Radical price incentives

from Phillip Longman’s article in the upcoming Washington Monthly. He draws
on recent literature that suggests that America has a surplus of private
medical care — and that, as with any economic good with diminishing
returns, we are now getting no (or maybe even negative) returns from
increased investment in private health care. What we need instead, he
argues, are radical measures to improve public health.

Death by Sprawl : On a statistical basis, what’s most likely to get you
killed in the next year: (A) living in Israel during the Intifada; (B)
living in crime-ridden, inner-city Baltimore, Chicago, Dallas, Houston,
Milwaukee, Minneapolis-St. Paul, Philadelphia, or Pittsburgh; or (C) living
in the bucolic outer suburbs of those cities? The answer is overwhelmingly
C. A recent study by University of Virginia professor William H. Lucy found
that Americans’ migration into sprawling outer suburbs is actually a huge
cause of premature death. In the suburbs, you’re less likely to be killed by
a stranger–unless you count strangers driving cars. Residents of inner-city
Houston, for example, face about a 1.5 in 10,000 chance of being killed in
the coming year by either a murderous stranger or in an automobile accident.
But in the Houston suburb of Montgomery County, residents are 50 percent
more likely to die from one of those two causes because the incidence of
automobile accidents is so much higher.

Sprawling, auto-dependent suburbs are unhealthy in other ways, too. In such
an environment, almost no one walks–and for good reason. In 1999, 4,906
pedestrians died, 873 of them children under 14. Not surprisingly, metro
areas marked by sprawling development and a high degree of auto
dependency–Orlando, Tampa, West Palm Beach, and Memphis, among others–are
the most dangerous regions to walk in.

But rarely walking or riding a bike can also be deadly. Largely because of
sprawl, the number of trips people take on foot has dropped by 42 percent in
the last 20 years. This is particularly true among children. In 1977,
children ages 5 to 15 walked or biked 15.8 percent of the time. By 1995, the
rate dropped to only 9.9 percent. Seventy percent of all trips children take
today are in the back seats of cars. So sprawl not only substantially
increases the odds of dying in an auto crash, it also discourages routine

This is no small matter. Walking 10 blocks or more per day reduces the
chance of heart disease in women by a third. The risks associated with a
sedentary lifestyle rival those of hypertension, high cholesterol, diabetes,
and even smoking. According to the surgeon general, the economic costs of
obesity total $117 billion a year, about 9.4 percent of health-care
spending. Americans who never exercise cost the health-care system $76.6
billion a year. Sprawl does not fully account for our increasingly sedentary
lives, but it is a major factor, and therefore a leading cause of premature

Sprawl also leads to high levels of social isolation, which has its own
public-health implications. Lonely individuals who are cut off from regular
contact with friends and neighbors face highly elevated risks for heart
diseases and other disorders. What’s cause and effect is not entirely clear,
but Robert Putnam, a professor of public policy at Harvard University, has
found that an isolated individual’s chances of dying over the next year fall
by half if he joins a group, two-thirds if he joins two.

The good news is that reducing subsidies for sprawl is among the biggest
policy levers available to improve public health. This includes reforming
gas taxes that are currently nowhere near high enough to recoup the
environmental costs of driving, let alone to compensate for the losses to
the economy caused by auto-related deaths and injuries. And it includes
ending overinvestment in new roads and highways, and directing more toward
mass transit, bike trails, and sidewalks. Thanks to the surgeon general’s
warnings and vastly increased tobacco taxes, millions of Americans have
overcome their addiction to nicotine. It’s equally important for the federal
government to warn Americans about the health hazards of auto-dependent
sprawl and provide financial incentives to encourage a healthier environment
and lifestyle.

Instead of paying a fare, for example, transit users should receive a
dollar’s credit on their swipe cards for up to three rides a day, financed
by drivers who will enjoy less traffic, cleaner air, and a smaller burden on
the health care system. The government could also offer greater home
mortgage deductions to homeowners who move to cities and developments served
by mass transit. These measures might at first seem politically unfeasible,
but presented to an aging population as a way to improve public health and
fix a failing health-care system, they may gain real political traction.

The Americans Without Disabilities Act : The Americans With Disability Act
mandates everything from how parking lots and public bathrooms are arranged
to how employers organize workplaces. Yet it does nothing to prevent
disability. Why not adapt parallel legislation that would prevent Americans
from becoming disabled in the first place?

For instance, the National Cancer Institute recommends at least five
servings of fruits and vegetables a day–but prices for fruits and
vegetables have increased more than any other food category in recent years.
Expand the Food Stamp program so that everyone is entitled to generous, free
weekly allowances of fruits and vegetables. Or how about creating an
Interstate Bicycle Highway System using abandoned railroad right-of-way?
Instead of charging tolls, pay cyclists according to the number of miles
they’ve pedaled. Or how about mandating that companies that employ 25 or
more workers provide on-site exercise rooms or tax-free benefits to cover
gym membership? Or offer a $200-a-month benefit increase to obese welfare
recipients who shed at least 20 pounds, using the subsequent decrease in
Medicaid expenditures to meet the cost? The ideas are practically limitless
(see sidebar).

How might American life change for the better if we took this approach?
Consider the problem of the uninsured. Currently, the cost of health care is
outpacing economic growth, so maintaining the number of insured people would
seem enough of a challenge. But the question of what health care costs
depends overwhelmingly on how much is needed–and that is determined largely
by how Americans conduct their lives. How fat are we? How sedentary? How
much pollution do we create? How much do we suffer from loneliness,
depression, and social isolation? How much do we smoke, drink, or abuse
drugs? How productively do we age? What the Costa Rican example shows us is
that with the right behavioral changes in lifestyle and social environment,
we too could lower health-care costs–maybe not to $273 per person, but low
enough to afford universal health-care access. And Americans wouldn’t even
need to forego superfluous treatments; Costa Rica boasts world-class plastic
surgeons and cosmetic dentists and still offers free universal health.

That would, however, require more time walking. And some of us would have to
be bribed to take better care of ourselves. And there would be big expenses
for building better transit systems, and more compact, socially cohesive,
less-polluted communities. But which system seems like the better bargain?