Raising Taxes on Soda

Here’s an idea to lower health care costs.  Raise taxes!  Selectively, of course.

 

There is a long history of using tax policy to encourage or discourage behavior.  The best example is probably cigarettes, where a combination of taxes and penalties assessed against the tobacco companies has raised the price of cigarettes to $7 per pack.   This has been great news – because cigarettes are now out of financial reach of many teenagers.  Thus, the supply of younger smokers is dwindling .  Taxes on cigarettes put valuable dollars in federal and state government coffers – and they also decrease health care costs (including costs of Medicare and Medicaid paid by federal and state governments) by decreasing cigarette-related illness.   This is a real win-win.

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Thomas Frieden, New York City’s Commissioner of Health,  is a coauthor of an article in the April 30 New England Journal reviewing the case for increasing taxes on sugared beverages.   The authors note the excess cost associated with obesity ($79 billion per year, which looked like real money until the recent financial crisis), and the structural problem that the costs of fresh fruits and vegetables have gone up for more than the costs of carbonated sweetened beverages.  New York is in the vanguard of considering such a tax.

 

The authors' conclusion:

 

A penny-per-ounce excise tax could reduce consumption of sugared beverages by more than 10%. It is difficult to imagine producing behavior change of this magnitude through education alone, even if government devoted massive resources to the task. In contrast, a sales tax on sugared drinks would generate considerable revenue,and as with the tax on tobacco, it could become a key tool in efforts to improve health.

 

 

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Patient Portals and Health Care Cost

I gave a seminar at the Center for Information Technology Leadership this weekend (on web patient information and patient portals, with Patti Dykes DNSc, MA, RN, a talented nurse informaticist.   The presentation is here).This made me go back and reread a set of Health Affairs articles from Kaiser from earlier this year.   

 

Kaiser found that in Hawaii the implementation of electronic medical records, scheduled telephonic visits, and a patient portal that allowed patients to send electronic messages to their physician office led to a 26% decline in office visits over four years.   There were other confounding variables, including higher copayments – but this was before the “great recession” hit, and the copay increases were modest.  There was not huge patient or physician turnover during this time. 

 

Quality measures, at least by HEDIS standards, were unchanged during this time period. Patient satisfaction was slightly improved.

 

The Kaiser researchers are modest in their claims of cost saving. They suggest that patients save 103 minutes by not having to visit the office (which is much less than the elapsed time lost by most of my colleagues when they see a physician), and point out that Kaiser does not have cost accounting systems that make it clear how much this effort has lowered resource use. They don't take credit for the potential saved costs of avoided lab tests, imaging, and prescription therapy based on avoided office visits. 

 

Still – this is very impressive.  Is this relevant outside of Kaiser, a large, multispecialty group tightly integrated with (and capitated by) an exclusive health plan?

 

Private practice fee-for-service physician offices could regard patient portals the way newspapers now regard Craigs List – which destroyed their previous business model by disrupting classified advertising.   To harness the benefits of patient portals, we need more connected physicians.  We also need some degree of payment reform.  

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The Great Recession and Consumers

Thomson Reuters released the results of a survey of 100,000 families, which showed that almost a third of Americans report some difficulty paying for health care in the first wave of surveying in 2006 – a substantial increase from 2006. Further, in 2006 the main reason given for lack of access to care was lack of time, whereas in 2009 the reason given is lack of economic resources. (Double click on the graphics to enlarge them)

 

In yesterday’s New York Times magazine,David Leonhardt interviews Barack Obama on his view of the post-recession economy.  Obama talks enthusiastically about the need for patient engagement, while he acknowledges that physicians drive many medical decisions.  He endorses comparative effectiveness, in part to decrease the information asymmetry between patients and their physicians.    He also tells the heart-wrenching story of his grandmother’s hip fracture just after her diagnosis of incurable cancer. 

 

His quote directly:

I don’t know how much that hip replacement cost. I would have paid out of pocket for that hip replacement just because she’s my grandmother. Whether, sort of in the aggregate, society making those decisions to give my grandmother, or everybody else’s aging grandparents or parents, a hip replacement when they’re terminally ill is a sustainable model, is a very difficult question. If somebody told me that my grandmother couldn’t have a hip replacement and she had to lie there in misery in the waning days of her life — that would be pretty upsetting.

 

There is a lot of nuance here.   Obama talks about making decisions and not just doing everything all the time, but shows that he recognizes how difficult this will be.  Decisions that are obvious on a policy basis are very hard to apply to ourselves and our loved ones.  Of course, most Americans could not have paid for their grandmother’s hip replacements out of pocket.

 

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