Are Fat Taxes All the New Rage?

Photo by Vijverln

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.

Medicaid Incentives for Healthy Behavior: Turning That Cigarette Back Into Cold Hard Cash

V. Van Gogh (1853-1890)

The Centers for Medicare and Medicaid Services (CMS) recently announced a $100 million program through which states can reward Medicaid enrollees who adopt healthy behaviors. The grant program is part of the Patient Protection and Affordable Care Act and allows states to offer incentives for tobacco cessation, controlling or reducing weight, lowering cholesterol or blood pressure, and avoiding the onset of diabetes or improving management of the condition. The goal of the program is prevention, as spending on chronic conditions is said to account for more than 75 percent of annual healthcare expenditures in the U.S.

According to CMS Administrator Dr. Donald Berwick,

With the right incentives, we believe that people can change their behaviors and stop smoking or lose weight. Not only can preventive programs help to improve individuals’ health, by keeping people healthy we can also lower the nation’s overall health care costs.

States are not limited to direct cash incentives– proposed plans could include waiving premiums, deductibles and coinsurance payments, or offering coupons or gift certificates for weight management classes or tobacco cessation counseling.

CMS has based the program on data suggesting a short-term change in behavior when people are offered monetary incentives. Current research shows that while people may be internally motivated to make healthier decisions because of future consequences, they don’t often weigh those delayed outcomes with the immediate reward of engaging in the behavior. For example, knowing that smoking increases lung cancer risk 20 years from now isn’t always going to stop someone from smoking a cigarette. The benefit of monetary incentives is therefore their immediacy– they replace one unhealthy reward with another less harmful one. In short, CMS is betting that someone would put down that cigarette right now if you just paid them to.

But the experience of making healthy decisions seems to align more with what Mark Twain opined in Following the Equator,

He had had much experience of physicians, and said “the only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d druther not.

Though an individual may make a healthy choice now because they would prefer a cash incentive, that doesn’t automatically change their instinctual behavior. Someone could theoretically be convinced to take a grocery store gift card instead of buying a fast food dinner, but that does not change how much they enjoy the taste of a cheeseburger. In many circumstances, people engage in certain behaviors simply because they like to. For this very reason, critics are quick to point out that monetary incentives are unlikely to spur long-term changes in unhealthy habits. Critics also note that there is little research on whether these incentives will be successful in the Medicaid beneficiary population.

What may redeem the initiative from these criticisms is that CMS is candidly calling it a  ”demonstration program,” designed to figure out which strategies produce long-term behavioral changes. By allowing states to develop their own programs and keep data on the experience, CMS seems to be hedging its bets, wagering that at least one program will provide a successful model. Further, CMS can use the data to evaluate other factors such as the administrative costs incurred by states in rendering the programs.

Could $100 million federal grant dollars be used to support preventative health in a different way? Of course. But as long as this money is being set aside to incentivize healthy behavior, we may get an answer to whether external motivators spur long term behavior change. I, for one, would love to know just how much money it costs to convince someone to stop smoking, or to consistently trade in that Big Mac for some broccoli. It almost has to be cheaper than what we’re doing right now.

New Year’s Resolution #1: Preventive Care and Negotiated Costs

Photo by The Shopping Sherpa via flickr.

Happy 2011, folks!  It’s a new year of reformed eating, exercising, spending, and no-smoking habits.  It’s a new Congress with promises or threats (depending on your view) of healthcare repeal.  And with the help of U.S. Preventive Medicine, Inc., it’s a new year for Sam’s Club shoppers to reach their health goals with the “The Prevention Plan.”  Or is it?

For $99 a year, Sam’s Club shoppers can access:

a personalized, step-by-step health management program designed to help people take control of their individual health.  Via an online health assessment and at-home blood test [measuring cholesterol, blood glucose, and Hemoglobin A1c levels]… members can take the first steps in identifying potential individual health issues.  From there, a personalized plan is created to address risks.  Personal health coaching, ongoing support, a variety of tools and a plan-wide health challenge are provided through The Prevention Plan to keep members motivated to maintain a healthy lifestyle.

Although the Plan includes a 24/7 nurse line, 20 online education programs, recommended prevention screenings, and a detailed member report, it isn’t a substitute for regular health insurance… or for a primary care physician.  In a CNNMoney report, U.S. Preventive Medicine CEO Christoper Fey suggested that shoppers “[t]hink of it as what a financial planner does.   He takes all the information you provide, assesses the risk and gives you a plan on how to improve your financial health.  The prevention plan does a similar thing, but for your health.”  In the same report, a director of health policy at Families USA, a consumer advocacy group, said that she “worr[ied] about people thinking of this prevention plan as a substitute for an annual checkup at a doctor’s office.”

Participating in preventive care and services makes a lot of (dollars and) sense.  Okay, a little lame joke.  Seriously, though, why sit around when you can take measures to try to maintain your health and to prevent certain diseases from occurring?  The Patient Protection and Affordable Care Act recognizes the benefit of preventive care and services — remember, there’s that provision concerning free access to important screenings, tests, vaccinations, and the like.

Yet I’m somewhat skeptical about the benefits of paying $99 to enroll in this Sam’s Club Plan.  For starters, it sounds like the same kind of educational information and health tips can be found on other sites such as WebMD… and at no cost to the consumer/patient.  Okay, well, maybe WebMD doesn’t come with a 24/7 nurse line.  Yet after you take the at-home blood test, upload the results, and figure out your health summary, you’ll still need to consult a doctor to figure out whether any additional screenings are required.  So take that $99 and add to it the cost of your co-pay… or whatever you might pay out-of-pocket if you don’t have insurance.

Speaking of which, be sure to check out a recent New York Times article which reminds us how (most of) everything in life is negotiable, including healthcare and prescription costs.  Similarly, a NPR blog post discusses how some drug manufacturers offer coupons or subsidy cards to reduce prescription costs–but as Kate Matos mentioned the other day here at HRW, that too comes with a cost.

Impact of Free Preventive Healthcare

This color sketch, which was drawn in 1962, showed the CDC’s national symbol of public health, the "Wellbee," and was created by CDC’s staff artist Harold M. Walker, who had previously worked as an animator in Hollywood, California. CDC used the Wellbee in its comprehensive marketing campaign that used newspapers, posters, leaflets, radio and television, as well as personal appearances at public health events. Wellbee’s first assignment was to sponsor Sabin Type-II oral polio vaccine campaigns across the United States. Later, Wellbee’s character was incorporated into other health promotion campaigns including diphtheria and tetanus immunizations, hand-washing, physical fitness, and injury prevention. This artifact can be found in the Global Health Odyssey, which is the CDC’s museum featuring many various public health-related artifacts. Date 1962, http://phil.cdc.gov/phil/home.asp

Benjamin Franklin famously once said, “an ounce of prevention is worth a pound of cure.” The statement has that ring of truth– especially when it comes to American healthcare.  Numerous studies have shown that early detection of diseases as well as interventions for bad habits (e.g. overeating and smoking) can potentially avert thousands of deaths each year.  Additionally, reported by Reuters, these preventative cares can lead to massive health care savings because preventable diseases such as heart diseases, cancer, and diabetes account for 75% of the national health care spending.

Considering the potential of prevention, just last week, the White House laid out rules requiring health insurance companies to provide many preventative medical services at no cost to the consumer.  The NY Times reports,

The rules will eliminate co-payments, deductibles and other charges for blood pressure, diabetes and cholesterol tests; many cancer screenings; routine vaccinations; prenatal care; and regular wellness visits for infants and children.

Other services that must be offered at no charge include counseling to help people stop smoking; screening and counseling for obesity; and tests for infection with the virus that causes AIDS.

The rules stipulate that no co-payments can be charged for tests and screenings recommended by the United States Preventive Services Task Force, an independent panel of scientific experts. The rules apply to new health plans that begin coverage after Sept. 23 and to existing health plans that make significant changes after that date. The administration said the requirements could increase premiums by 1.5 percent, on average.

Currently, the government reports that Americans use preventive services at about half the rate recommended by doctors and public health experts.  The Obama Administration, including many experts and consumers groups, is hoping that these new changes will eventually have a huge impact and Americans will take advantage of the free preventative care.

But, how much impact would it really have?

While costs have deterred some consumers from preventive care, others have avoided doctors’ offices for other reasons.  For example, people with unhealthy lifestyles avoid checkups, not because of cost, but out of fear.  According to the NY Times,

Recent studies have shown that people who know they have health-endangering vices (like smoking or drinking) put off appointments because they do not want a healthy-living lecture. Others do not go because they feel doomed despite medical treatment. At the other extreme are the overly optimistic who are convinced they will get better no matter what. And then there are those who are embarrassed to discuss their symptoms, such as incontinence or impotence.

The bottom line for many people is fear: fear of bad news, fear of an uncomfortable test, fear of discussing something intimate.

And other people, namely men, do not regularly see their primary care physician because men generally tend to overestimate their health.  According to a survey by the American Academy of Family Physicians:

● Almost one in five men (18%) 55 years and older have never received the recommended screening for colon cancer.

● More than half (55%) of all men surveyed have not seen their primary care physician for a physical exam within the past year.

● Four in 10 (42%) men have been diagnosed with at least one of the following chronic conditions: high blood pressure (28%), heart disease (8%), arthritis (13%), cancer (8%) or diabetes (10%).

● More than one out of four men (29%) say they wait “as long as possible” before seeking help when they feel sick or are in pain or are concerned about their health.

● Despite this, almost 8 in 10 (79%) men describe themselves as in “Excellent,” “Very Good,” or “Good” health.

The “missing” men in these statistics would seem to be among those who would benefit, arguably most, from regular  checkups and screenings; unfortunately, it would seem that free preventive care will not drive these groups running to the doctor.  While the new rules will undoubtedly increase the number of people receiving preventive care, it is uncertain how much impact it will actually have as some groups will continue to avoid doctors regardless of costs.

Pilot Program Seeks to Educate Patients, Prevent Illness, and Save Billions

A pilot program aimed at reducing Medicare costs by “stopping the revolving door of hospital admissions by some chronically ill elderly” is taking shape in Baton Rouge, Louisiana.  According to the Baton Rouge Advocate, the program, called the Care Transitions Project, could be a model for U.S. health care reform if it is successful in Baton Rouge and 13 other participating communities.

Photo by Marcel Oosterwijk via Flickr

The program seeks to provide patients and caregivers with information before they leave the hospital in order to prevent problems that could lead to readmission.  Fundamental to the program is the use of a “transition coach” who helps the patient put together a list of questions for their primary care physician, discusses questions about medications, and puts together a plan for “self-care.”  This allows the patient to be mindful of preventive measures and symptoms to be on the lookout for.

The patient signs a consent form in which they agree to meet with the transition coach before leaving the hospital and again within 48 hours of leaving. There is an additional follow-up at a week, two weeks, and a month.

Gary Curtis, head of Louisiana Health Care Review, says that:

In Louisiana, two out of every 10 chronically ill elderly patients are back in the hospital within 30 days of their release.

However, the problem is not confined to Louisiana.  According to statistics from the Centers for Medicare and Medicaid Services,

Nationally, the readmissions and subsequent treatment contribute to a $12 billion annual increase in Medicare costs.

Other communities engaging in the pilot program include Denver, Colorado and Miami, Florida.  Click here for more information about the Care Transitions Program.