Saturday, October 12, 2013

Economy: Why A Tax On Junk Food Would Reduce The Costs Of Healthcare

(Drivebycuriosity) - There is a lot ado about Obamacare and the huge costs of this program. According to the World Bank the U.S. currently spends 17.9% of its total GDP on health services (), much more than Canada (11.2%), France (11.6%), Germany (11.1%) and UK (9.3) (worldbank). Experts claim that Americans are less healthier than Canadian, French, Germans and Britons and spend therefore more money for curing diseases.

I believe that the bad health (and the resulting high health care costs)  of the average American is at least partly caused by the American crave for junk food: hamburgers, sandwiches, chocolate bars, ice cream and other foods which contend a lot of sugar & fat - plus over sugared soft drinks.

Many ignore that the heavy consumption of junk food & soft drinks could cause diseases like heart attacks, strokes and cancer. The costs of the medical treatment of these diseases are often borne by insurances, meaning by all their members (customers).

Economists call this behavior "moral hazard": People care less about risks if their consequences are borne by others (wikipedia). The heavy consume of junk food is just another case of "moral hazard".

Economist also know a solution for the "moral hazard" problem: Taxes. In many countries alcohol & tobacco carry high taxes because those products cause medical costs which are borne by insurances. Europe also has high taxes on gasoline because of the environmental problems.

I suggest a special tax on junk food, ergo on food that is high on fat and sugar. The tax income could be used to finance health care costs caused by over-consumption of sugar & fat.

I reckon such a tax would be fair because otherwise insurances (and all their members) have to pay for such costs. Such a tax also could reduce the costs of Obamacare.  A fast food tax also might  lead to a healthier behavior and less consumption of junk food.

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