The Ethicist of the New York Times has entered the battle of taxing carbs. First the mere thought that the Times has an ethicist is an oxymoron if I ever saw one. Is it that they need one or is it that they believe that they can opine on what is right. But back to what was said. The article begins:
"Proposals to tax sugary drinks as a way to fight obesity and finance health care reform have found support from medical experts and some interest from President Obama while meeting resistance from the beverage industry in general and the Coca-Cola C.E.O. Muhtar Kent in particular. “I have never seen it work where a government tells people what to eat and what to drink,” he told the Rotary Club of Atlanta last month. “If it worked, the Soviet Union would still be around.” Is this sort of argument so dubious, and does it come from the maker of products so damaging, that Muhtar Kent should be dragged off in handcuffs — or worse?"
One would expect the CEO of Coke to say as such. But there is an example. It is the tax on cigarettes. It has worked and continues to work. We have shown that many times and it is detailed in our book, Health Care Policy: Politics vs Reality.
He goes on to state:
"Proposals to tax sugary drinks as a way to fight obesity and finance health care reform have found support from medical experts and some interest from President Obama while meeting resistance from the beverage industry in general and the Coca-Cola C.E.O. Muhtar Kent in particular. “I have never seen it work where a government tells people what to eat and what to drink,” he told the Rotary Club of Atlanta last month. “If it worked, the Soviet Union would still be around.” Is this sort of argument so dubious, and does it come from the maker of products so damaging, that Muhtar Kent should be dragged off in handcuffs — or worse?"
One would expect the CEO of Coke to say as such. But there is an example. It is the tax on cigarettes. It has worked and continues to work. We have shown that many times and it is detailed in our book, Health Care Policy: Politics vs Reality.
He goes on to state:
"Assuredly, many factors affect our weight. But it doesn’t follow that because a policy fails to address all of them, it should not address any. That the feds devote few resources to going after counterfeiters who mint fake quarters doesn’t mean they should decline to pursue those who run off $20 bills.
What’s more, the multiple causes of a problem need not share equal significance. Studies suggest that sugary beverages are a key contributor to obesity. In its analysis, the Center on Budget and Policy Priorities notes that “Americans consume about 250-300 more daily calories today than they did several decades ago, and nearly half of this increase reflects greater consumption of high-sugar soft drinks.” So there’s a case to be made for giving serious consideration to a soda tax even if other steps are not taken."
To build upon the above let us recall the simple relationships:
1. It requires 3500 kcal for each added pound.
2. A BMI between 25 and 30 is overweight and over 30 is obese. Obesity is the primary cause of Type 2 Diabetes which costs us $275 Billion in 2007, and it is growing.
3. The extra 300 kcal per day equals 2100 kcal per week, or 109200 kcal per year or 31.2 pounds per year!
We want to reduce health care costs so here is the target. It is not ethical it is economic.
In a recent NEJM article the authors state:
"Economists agree that government intervention in a market is warranted when there are "market failures" that result in less-than-optimal production and consumption. Several market failures exist with respect to sugar-sweetened beverages. First, because many persons do not fully appreciate the links between consumption of these beverages and health consequences, they make consumption decisions with imperfect information. These decisions are likely to be further distorted by the extensive marketing campaigns that advertise the benefits of consumption. A second failure results from time-inconsistent preferences (i.e., decisions that provide short-term gratification but long-term harm). This problem is exacerbated in the case of children and adolescents, who place a higher value on present satisfaction while more heavily discounting future consequences.
Finally, financial "externalities" exist in the market for sugar-sweetened beverages in that consumers do not bear the full costs of their consumption decisions. Because of the contribution of the consumption of sugar-sweetened beverages to obesity, as well as the health consequences that are independent of weight, the consumption of sugar-sweetened beverages generates excess health care costs. Medical costs for overweight and obesity alone are estimated to be $147 billion — or 9.1% of U.S. health care expenditures — with half these costs paid for publicly through the Medicare and Medicaid programs.""
Our analysis presents a substantially greater number but they are within a factor of two which is not bad for this type of analysis. The NEJM authors then go on to discuss how the taxes would work. Let us look at this in a more general manner. We see the following mechanisms:
1. Tax at Point of Sale/Consumption: This is akin to the cigarette tax. We know that the cigarette tax works but it took many years and many tax increases to get it to function. Also there is a one to one mapping between tobacco and cancer for example. That is if you stop tobacco usage as in cigarettes you stop lung cancer. This is not the case with sugar. It is total kcal which must be modulated. Thus we would have to tax cookies, cakes, candies, and the like. It is more complex.
2. Tax at Point of Result: This is the proposal that everyone must be weighed each and every year and they get taxed on excess BMI. Thus, for example, you get weighed and pay $1,000 per point over 25 if you are between 25 and 30 and say $2000 for every point above 30. After all you get you car inspected each year and all you would then do is do the same for yourself! Thus if you desire to gain weight you can but you get taxed.
These two proposals look at extremes. One looks at one particular element and the second looks at the result. One attempts to modify behavior and the other penalizes the results. We feel that neither accomplishes the desired result and that the carb issue is more complex than tobacco but it worth continued study.
To build upon the above let us recall the simple relationships:
1. It requires 3500 kcal for each added pound.
2. A BMI between 25 and 30 is overweight and over 30 is obese. Obesity is the primary cause of Type 2 Diabetes which costs us $275 Billion in 2007, and it is growing.
3. The extra 300 kcal per day equals 2100 kcal per week, or 109200 kcal per year or 31.2 pounds per year!
We want to reduce health care costs so here is the target. It is not ethical it is economic.
In a recent NEJM article the authors state:
"Economists agree that government intervention in a market is warranted when there are "market failures" that result in less-than-optimal production and consumption. Several market failures exist with respect to sugar-sweetened beverages. First, because many persons do not fully appreciate the links between consumption of these beverages and health consequences, they make consumption decisions with imperfect information. These decisions are likely to be further distorted by the extensive marketing campaigns that advertise the benefits of consumption. A second failure results from time-inconsistent preferences (i.e., decisions that provide short-term gratification but long-term harm). This problem is exacerbated in the case of children and adolescents, who place a higher value on present satisfaction while more heavily discounting future consequences.
Finally, financial "externalities" exist in the market for sugar-sweetened beverages in that consumers do not bear the full costs of their consumption decisions. Because of the contribution of the consumption of sugar-sweetened beverages to obesity, as well as the health consequences that are independent of weight, the consumption of sugar-sweetened beverages generates excess health care costs. Medical costs for overweight and obesity alone are estimated to be $147 billion — or 9.1% of U.S. health care expenditures — with half these costs paid for publicly through the Medicare and Medicaid programs.""
Our analysis presents a substantially greater number but they are within a factor of two which is not bad for this type of analysis. The NEJM authors then go on to discuss how the taxes would work. Let us look at this in a more general manner. We see the following mechanisms:
1. Tax at Point of Sale/Consumption: This is akin to the cigarette tax. We know that the cigarette tax works but it took many years and many tax increases to get it to function. Also there is a one to one mapping between tobacco and cancer for example. That is if you stop tobacco usage as in cigarettes you stop lung cancer. This is not the case with sugar. It is total kcal which must be modulated. Thus we would have to tax cookies, cakes, candies, and the like. It is more complex.
2. Tax at Point of Result: This is the proposal that everyone must be weighed each and every year and they get taxed on excess BMI. Thus, for example, you get weighed and pay $1,000 per point over 25 if you are between 25 and 30 and say $2000 for every point above 30. After all you get you car inspected each year and all you would then do is do the same for yourself! Thus if you desire to gain weight you can but you get taxed.
These two proposals look at extremes. One looks at one particular element and the second looks at the result. One attempts to modify behavior and the other penalizes the results. We feel that neither accomplishes the desired result and that the carb issue is more complex than tobacco but it worth continued study.
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