A Tax on Alcohol and Tobacco Products - A Healthcare Reform Trifecta
The greatest threat to reform that could make quality health care available to all Americans is its crushing cost. Fears that reform proposals place an intolerable burden of the federal deficit and that mandating the middle class to buy health insurance or face a financial penalty will bust middle class budgets are palpable.
Americans have an uncanny ability to see through the political haze and sense—rightly–that none of the proposals under consideration is going to reduce health care costs.
Sure, the insurance companies may make too much money. But the system that politicians promise to preserve for those of us with health insurance is the real cost gorilla. Paying doctors on a fee for service basis and reimbursing hospitals on a cost plus basis provide no incentive for efficiency. Maintaining the current tort system will continue to make the MRI, PET and CAT scan the doctor’s least expensive malpractice insurance. With the health care industry pumping (just in this election cycle) more than $12 million in political contributions and the lawyers topping that with more than $14 million, there’s little hope that the administration and Congress will tackle these imbedded sick care costs. The health care providers, pharmaceutical and medical equipment companies and plaintiffs’ lawyers like the system just the way it is.
So, let me offer another idea. Mount an all fronts effort to reduce the cause of 30 per cent of sick care costs: smoking, excessive drinking and illegal and prescription drug abuse.
In 2008 health care costs totaled $2.4 trillion, 16.6 per cent of the Gross Domestic Product. Thirty per cent of those whopping costs—some $730 billion—were attributable to the 72 diseases substance abuse and addiction causes and exacerbates, as well as the extra hospital time that smokers, excessive alcohol users and illegal and prescription drug abusers require to recover from cancers, heart attacks, emphysema, chronic bronchitis, and other diseases, ailments and accidents.
Reducing substance abuse and addiction is key to the financial viability of Medicare and easing the brutal burden that Medicaid slaps on state budgets. Last year, 35 percent of Medicare spending–$134 billion—and 29 percent of Medicaid spending–$98 billion—were attributable to smoking, excessive drinking and drug abuse, and the diseases they spawn.
Here’s how the President and Congress can save billions in health care costs and relieve the burden on the federal deficit and middle class:
–Sharply increase the taxes on alcohol and tobacco products. Making these products more expensive has been shown to reduce smoking and excessive drinking.
–Require that health insurance premiums be significantly higher for those who use tobacco products, drink excessively and abuse illegal and prescription drugs.
–Mount a massive public health campaign to discourage smoking and underage and excessive drinking. Comprehensive public health campaigns have cut smoking in half over the past 30 years.
If such a wide-ranging effort reduced the cost of substance abuse related diseases by only ten percent, that would deliver $73 billion a year in health cost savings. Over ten years that’s 80 percent of the cost of Obamacare reform. Even a five percent reduction would offset 40 percent of his projected costs.
Why don’t the beltway politicians take these actions? Some don’t appreciate how substance abuse and addiction drive up health care costs. Also involved is the rancid underbelly of politics: the campaign contributions of the tobacco and alcohol merchants that buy the votes of members to protect their industries from higher taxes. Years ago when I was Secretary of Health, Education, and Welfare, I suggested higher taxes on beer to Jim Wright, then the Democratic Majority Leader of the House. His response: “Forget it. Joe six pack is our guy and the beer folks are major contributors to our candidates.” Republicans share in the political largesse of nicotine and alcohol pushers; for them that money is a bonus since it fits snuggly with their opposition to any tax increases.
The president keeps saying, “Now is the time for action.” How about some action from you, Mr. President, and from your fellow Democrats in the House and Senate, to go after substance abuse and addiction? A tax on alcohol and tobacco products is a health care reform trifecta: it will raise money to help cover the uninsured, lower health care costs by reducing smoking and excessive drinking, and make cigarettes, beer and sweetened liquor drinks too pricey for many teens to experiment with them.
For the first time in almost half a century—when Lyndon Johnson drove Medicare and Medicaid through the 89th Congress - a President has developed among our people and public officials a sense that social justice demands action to make affordable health care available to all Americans. Let’s not blow it.
Our nation leads the world. We have more untreated mental health and addiction patients behind bars than any other nation on earth. I use the word patients loosely because the vast majority of those incarcerated in the United States do not get mental health nor addiction treatment in jail. They do get a heavy dose of recidivism.
Private insurance companies cut coverage for those afflicted with treatable mental health and addiction disorders. FREE WHEELING FREE MARKET cost shifting to the public ensues placing a heavy burden on our government budgets. Rationed health care is rampant everywhere with universal social and fiscal consequences. Beltway politicians cannot allow private insurance companies to operate with impunity and without any regulatory oversight.
As an emergency physician for 30 years with a parallel career in addiction medicine I couldn’t agree more. And there is also the issue of access to qualified professionals and coverage for addiction care. In Massachusetts we are blessed that outpatient methadone is covered by Medicaid but inconsistently by private carriers. In Florida methadone is strictly a cash business. This lack of and inconsistency of coverage is a national disgrace. The American Society of Addiction Medicine coined the mantra, Treat Addiction/Save Lives. In the spectrum of American illness and injury nothing should be more important or morecost effective
Excellent Assessment Mr. Califano!
I agree with increasing the taxes and regulation of alcohol and tobacco sharply and mounting a massive public campaign. But, raising the insurance cost for this patient group is discriminatory. Addiction is a disease – let’s don’t punish them for their ailment. Let’s spend more money to treat them (compare 46.7 billion to the amount spent in treating cardiovascular diseases). If that’s what is going to happen then lets break down the whole thing to over eating, poor life style, people not doing exercise, diabetics not sticking to their dietary advice etc. charge them more too. Let’s don’t forget that this cohort is disadvantaged in many ways and they have a tendency to drift socially and economically downwards. Increasing the cost would make the situation worse. Perhaps decreasing the cost of the insurance policy for this group might encourage them to seek help.
Increased tax on tobacco and alcohol sounds good. Perhaps considering ban on advertising these products would also do some good.
Great comments about increasing the tax on alcohol but I think you risk weakening that arguement by confusing it with health care reform. The two issues are completely different and should be treated as such or risk loosing both. I realise that it is difficult to see outside the box when you are locked inside but the US health system does need a complete radical overhaul. If citizens dont allow this to happen and ensure a complete change then you will end up with the worst bits of all systems. Look to the UK, Australia and New Zealand and learn the lessons available from those and other systems to try and make yours the best in the world instead of the worst that it currently is.
There is evidence (Fellitti study, ‘Adverse Childhood Experiences’) that childhood trauma, particularly sexual abuse, correlates to many self and other destructive behaviors. Smoking and other addictive behaviors are symptomatic of deeper wounds– criminal behavior. We would be wise to invest in the prevention of child sexual abuse and ending other violence, particularly domestic violence.