We may be healthier, but the public purse is sicker

GARY JOHNS
November 2, 2016
The Australian
Try this for a provocative statement. “Healthy, not unhealthy, lifestyles have driven up health costs.” This is the conclusion of a paper, “Death and Taxes”, by Christopher Snowdon of the Institute of Economic Affairs in London, with whom I met recently.
The context of the discussion is that it makes no sense to blame escalating public sector budgets on people whose lifestyle choices, the “sins” — smoking, alcohol and overindulgence in food — tend to be cost saving.
Some preventive activities, such as immunisation of children and mandatory seat belts, can be cost saving. These are relatively cheap to implement and prevent a condition that may be non-fatal but expensive to treat.
In contrast, the prevention of fatal diseases leads to an increase in healthcare spending. This is because the extra years of life generated inevitably result in an increased need for treatment of chronic conditions and for long-term nursing care (Norman Temple, 2011, “Why Prevention Can Increase Health-Care Spending”, European Journal of Public Health).
It seems clear that “longevity-related” costs of healthier people are considerably higher than “lifestyle-related” costs of less healthy people. Acute healthcare costs are usually higher, long-term healthcare costs are invariably higher, and pension costs are much higher.
Over the past 40 years, hundreds of economic studies have shown that prevention in chronic diseases such as heart disease and stroke, and diabetes, as well as for screening for various cancers, and in the management of chronic conditions, usually adds to medical spending (Louise Russell, 2009, “Preventing Chronic Disease: An Important Investment, But Don’t Count On Cost Savings”, Health Affairs).
Obesity prevention, for example, which is one of the leading causes of morbidity, mortality, and high medical expenditures, perversely does not result in cost savings (van Baal et al., 2008, “Lifetime Medical Costs Of Obesity: Prevention No Cure For Increasing Health Expenditure”, PLOS Medicine). Although effective obesity prevention leads to a decrease in costs of obesity-related diseases, this decrease is offset by cost increases because of diseases unrelated to obesity in life-years gained.
Clearly, the improvement in health associated with the prevention of obesity is a worthwhile goal in itself, but it does not follow that the prevention of obesity reduces national spending on medical care.
The study by van Baal, in The Netherlands, compared the lifetime health costs of obese people, smokers, and otherwise healthy-living people. The study predicted that until the age of 56, yearly health costs are highest for obese people and lowest for healthy-living people. At older ages, the smoking group incurred the highest yearly costs.
However, because of differences in life expectancy (life expectancy at age 20 was five years less for the obese group, and eight years less for the smoking group, compared to the healthy-living group), total lifetime health spending was greatest for healthy-living people, lowest for smokers, and intermediate for obese people.
Although public health NGOs downplay the financial costs associated with healthy living and longer lives, it is important these costs be considered in the policy mix. If gains are few, the public has less return than expected on its investment in health promotion or harm prevention policies.
Snowdon argues that public health NGOs downplay the financial costs of healthy longer lives in five ways:
● By focusing on end-of-life costs (which are similar regardless of the age at death) while ignoring the additional years of life that require more healthcare expenditure.
● By paying little attention to long-term care costs, which will increase significantly as the population ages. Long-term costs are greater than the acute healthcare costs associated with ageing.
● By ignoring welfare payments. Public health authorities are concerned with healthcare budgets, rather than welfare budgets, but the taxpayer foots the entire bill.
● By focusing on per capita costs rather than the costs that are met by working taxpayers. Without steep rises in the retirement age, the ratio of working taxpayers to pensioners will continue to decline for the foreseeable future.
● By arguing that public health policies will reduce healthcare costs by facilitating healthy ageing.
The rationale for gouging levels of taxation (as with tobacco excise), restricted access to alcohol (for responsible drinkers), and highly interventionist programs for all (with food labelling), is a lot shakier when it is known that good health is not a saving.
Governments may tax, regulate, and bewail sinners, but doing so will not lower the taxpayer’s burden.
More important, the rationale for controlling the lives of those who choose to indulge has a lot less weight than previously argued. It seems that “lifestyles” are not public property.
garytjohns@gmail.com