Healthist fantasizing

I'd put low(ish) odds on these fantasies coming true. But that they're getting airtime in the New England Journal of Medicine is a tad worrying [HT: Chris Snowdon]. Mello and Cohen there argue that the Supreme Court decision in ACA gives the federal government more scope for achieving public health objectives through the tax system, and that this is a good thing.

The federal government has long used taxes to achieve public health goals, but in fairly limited ways. Taxes and tax penalties for individuals have generally been confined to products that cause health harms and associated social costs, such as tobacco, alcohol, firearms, and pollutants. Taxing of activities is rarer and confined to economic transactions; most recently, the ACA imposed a 10% tax on tanning-salon services. Broader use has been made of tax penalties and incentives to influence corporations to refrain from activities that threaten health, such as environmental contamination, or to engage in health-promoting activities such as subsidizing health insurance and wellness programs.

Roberts's opinion appears to invite more targeted, assertive interventions to promote public health. For example, instead of merely taxing tobacco sales, the federal government could require individuals to pay a tax penalty unless they declare that they haven't used tobacco products during the year. It could give a tax credit to people who submit documentation that their body-mass index is in the normal range or has decreased during the year or to diabetic persons who document that their glycated hemoglobin levels are controlled. It could tax individuals who fail to purchase gym memberships. It could require taxpayers to complete an annual health improvement plan with their physician in order to obtain a tax credit, though that might be challenged under other parts of the Constitution. These strategies depart from traditional uses of taxes by targeting omissions and noncommercial activities that are important drivers of chronic disease.

State and local governments, too, can pursue such strategies. Levying taxes to achieve regulatory aims — even taxes resembling mandates with penalties — is well within their police-power authority. They've wielded this power to impose various “sin” taxes on unhealthful products, as well as in more innovative ways, such as the insurance mandate with an SRP that Massachusetts pioneered. The Court ruling makes clear that the federal government can enter territory historically dominated by the states.

Sin taxes are unbounded in domain when anything that's less than perfectly healthy is a sin. So far so awful. But this next paragraph... egads.

Taxes are an appealing mechanism of public health regulation for several reasons. They proffer “nudges” and market-based solutions as alternatives to rigid mandates. Tax-based policies like the SRP retain an element of voluntariness, especially since lawmakers can calibrate the tax penalty to the importance of the desired behavior change. There's strong evidence that taxes affect consumption decisions. Finally, tax strategies are “win–win” for governments, either leading people to take health-enhancing steps or collecting revenue to fund health or other programs.

I hope that Richard Thaler goes and smacks these guys around. This isn't a nudge, it's a shove. Much ill is advocated in Thaler's name. Constrained to the exact mechanism that Thaler laid out, his libertarian paternalism recommendation can hardly be faulted. But it was never, ever, ever going to be constrained to that range. Thaler himself has never been clear enough on the line between a nudge and a shove.

As always, the healthists see the main obstacle as being the powerful moneyed interests:

Yet even when proposed taxes make sense, they can be soundly defeated. Although tax credits, exemptions, and deductions tend to be well received, new taxes and penalties do not. Strong industry opposition is a formidable obstacle even when public sentiment isn't. Aggressive lobbying by the beverage industry, for example, defeated a soft-drink tax proposed for inclusion in the ACA, and a blitzkrieg by the tobacco industry sank California's Proposition 29, which would have hiked cigarette taxes by $1.00 a pack, with revenues allocated for cancer research. States, however, have sometimes had remarkable success in enacting new taxes; for example, New York passed a $1.60-per-pack increase in its cigarette tax in 2010, bringing the total state tax to $4.35 per pack, and 47 states have collectively increased their cigarette-tax rates more than 100 times in the past decade.4

And, finally, the beast that slouches towards Washington to be born:

Although no constitutional barriers block expanded federal use of tax-based strategies, political obstacles remain. Some interventions we've outlined would never survive the political process, given prevailing antitax sentiment. But such sentiment may fade as the economy recovers or become less important if Democrats regain control of the House of Representatives. Moreover, the Court decision affirms that Congress can facilitate passage of a tax by calling it something less controversial. The Court has highlighted an opportunity for passing creative new public health laws, authorized by the taxing power; this opportunity now awaits its political moment. [emphasis added]

My odds-on bet for the path that leads to the political moment:

1. More reports come out on the costs of unhealthy behaviours, either to the government directly via the public health system, or to the public via insurance mandates that insurers cannot fully internalise the costs of individual health-related decisions via actuarially fair premiums.
• A bunch of these are highly inflated by including costs totally internal to the individual, but journalistic accounts never ever ever parse out the costs to the public versus costs to the individual; they're all "social costs" by virtue of assuming that unhealthy decisions can never be rational.
2. Change in framing: it's not individual choice, it's internalising the costs that unhealthy decisions impose on others.
3. Properly nudge-style policies will fail to make enough headway against the purported costs. Harder nudges then are needed, the grounds for intervention already having been conceded. 
4. Tax measures then are proposed to internalise the externality, even though the purported externality is mostly, well, not an externality of any kind. These get described as nudges as well (see NEJM, above). 

That's the path we've been seeing here in New Zealand and Australia around alcohol and tobacco.