Jenesa Jeram: Time to question costing of unhealthy habits

By Jenesa Jeram

The sun rises over the Auckland Marathon. Photo / Richard Robinson
The sun rises over the Auckland Marathon. Photo / Richard Robinson

We're all going to die. We're not all going to die tomorrow, although these days it feels like the apocalypse is looming, but it will happen to all of us.

This rather uncomfortable fact often escapes some policymakers and public health experts.

They forget all lives, and indeed all deaths, have a fiscal cost, writes Jenesa Jeram.

We constantly hear that obesity is increasing and is leading to a costly blow to the public purse. Likewise, public health campaigns characterise excessive drinking and smoking as not just personal vices but public burdens.

But is obesity really the most costly disease? Who costs the public purse more: an obese person or a person with an eating disorder? How about a smoker or a person on a welfare benefit? I don't know the answer to these questions.

The problem is, policymakers don't know either. While billions of dollars are pumped into the health system, we are still no closer to knowing which diseases are the most costly, and how they compare to the costs of living a healthy life.

This is where "net" costs matter. The net costs of disease take into account the costs to the public purse and the savings compared with a counterfactual (such as a healthy person).

Diseases arising from lifestyle choices will obviously cost the health system. But even healthy people who take every foreseeable precaution can end up sick.

The health system isn't the only cost to taxpayers. Superannuation and end-of-life care for those who live long and healthy lives also make significant dents in the public purse. In fact, international evidence suggests that longevity might be one of the more costly health outcomes in developed welfare states.

If you think viewing people only as fiscal costs is grossly detached and inhumane, it kind of is. The real costs of illness and early mortality won't just be fiscal. Such as the grief that friends and family experience from losing a loved one far too young.

But considering how many lifestyle regulations are justified (at least in part) on a fiscal basis, it is important to at least get the numbers right. If viewing obese people as economic units is unpalatable, then imposing, say, a sugar tax on them because they are economic burdens is worse. A recent study released by the think tank The Institute of Economic Affairs in the United Kingdom has calculated the net cost of obesity to taxpayers - the cost difference between the obese and non-obese.

The direct medical cost of the overweight and obese population in the UK has been estimated at around 6 billion ($10.4b) a year. The study finds that the net cost of obesity is much lower, at around 2.47b, or around 0.3 per cent of the British government's total budget.

A number of New Zealand studies have calculated the "cost of illness".

Researchers from the University of Auckland have estimated that overweight and obesity in New Zealand costs between $722 million and $849m a year in health care costs and lost productivity.

Unfortunately, they don't get us any closer to understanding net costs to the taxpayer.

Done well, "cost of illness" studies only tell us the gross cost to taxpayers, rather than any costs avoided because of the disease (like superannuation). Done poorly, some "cost of illness" studies won't even tell us that, instead conflating personal, private and fiscal costs into one big, scary number. Assumptions also need to be made about what counts as a cost, and the likelihood that the individual will incur that cost.

Fiscal costs matter because personal choices are now up for public scrutiny. What if some risky activities weren't the fiscal burdens they are made out to be? What if research, regulations and funding have been misdirected?

Keep in mind that the risk profiles of weight and body mass index are complex. Scientists are now questioning the relevance of the index as a reliable measurement of health, and recent studies have suggested that those classed as "overweight" have longer lifespans than those who are "normal".

Acknowledging that being fit and healthy might be costliest to taxpayers could be considered tasteless in some circles.

But even more tasteless is stigmatising those already on the social margins by exaggerating the great burden they are imposing on others.

• Jenesa Jeram is a policy analyst at public policy think-tank The New Zealand Initiative.

- NZ Herald

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