Institute of Medicine

Panel proposes new tax to pay for public health

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By Julie Rovner, NPR News

This story comes from KHN partner ‘s Shots blog.

Log of the Institute of Medicine

It may sound counterintuitive, but a panel of experts from the Institute of Medicine has concluded that the best way to slow the nation’s breakneck spending on medical care is to impose a tax on every health care transaction.

That tax — amount TBD, but possibly a half-percent or so — would go to replenish the coffers of the nation’s state and local public health agencies.

In so doing, according to the IOM panel, the public health workforce could renew its historic role in looking at population rather than individual health care, and thus “offer efficient and effective approaches to improving the nation’s health.”

The US lags behind its peers on health status while outspending every country in the world on health, largely in clinical care costs.

US lags behind its peers on health status while spending more on health every country in the world.

Currently, said Marthe Gold, professor of Community Health and Social Medicine at the City College of New York and chair of the panel, the U.S. spends only about 3 percent of the $2.5 trillion it spends on health care overall on public health. It has a history of “unpredictable, inadequate and uncoordinated funding.”

Yet “public health also has a track record of achievement in vanquishing the historic causes of death and disease,” she said, from early successes like ensuring clean water and sanitary food to more recent campaigns to get people to stop smoking or use seat belts.

The public health infrastructure has taken a hit during the recent economic downturn: Roughly one-fifth of the local public health workforce has been lost through attrition and layoffs.

Renewing that infrastructure could have a profound impact on slowing the rate of growth in health spending, the panel argues.

For example, public health measures — including community-based outreach — could help reduce adult obesity by 50 percent, the panel says.

Sounds ambitious, but as the panel notes, that’s about the same relative reduction in smoking rates that resulted from the “public health community’s multifaceted attack on smoking” in the past few decades. It would also save the U.S. an estimated $58 billion in health care spending.

In order to meet those goals, the panel says every public health agency would need to be able to deliver a “minimum package of services.”

That would include what it calls “foundational” services, such as the ability to do basic disease surveillance and communicate with the public, and “programmatic” services, such as injury prevention and communicable disease prevention.

But to get there, the federal government would need to at least double the $11.6 billion it invests each year in public health activities, according to the panel’s estimates.

Which brings us to that pesky tax.

Panel member George Isham, medical director at HealthPartners in Bloomington, Minn., acknowledged that “it’s difficult to propose any kind of increase in taxation.”

But the group considered a number of different financing mechanisms before settling on a minimal tax on medical transactions as the best solution: It’s a tax related to the goal; it would raise sufficient funds; and it would not have a bad economic consequence. In short, said Isham, “it’s an investment we can’t afford not to make.”

Now they just have to convince the rest of the nation of that.

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This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.

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