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The Economics of Health

8/16/2017

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PRESIDENT Trump pledged to withdraw the United States from the Paris Climate Accord. His arguments were mostly economic, bemoaning lost jobs and international uncompetitiveness. They’re phony. And he can’t officially withdraw us until 2020 anyway. But the chatter had me thinking: What about health?​

An argument for remaining in the Accord is that reducing emissions will improve health. According to the World Health Organization, pollutive emissions increase “the burden of disease from stroke, heart disease, lung cancer, and both chronic and acute respiratory diseases, including asthma.” And rising global temperatures will worsen tropical diseases, heat strokes, and possibly insomnia.

Apparently, health isn’t a good enough reason to stay. But let’s make this Trump-friendly: Health is an economic argument in its own right.

Here’s the logic, which applies to many “economic” policies of the Republican Party. If pollution, climate change, deregulation, reduced access to health care, etc., make people unhealthier (or dead), and if these people are less productive or more economically burdensome than healthier people beyond some breakeven point, then deregulation is costlier than the regulation itself.

It’s counterintuitive. But pulling out of the Accord and other “conservative” wishes may hurt — not help — the economy. While making us all unhealthier.

Let’s start with climate change. In his announcement, Trump cited a study that concluded up to 2.7 million American jobs would be lost under the Accord. That’s a lot. If the average American makes about $55,000, it’s about $149 billion each year. But the study does not account for any benefits of a planet-healthy economy, like new jobs in renewable energy and technological development. Already, we’ve underestimated the economic burden.

Nor does it account for the health benefits of a greener economy. The United States spends more money on health per capita than any other postindustrial nation. Improving or worsening health, even by a small amount, is economically impactful. We also lead the world in pollution per capita.

How do health, pollution, and cost interplay? As you guessed, negatively.

An analysis last year estimated that pollution from dirty energy production cost the United States $131 billion in 2011, mainly in health care costs. Most diseases that pollution causes are chronic and expensive. A few years earlier, the O.E.C.D. issued a broader report, “The Cost of Air Pollution,” estimating that death from all types of pollution costs the U.S. about $500 billion yearly. They factored in health care costs plus the lost consumption and productivity of dead Americans. Notably, the O.E.C.D. report included automobile emissions, while the other did not.

Although the numbers for death and “social costs” are fuzzy, we see that reducing pollution doesn’t have exclusively negative economic impacts. It recuperates much in health savings — and may even “profit.” If we could save half of that $500 billion, we’d more than cover the cost of lost jobs. Any more and we’re ahead.

Does rejecting the Paris Accord still make sense?

(Another consideration of pulling out is damage to foreign relations. Leaders in China, France, Australia, Britain, Germany, and more have expressed dismay at Trump’s decision. This strains military and economic alliances, possibly impacting trade. And as the U.S. retracts on the international stage, many countries are looking to China for leadership. This does not benefit American interests.)

Let’s try another policy: health care. Congressional Republicans justified their (many) plans on “economic” grounds, since they’d shave a small fraction off the federal deficit. But the plans would do so by cutting Medicaid and subsidies, which millions of Americans rely on for health insurance. And the plans do nothing to reign in health care costs, perpetuating an inefficient, unequal system.

By every estimation, they’d throw millions of people off their insurance, eventually making us unhealthier and costlier as a system. Because of this, I remain unconvinced that the plans would save the country any money whatsoever.

Is that economically justified?

Or consider deregulation, like the decision of E.P.A. director Scott Pruitt to allow continued use of the pesticide chlorpyrifos. E.P.A. scientists recommended banning it on farms nationwide because it was leeching into the water supply and causing cognitive defects in farm workers and children exposed to it. (The chemical was banned for household use a decade and a half ago.)

Pruitt overrode the recommendation because — that’s right — the ban would economically “burden” farmers that rely on the pesticide. But is it not conceivable that cognitive defects might decrease their productivity and increase their health care costs beyond whatever more they’d make in crop yields?

You see how this goes.

Any policy that attempts to save money while hurting health will have this trade-off. Health is economically consequential — Americans spend $3 trillion on it every year. Even small inflations in its costs can drown a policy’s other savings. But for whatever reason, these policies ignore it. It’s almost as if — dare I say it — Republicans are being more fiscally irresponsible than Democrats! Gasp!

As we dig deeper, this discussion only becomes sourer. The subtext of it all is morality: the value of a human life. In cutting Medicaid, polluting the air, or letting pesticides in water, all of which have paltry economic gains (or none), these policies place a higher premium on penny-pinching than on human lives. Illness and death by pollution are apparently worth it, so long as some coal jobs stay around.

This evaluation of human life is immorally low.

Of course, policy decisions necessarily balance positive and negative impacts, and we want to save money. But from a fuller economic perspective, these policies barely or don’t save money — all while bearing rampant unhealthiness and death, often for those they are meant to “help.” How does any of this make sense?

It doesn’t.
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