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Fat Taxes Go Over Like A Lead Balloon

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Fat Taxes Go Over Like A Lead Balloon

The Washington Times July 29, 2011
EconomicsBudget
Health PolicyOther

Taxes dominate the debate on solving America’s obesity epidemic. Arizona considers a plan to impose a $50 fat tax on obese Medicaid patients. Weeks ago, Philadelphia Mayor Michael A. Nutter launched his second attempt to impose a city soda tax. In California, public health lobbyists tried (and failed) to get a soda tax in late April. For the record, President Obama’s debt commission champions the idea of a tax on soda, receiving praise from the White House, and New York Times food writer Mark Bittman calls for a tax on “soda, French fries, doughnuts and hyperprocessed snacks.” Across the Atlantic, Denmark’s new tax on fat takes effect in October, and the Swedes consider a calorie tax.

It worked for smoking, advocates claim. So why not for diets?

There are big problems, though, with their big idea. First, even the most favorable studies argue that dietary taxes have to be very high - in the 18 percent to 25 percent range - before they’ll have any real impact on consumers. Even then it’s not clear that people will eat healthier; they may just shift their calories (from soda to chips, for instance). Even if they didn’t do that, taxing unhealthy foods is far more complicated than taxing paper sticks filled with tobacco. A tax on calorie-rich foods� the sort Mr. Bittman champions - will be hard to target and much harder to enforce. Complicating matters further, voters dislike these taxes. Even in tax-friendly Washington state, the soda tax failed at the ballot box.

Consider a positive alternative: Insurers - public and private - should offer rewards for measurable improvements in healthy behavior instead. Two studies published this spring suggest there is significant evidence that incentive-based weight-loss programs can be successful. The first study was British, appearing in the Journal of Public Health. The second study was American, published in the Journal of General Internal Medicine.

In the British “pounds for pounds” experiment, about 400 people were paid to lose weight. On average, the program cost about $300 per participant. Forty-four percent of participants finished the year with “medically significant” weight loss, and nearly one-quarter of the group averaged 25 pounds. lost. True, the experiment had a high dropout rate, but it’s hard not to conclude that the results are better than anything expected from a fat tax.

The American study tested a variety of financial incentives on a group of veterans, finding that “incentives produced significant weight loss over an eight-month intervention.” The catch? Participants tended to regain the weight after the incentives had ended. But that’s no deal-breaker because it should be possible to design longer-term incentives. For example, Safeway’s Health Measures program offers annual cash incentives for healthy behavior for its employees.

If you hate the idea of paying people to improve their health, consider your own self-interest. Remember, over time, obese patients cost far more to treat than those at a healthy weight because of joint deterioration, heart disease and other ailments. If a rewards plan is effective, healthier outcomes will cut long-term costs in the health system for everyone. In some ways, you aren’t really paying people to lose weight - you’re dividing up the cash from the unneeded hip replacement. And unlike the buffet of fat taxes, soda taxes and other diet regulations revered by the public-health community, incentives for healthy behavior directly target health problems instead of dancing around them.

Rewards offer a clearer policy with less bureaucracy. No one needs an army of survey assistants to interview people in supermarkets, hoping to confirm that the taxes are changing behavior. No one needs to worry about whether poor eaters will get their calories from untaxed foods. Incentive plans only reward the desired result. It’s not surprising, then, that some insurance companies are pushing the idea, but they’re still scarce among employer plans.

So why, then, are taxes so popular with the public-health community?

Largely, it’s nostalgia. Remembering the success with tobacco, public-health officials promote similar ideas. But having won the war on smoking in decades past isn’t going to help America slim down today. A majority of smokers want to quit - and a tax is a solid nudge in that direction. In contrast, polling suggests that many obese Americans aren’t even aware of their excess weight. The problem is different, but too many in the public-health community are blind to that difference.

Between today and 2020, it’s estimated that 20 percent of the increase in health costs will be attributable to obesity. We need a fresh approach, not another tax.

This piece originally appeared in Washington Times

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