Another Modest Proposal

Healthcare is another area of economic concern. Here again we have our supply siders and our demand siders. I am a demand control sider, kind of.

Here is the proposal: If we cannot change human behavior, say cease smoking, then we tax it so that it pays for its negative effects, a kind of reverse Coase approach. Perhaps a Pigou type approach. Well let's explain:

Take the following disease and their remedies:

Eating and Type 2 Diabetes: Now we have 20% of adults with T2 Diabetes which leads to heart disease, kidney failure, blindness and a few others. This is a result of one thing, carbohydrates! Carbs lead to fat people and fat people have T2 Diabetes. Medications just exacerbate the problem by having their own effects plus giving the fatty a false sense that the disease is under control. T2 costs almost 5% of our healthcare costs, $100 Billion (see CDC, www.cdc.gov ). Thus we should institute a carb tax. This was actually proposed by Governor Patterson in New York, a brilliant idea. We permit up to 150 grams of carbs a day and then we tax anything above it. Let us assume that the typical T2 patient eats 700-1,000 g of carbs a day, that is half a dozen cans of soda and a box of cookies. We know that the typical T2 patient costs us $10,000 per year. They consume 350,000 more carbs per year than most other healthy people, so we establish a "carb tax". Then we charge that "carb tax" to cover the costs, of about $0.02 per carb! It would make a Snickers a bit expensive but it would put a payment system in place to recover costs of a self inflicted disease, kind of like a "carbon tax" for the believers of Global Warming. Thus there are 20 million people with T2 Diabetes and if we use the carb tax of the type above we add $10,000 on their diet and this generates almost $200 billion!

Smoking: We know the incidence of lung cancer and other effects of cigarette smoking. Going through the same calculation we have from the same CDC sources that smoking has a direct health care cost of $75 billion per year. We have about 400,000 people a year die of smoking related causes. We have approximately 75 million smokers. The cost per person smoking is about $1,000 per person per year. To recover the direct costs, with a 1 pack a day habit, we need about $3 per pack tax. To add for indirect costs we arrive at the conclusion that a $4 per pack tax would suffice. This would generate $110 billion.

Thus just from the "carb tax" and the "butt tax" we could start to cover our major healthcare costs! The two yield over $300 Billion which is almost 15% of the Healthcare Budget! So what is the problem? Oh, by the way, I can extend this list for at least a few more pages on similar diseases, and ultimately eliminate the National Debt as well.