Cutting Costs and Improving Health: Cost Savings

The Physicians Committee

Cutting Costs and Improving Health: Federal Food Policy Reforms Could Save Billions

A Report from the Physicians Committee for Responsible Medicine
July 28, 2011

Cost Savings

Short-Term Savings

As noted above, the above changes will lead to major financial savings over the short and long term. Over the next ten years, cost savings are estimated as follows in current dollars, without adjustment for inflation:

Policy Change

Savings (over 10 years)

Elimination of direct payments

$50 billion
Crop insurance privatization                       $70 billion
Clean-up program privatization             $9 billion
SNAP reform                                                   $240 billion
Commodity reform                                            $14 billion
Total short-term savings:  $383 billion  

Long-Term Savings

Over the long term, an end to the promotions of unhealthful foods that have escalated health care costs in recent decades could mean substantial savings. To the extent that consumer behavior changes as a result of an end to direct and indirect subsidies and the elimination of promotions of unhealthful foods, the financial savings can be estimated in various models.

In 1995, the medical costs attributable to meat consumption were estimated at $28.6 billion to $61.4 billion annually.2 These figures related solely to that portion of the direct medical care costs for seven conditions (hypertension, heart disease, cancer, diabetes, gallbladder disease, obesity-related musculoskeletal disorders, and foodborne illness) that could be attributed to meat consumption based on published prevalence studies.

The continued inflation of medical prices and rising disease rates have greatly increased these costs. The medical costs of meat consumption, based on 1992 data, but inflated to 2011 dollars corresponding to increases in medical costs, are estimated at approximately $60 billion to $130 billion annually. If 5 percent of these costs were saved, it would amount to $30 billion to $65 billion over a 10-year period. A greater or lesser degree of estimated change in consumer behavior would lead to proportionate adjustments in estimated savings.

However, this estimate relates only to direct medical costs. Indirect costs of illness, such as the lost tax revenue from people who become sick or disabled or who die prematurely, are much greater than direct medical costs.

Also left out of this analysis are potential medical cost savings related to changes in consumption of other food products. For example, dairy products are the largest source of saturated fat in the American diet, and are subjects of massive promotions. Sugar intake, particularly in the form of sweetened beverages, has risen in recent years. To the extent that vegetable and fruit intake increases, overall improvements in health are to be anticipated. However, these products have not been the subject of analyses that would permit estimates of potential savings in health care costs.

This analysis does not include potential savings though changes in overseas marketing programs and other areas that may have substantial health effects of their own.

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