Congressional Budget Office

Obesity and Health Costs

Remarks by Peter R. Orszag

Director, Congressional Budget Office

May 2007

Total Federal Spending for Medicare and Medicaid Under Assumptions About the Health Cost Growth Differential

1966 1972 1978 1984 1990 1996 2002 2008 2014 2020 2026 2032 2038 2044 2050

0

5

10

15

20

25Actual Baseline

Projection

2.5 Percentage Points

1 Percentage Point

Zero

Differential of:

Percent of Gross Domestic Product

Medicare Spending per Capita in the United States

Source: Dartmouth Atlas of Health Care.

Note: Overweight is defined as having 25 ≤ BMI < 30; obese as BMI ≥ 30; and healthy weight as 18.5 ≤ BMI < 25

Source: Centers for Disease Control and Prevention (2005)

Proportion of Individuals Ages 20 to 74, by Weight Status, 1960-2002

1960-1962 1976-1980 1999-2002

Healthy Weight Overweight Obese

Children and Adolescents Considered Overweight, by Age Group, 1971-2002

Note: Overweight is defined as BMI at or above the sex- and age-specific 95th percentile BMI cutoff points from the CDC Growth

Charts: United States

Source: Centers for Disease Control and Prevention (2005)

6.1

5

10.5

16.115.8

4.0

6.5

11.3

0

2

4

6

8

10

12

14

16

18

1971-1974 1976-1984 1988-1994 1999-2002

Perc

en

t O

verw

eig

ht

Ages 6-11 Ages 12-19

Change in Percentage Obese, by Educational Attainment and Sex, 1971-1994

Source: Cutler (2003)

0

5

10

15

20

25

30

35

40

<High School High School College +

Per

cen

t O

bes

e

% Obese in 1971-1975 for Women/Men

Increase in Obesity by 1988-1994 for W/M

0

5

10

15

20

25

30

35

<$25,000 $25,000-$40,000 $40,000-$60,000 >$60,000

Pe

rce

nt

Ob

es

e

1971 - 1974

2001 - 2002

Income

Obesity by Income Levels, 1971-2002

Source: American Heart Association

Level and Trend of Obesity in Selected OECD Countries, 1978-2005

Source: FAOSTAT & OECD Health database as cited in Bleich et al. (2007) “Why is the Developed World Obese?”

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Per

cen

t O

bes

e

Australia

Finland

Japan

Netherlands

United Kingdom

United States

Attributable Fraction of Obesity Due to Calories In and Calories Out, Across Countries, 2005

Source: FAOSTAT & OECD Health database as cited in Bleich et al. (2007) “Why is the Developed World Obese?”

0%

20%

40%

60%

80%

100%

Finland Japan Spain United States Canada Norway All Countries

% to calories in % to calories out

Meal 1977-1978 1994-1996 Change

Male Meals 1819 1846 27

Snacks 261 501 241

Total 2080 2347 268

Female Meals 1330 1312 -17

Snacks 186 346 160

Total 1515 1658 143

Source: Continuing Survey of Food Intake 1977-1978 and 1994-1996, as cited in Cutler, Glaeser, Shapiro (2003)

Change in Caloric Intake, 1977-1996

Obesity and Food Technology

Increase in obesity may be the result of the technological changes in food processing.

Increased technology has cut down the time for food preparation, making food more available and cheaper.

This argument is supported by the demographic trends, which show that obesity has grown most among women since the 1970s.

The increase in caloric intake comes mainly from snacks, the foods with the greatest amount of processing.

What food can you buy with a $1?

To get 2,400 calories, need less than $1 if getting them in oils and sugars

Cheap, unhealthy food:

$1 can buy 2,400 calories worth of white pasta    $1 can buy 500 calories worth of potatoes    $1 can buy 500 calories worth of cereal

Expensive, healthy food:

$1 can buy 30 calories of fish    $1 can buy 2.4 calories of raspberries    $1 can buy 8 calories worth of arugula

Incentives and Behavior

Some studies show that consumption is influenced by availability of food rather than taste or hunger:

Stale Popcorn Vending Machines in Schools

Possible to help people make healthier decisions

Diseases Associated with Obesity

Type 2 Diabetes Cardiovascular Disease Cancer (Endometrial, postmenopausal breast, kidney,

and colon) Musculoskeletal Disorders Sleep Apnea Gallbladder Disease

Obesity and Health Care Costs

Obese people incur health costs about 36% higher than people of normal weight.

2001 mean per capita spending: Normal weight: $2,907; Overweight: $3,247; Obese: $3,976

Thorpe et al (2004) shows that between 1987 and 2001, per capita spending rose $1,110. That growth in spending would have only been $809 if not for increase in obesity and obesity costs. That extra $301 in growth is attributed to obesity.

Although obesity is costly, there is very little evidence that obesity decreases life expectancy as is the case with smoking.

Mean per Capita Spending by Weight Status, 2001

$3,255

$2,907

$3,247

$3,976

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Underweight Normal Overweight Obese

Source: Thorpe (2004)

Proportion of Increasing Health Costs Driven by Obesity

Increased Costs of Treating

Obesity

Increased Obesity

Obesity-Driven Increase

Total Increase in per Capita Spending: $1,110

27%

Source: Thorpe (2004)

Possible Tools to Curb Obesity

Education

Increasing Food Prices- Several states have extra taxes on soft drinks- Recent proposals: - Detroit: Mayor proposing 2% fast-food tax - British Medical Association: 17.5% tax on

high-fat foods- Could also subsidize healthy foods

Regulation