion was the final straw (and, somehow, the risk of cadmium exposure isn’t a concern here).  In a follow-up press release, Mr. Gardner also compared McDonald’s to:

… the stranger in the playground handing out candy to children.  McDonald’s use of toys undercuts parental authority and exploits young children’s developmental immaturity — all this to induce children to prefer foods that may harm their health.  It’s a creepy and predatory practice that warrants an injunction.

McDonald’s must decide later this month whether it will continue its Happy Meal toys or succumb to pressure.  So far the company believes that “[g]etting a toy is just one part of a fun, family experience….”

Before you completely write-off this lawsuit and characterization as over-the-top theatrics, just remember that CSPI already has a proven track record.  In 2006, the group sued KFC for using partially hydrogenated oils to deep-fry its food.  KFC subsequently switched to a trans-fat-free frying oil.  That same year CSPI also negotiated a settlement agreement with the Kellogg Company which set certain nutrition standards for marketing to children.  Better not tell CSPI about Cracker Jack and removable tattoos or Topps baseball cards and chewing gum.

In all fairness, CSPI isn’t the only group focusing on marketing to children.  Earlier this year in California, the Santa Clara County Board of Supervisors banned the inclusion of toys with meals numbering 485 calories or more.  Granted, Supervisor Donald Gage voted against the ordinance because “[i]f you can’t control a 3-year-old child for a toy, God save you when they get to be teenagers.”  The Los Angeles Times has reported on the increasing number of fast food television advertisements directed at children, particularly non-white children.  Likewise, CNN has reported on successful junk food marketing campaigns through the use of cartoon characters.  Perhaps CSPI and its supporters should go after DreamWorks and other studios whose agents negotiate these marketing agreements.  Just a thought.

This concern over McDonald’s Happy Meals and developing good eating habits in children coincides with the Trust for America’s Health (TFAH) report “F as in Fat: How Obesity Threatens America’s Future 2010.”  The report found that 38 states have adult obesity rates above 25 percent, a sharp increase from 20 years ago when no state had an obesity rate above 20 percent.  (Click here to see how your state weighs in.)  According to TFAH executive director Jeffrey Levi:

[o]besity is one of the biggest public health challenges the country has ever faced, and troubling disparities exist based on race, ethnicity, region, and income….  Millions of Americans still face barriers — like the high cost of healthy foods and lack of access to safe places to be physically active — that can make healthy choices challenging.

The report suggested a connection between income disparities and adult obesity: “35.3 percent of adults earning less than $15,000 per year were obese compared with 24.5 percent of adults earning $50,000 or more per year.”  The report also showed that “more than 12 million children and adolescents are considered obese” and half of Americans believe this is an important issue to address.  However, rather than suggesting that consumers sue fast food and junk food companies, the report recommended investing in public health initiatives and prevention programs.

I’m not a parent, so I won’t preach about better parenting skills when it comes to “pester power” and how a child’s eating habits are determined as much by their parents as the cartoon characters selling the food.  I’ll just say that there was seldom any debate with my parents over the foods that I ate as a child.  Admittedly, there sometimes are no other alternatives.  Whether you’re a high school athlete on the road, a parent with no time to make dinner, or looking for an inexpensive meal, fast food is the cheap and easy way to go.  Perhaps the key is moderation?

Does this mean CSPI should hold the fast food (and junk food) companies responsible for the development of our eating habits, from childhood to adulthood?  The TFAH report also referred to obesity liability laws in 24 states protecting restaurants, manufacturers, and marketers from weight-related lawsuits.  Take note, CSPI.  (And you, dear reader, take note of Michael Ricciardelli’s post containing some staggering numbers relating to the healthcare costs of managing Type-2 diabetes, in which obesity plays a factor, and Professor Pasquale’s beverage tax utilitarian calculus.)

Soda & Diabetes, How Much Does That Can of Soda Really Cost? Part II

Diabetes. In a brief but interesting interview on NPR’s Marketplace, Kaiser Permanente CEO George Halvorson had this to say:

HALVORSEN: …. Right now, when you look at diabetes, 32 percent of the cost of Medicare is diabetes. It’s the number one cost of blindness, it’s the number one cause of amputations, it’s the number one cause of kidney failures. And when you look at the care delivery patterns in America, we only get care right for diabetics 8 percent of the time. If we got care right for diabetics 80 percent of the time, we’d cut the number of kidney failures in half.

A few days ago we began to ask, “How Much Does that Can of Soda Really Cost?” We considered cost in terms of external or social cost (not price for the actual can of soda, but that which results incidental to the primary transaction and may be borne by other than the buyer or seller), and noted that a recent study shows that obesity plays a prominent role in health care expenditures, and that many believe that soda and other sugary soft drinks play a prominent role in obesity. We noted that the Wall St. Journal reported that

Overall obesity-related health spending reaches $147 billion, double what it was nearly a decade ago, says the study published Monday by the journal Health Affairs.

Obesity-related conditions now account for 9.1% of all medical spending, up from 6.5% in 1998, the study concluded.

Obesity is a key factor in Type 2 diabetes. And  32% of Medicare costs are attributable to diabetes. It is no stretch to say that if we have a Medicare cost problem in this country (we do), what we really have is a diabetes problem (and, considering Halvorsen’s “we only get it right 8% of the time” figure, a diabetes treatment problem as well).

But first things first. 32% is a mere scooch (yes, that’s the technical term) away from ONE THIRD. That’s an enormous number. If one were to relate this portion of Medicare expense to houesehold expenditures, it occupies a place similar to a mortgage– but an expensive mortgage in a house that no one wants to live in.

In addition, according to the American Diabetes Association (ADA)

The total annual economic cost of diabetes in 2007 was estimated to be $174 billion.  Medical expenditures totaled $116 billion and were comprised of $27 billion for diabetes care, $58 billion for chronic diabetes-related complications, and $31 billion for excess general medical costs. Indirect costs resulting from increased absenteeism, reduced productivity, disease-related unemployment disability, and loss of productive capacity due to early mortality totaled $58 billion.  This is an increase of $42 billion since 2002. This 32% increase means the dollar amount has risen over $8 billion more each year.

Importantly, the ADA believes those numbers may be understated:

The actual national burden of diabetes likely exceeds the $174 billion estimate because it omits the social cost of intangibles such as pain and suffering, care provided by non-paid caregivers, excess medical costs associated with undiagnosed diabetes, and diabetes-attributed costs for health care expenditures categories not studied.

Read more

Employers Adopt Chronic Disease Management Programs

Kaiser Family Foundation reports another option for employers attempting to keep health insurance programs affordable.

KFF states:

“Eighty percent of large U.S. companies this year are offering chronic disease management programs for workers in an effort to reduce health care costs, up from 51% last year, according to a new survey by Hewitt Associates, the Houston Chronicle reports. Hewitt surveyed 343 large companies and found that more employers are targeting costly chronic diseases — such as diabetes, heart disease, asthma and depression — rather than workers’ eating or exercise habits. Hewitt estimates that a company with 9,500 workers and 500 retirees younger than age 65 spends between $18 million to $22 million on health care just for those with diabetes.”

Companies are managing chronic disease “by offering employees personal health coaches, on-site health clinics and copayment waivers for needed medications.”

Compared to consumer-directed health plans, chronic disease management is a relatively uncontroversial approach to lowering health care costs for employers.  As we’ve noted in a recent post, “Twenty-five percent of the U.S. community population were reported to have one or more of five major chronic conditions.” Not only does chronic disease management focus on preventative care and employees’ long-term health, employers are saving money in the short-term.  The results, although varying, are generally successful, with employers “spending 10% to 30% less per year on medical care after two to five years (Sixel, Houston Chronicle, 4/2).”  The short-term savings could lead to healthier employees, higher productivity and long-term savings.

The Houston Chronicle reports that:

According to Joseph Jasser, regional medical director for Houston for Concentra, an industrial medicine and urgent care provider, “If you can change their lifestyle — cut out smoking, eat better and exercise — then they’re healthier and companies end up spending less for medical care.”