CHAPTER 4
LEVERAGING FISCAL POLICIES TO ADDRESS OBESITY AND CHRONIC DISEASE
As we’ve seen in the first three chapters, the obesity and chronic disease pandemic enveloping nearly every country on Earth is in many ways an economic problem. Warren Buffett called rising health care costs the “tapeworm” of business. In the last 50 years we’ve gone from spending 5 percent of our gross domestic product on health care to spending almost 20 percent.1 Meanwhile, people are motivated to buy the most cost-effective foods, and in most countries, those just happen to be the foods that are most likely to make them fat. That’s why fiscal policies can help us alleviate the burden of the big three killers: heart disease, obesity/diabetes, and cancer.
Tobacco taxes were enormously successful. Tobacco was once the leading cause of preventable death. But today that distinction goes to poor diets. Just as tobacco taxes drove down smoking rates, resulting in remarkable public health improvements, taxes on soda can help drive down obesity rates.
FORCING THEIR HAND
Some of the brightest minds in economics have endorsed the idea of taxes on unhealthy foods. In 2018, Larry Summers, the former Treasury secretary and president of Harvard University, joined forces with former New York City mayor Michael Bloomberg and others to launch a global group called the Task Force on Fiscal Policy for Health. Their goal: to advocate for taxes as a solution to rising health care costs and the obesity crisis.
“What I came to realize was that in terms of human betterment in the health care area, there was enormous potential,” Summers told me. “In terms of the impact you could have, even with a limited number of dollars, there was probably no sector more promising than health.” Looking at global health through an economic lens, he realized that countries could derive tremendous returns by investing in health, making it one of the best financial investments. “In some contexts, the returns can be as high as nine to one or even twenty to one in terms of the benefit-cost ratio,” Summers says.
As an economist, Summers is a big believer in using the power of prices to influence behavior. First, people are price sensitive. Second, taxing products like tobacco and soda creates a lot of noise about those products, which itself can make people leery of buying them. “Taxes discourage things—and it’s better to tax things that we want to discourage, like tobacco and foods that cause obesity, than it is to tax things we want to encourage, like working and saving,” he says. “We have evidence that we do respond to prices and we do buy less of things when they become more expensive. That’s the most basic principle of economics.”
That’s why Summers and Bloomberg created their organization to advocate for taxes as a way to improve global health. Their argument is that government has a responsibility to protect the health of its citizens. Taxing junk foods is a great way to do that because it works. Combined with incentives for healthy food or innovations in market-based and tax-code incentives, it is a proven way to boost public health outcomes and reduce health care costs. If it didn’t, then the soda industry wouldn’t spend hundreds of millions of dollars fighting such taxes. Every time a soda tax is proposed anywhere in the world, the beverage industry dips into its war chest. When Oakland, San Francisco, and a few other cities asked their residents to vote on soda tax initiatives in 2016, the American Beverage Association launched a ferocious campaign, spending more than $38 million. The industry wouldn’t spend that kind of money if they didn’t think soda taxes would take a big chunk out of their profits. Thank God that Michael Bloomberg and the Arnold Foundation dipped into their own pockets for $20 million, which allowed those taxes to pass.
“The fact that the food industry objects so strongly is confirmation that these taxes are effective and have significant and meaningful impacts—and if they didn’t change the demand for their products, the food industry wouldn’t care,” Summers says.
One of the main criticisms against soda taxes is that they are regressive, causing a disproportionate impact on low- and middle-income families. This is the primary talking point for the soda industry. Some politicians have embraced it as well. The thing about junk-food taxes is that they are indeed regressive: The poor pay a higher share of their income on them. But the poor also suffer a larger share of the adverse health consequences. “So, the benefits, in terms of reduced health care spending, in terms of longer life expectancy, will be disproportionately felt by the poor,” Summers says. “So, I’m completely comfortable with the idea that we should put a universal tax on sugary foods, recognizing that it may be regressive but that it will be offset in other ways.” If those taxes on bad food are combined with incentives and price reductions on healthy foods, it will benefit everyone. When money is used to uplift poor communities with social programs, support for education, and more, as was done with the Philadelphia soda tax—which so far has provided $500 million to fund universal pre-K, public schools, and recreation centers—soda taxes gain wide acceptance and give back to those most affected. Some soda lovers have crossed over to Delaware to buy non-taxed soda, but the net decrease in consumption, and the community and health benefits and reduction in health care costs, outweigh any downsides.
However, any taxes must be paired with incentives that support cheaper prices for consumers and business incentives for research and development, marketing, and distribution of protective healing foods. This is important to offset the regressive effect of sugar-sweetened beverage and junk-food taxes and incentivize the replacement of processed foods with whole foods, not engineered Frankenfoods that bypass the limits on certain ingredients by replacing them with something worse, like we did when we replaced saturated fat with deadly trans fats (now banned).
THE PARTNERSHIP OF TAXES AND SUBSIDIES IN SAN FRANCISCO
In 2010, Laura Schmidt, a professor of health policy at the University of California, San Francisco (UCSF) medical school, was working on a program to improve health in underserved Bay Area communities. Schmidt had previously worked on alcohol addiction but switched her focus to sugar when she discovered that one of the leading causes of liver transplants in America is caused not by alcoholism, but by sugar and its consequences obesity and diabetes: nonalcoholic fatty liver disease. Schmidt knew that the way to tackle the country’s sugar addiction was to use some of the same tactics that worked on alcohol, such as taxes and warning labels.
But Schmidt and her colleagues learned something surprising from the people in low-income Bay Area neighborhoods who were most likely to be affected by sugary drink policies. They didn’t care too much for soda taxes. But they loved the idea of promoting tap water consumption by installing new water stations across the city. The insights taught Schmidt and her colleagues a valuable lesson. Much like SNAP reform, it is not enough to ban or discourage bad foods. We also have to create incentives or subsidies that encourage people to consume the right foods (or drinks) too.
With Schmidt’s help, the city of San Francisco took aggressive action on sugary drinks. It introduced a penny-per-ounce soda tax, passed an ordinance slapping health warnings on soft drink advertisements (which ultimately was defeated by a massive beverage industry lawsuit against the city of San Francisco claiming the warnings violated free speech), and banned the use of city funds to pay for sugary drinks. But the city did something else remarkable. It would use the roughly $10 million in annual revenue brought in by the soda tax to help pay for nutritious school meals made with locally grown produce and to install water hydration stations in schools and public buildings. An additional portion of the money would be used to subsidize healthy eating vouchers for low-income San Franciscans.2 Thanks to Schmidt and her colleagues in the public health community, San Francisco installed one hundred brand-new water stations in parks and other public locations, mainly targeting low-income neighborhoods.3
“We realized that if the city is going to tax soda and restrict it, put warning labels on it and stop selling it themselves, then what are people without access to clean water going to do?” she said. “How can we help them? And do we really want people buying more bottled water? Wouldn’t it be better to have them drinking safe, clean tap water?
“Taxes are regressive,” she added. “And so I think it’s kind of ethical, if you’re going to pass a tax, that you provide people with a healthy and free substitute. Don’t make people pay the jacked-up prices on bottled water. That to me is the ideal soda tax: You take some of the proceeds and you roll it into providing people with clean water.”
Hospitals, Schools, and Public Institutions As Soda-Free Zones
Thankfully, Schmidt did not stop there. As she was leaving a lecture on sugar and disease at UCSF one day, she walked by a food court at the medical center and noticed one obese person after another guzzling soda. The imagery struck her. Here she was, a public health expert warning people about the dangers of sugar, promoting water consumption, and yet her own institution was profiting from the sale of sugary drinks to sick patients and their families. “I thought to myself, ‘I feel like a total hypocrite, this is disgusting,’” she said.
Schmidt had spent years working on policies that governments could enact to promote healthy behaviors. But she realized that workplaces, private institutions, medical centers, and universities could do a lot. So, in 2015, Schmidt and her colleagues at UCSF pressed the school’s chancellor to stop selling sugar-sweetened beverages on the campus. It was a seemingly herculean task. UCSF is one of the largest employers in San Francisco, with more than 24,000 workers on a sprawling campus that extends across the city. But the university found the policy surprisingly simple to execute. The school’s beverage supplier simply started stocking the university cafeterias, vending machines, gift shops, conference rooms, and stores with water and zero-calorie beverages instead of soda. Even fast-food chains on the campus, like Subway and Panda Express, agreed to swap out sugar-laden beverages with healthier options. The initiative led to a 25 percent reduction in soda consumption and an improvement in weight, cholesterol, and metabolic markers of pre-diabetes.
BUT WHAT ABOUT THE NANNY STATE?
Critics of regulation often complain about government overreach. If the government slaps warning logos on our food, taxes sugary products, and restricts junk-food advertisements, then it is forcing people to live in a nanny state. But what do nannies actually do? They protect our children. Seems like a good thing.
Anytime a city or country tries to impose a soda tax, the beverage industry bombards the public with pamphlets, billboards, and commercials telling people to reject this so-called nanny state. It’s an argument that my friend Dr. Aseem Malhotra, one of the most influential cardiologists in England, and a leading food industry watchdog, has thought long and hard about. I asked him to explain why the food industry’s favorite talking point is fatally flawed.
“When you talk about nanny states, this is a term that’s really used in my view as propaganda,” Dr. Malhotra says. “It’s used by people that want to keep perpetuating the status quo where they’re benefiting and profiting from regulations that are so weak that they can mislead the people into buying products that ultimately cause them harm.”
We have mandatory seat belt laws, mandatory vaccinations, mandatory car seats for children, and other public health measures. How is this different? When the government proposed mandatory seat belt laws decades ago, the car industry vehemently opposed the idea. Carmakers were also against mandatory airbags and fuel emissions standards. These were all “nanny state” ideas, they cried. But now that we’ve had these safety measures in place for a while, the public has grown accustomed to them and the car industry is doing just fine. We accept these reasonable regulations because they are good for society. They save lives and protect the environment. It’s the same with smoking. Many critics of public smoking bans have now come around to the idea that less smoking is good for society.
“I think as awareness grows, then this nanny state argument will not stand up, and politicians will respond to the public,” Dr. Malhotra says. “The way the public gets their information is the media. Mass media has a huge impact on public opinion. We really need to engage journalists and editors so these discussions can be heard. We can’t keep this information from the public.” But the major media is mostly supported by Big Food and Big Pharma ads, making it hard for them to do true muckraking journalism. We need government regulation to make junk food more expensive, to reflect its real cost.
Proposed Policy Solutions
In 2018 Dr. Malhotra proposed a bold new plan that could reverse the diabetes crisis in three years. He created it with two other highly respected public health experts: Dr. Robert Lustig, a pediatric endocrinologist at UCSF, and Professor Grant Schofield from Auckland University of Technology in New Zealand.4 Here are some of the controversial solutions they proposed:
Education for the public should emphasize that there is no biological need for or nutritional value in added sugar. The food industry should be forced to label added and free sugars on food products in teaspoons rather than grams, making it easier for the public to understand. If a can of soda says 39 grams, do people really understand that it has almost 10 teaspoons of sugar (approximately 4 grams of sugar is 1 teaspoon)? The labels are designed to obscure the truth and confuse consumers.
Companies that make sugary products should be banned from sponsoring sporting events. We encourage celebrities in the entertainment industry and famous athletes to publicly dissociate themselves from sugary product endorsements. Examples of star athletes who have already done this include Indian cricketer Virat Kohli, basketball star Stephen Curry, football legend Tom Brady, and Beyoncé.
Sugary drink taxes should extend to sugary foods as well.
We call for a complete ban on ads for sugary drinks (including fruit juice) on TV and Internet on-demand services.
We recommend discontinuing all government food subsidies, especially for commodity crops such as corn turned into sugar, which contributes to health detriments. These subsidies distort the market and increase the costs of nonsubsidized crops, making them unaffordable for many. No industry should be given a subsidy for hurting people.
We need new policies to prevent all professional dietetic organizations from accepting money or endorsing companies that market processed foods. If they do, they should not be allowed to claim that their dietary advice is independent.
We recommend splitting healthy eating and physical activity into separate and independent public health goals. We strongly recommend avoiding sedentary lifestyles through the promotion of physical activity to prevent chronic diseases for all ages and sizes. But it is important to remember that “you can’t outrun a bad diet.”
You have to walk four miles to burn off one 20-ounce soda. However, physical activity is often perceived as an alternative solution to obesity based on the idea of calories in, calories out. The quality of calories matters more than the quantity. Sugar and broccoli calories are not the same when you eat them. A Big Gulp with 750 calories of sugar has profoundly different effects on your metabolism than 21 cups of broccoli with 750 calories. The disproven energy balance or calorie hypothesis of weight gain ignores the metabolic complexity5 and unnecessarily pits two independently healthy behaviors against each other on just one poor health outcome (obesity). To relieve the burden of nutrition-related disease we need to improve our diets, not physical activity. Big Food focuses on exercise, moderation, and energy balance as the solution.
FOOD FIX: TAX JUNK FOODS AND SUBSIDIZE HEALTHY ALTERNATIVES
1. Every government should institute a junk-food tax of some kind. Sugar-sweetened drinks are the logical place to start. Sugary drinks are not the sole cause of obesity. But they represent the largest source of added sugars in the modern diet, and they have a disproportionate impact on obesity, diabetes, and heart disease. The revenue that such taxes bring should be mandated to be used to pay for important public services like pre-kindergarten and after-school programs and other community benefits so it is not just used to cover budget shortfalls. Soda taxes are the low-hanging fruit for policy makers who understand that we have to do something about our out-of-control health care costs.
It’s also clear that soda taxes work. We now have studies that prove it.6 So I urge every government around the world to explore a soda tax. This can be done at the national level or in provinces, counties, states, and municipalities. The best option is a tiered soda tax, which taxes beverages based on the amount of sugar they contain. Under this tax plan, beverages that have the least amount of sugar are taxed at a lower rate, and those that have the most sugar are taxed at the highest rate. This is better than a flat soda tax, which taxes a bottle of kombucha, with 4 grams of sugar, at the same rate as a can of Pepsi, with 41 grams of sugar. Studies show that a tiered soda tax is best because it incentivizes companies to avoid the highest tax rates by reformulating their products so that they contain less sugar. Tiered soda taxes have faced less industry opposition than flat soda taxes. They prompt companies to make positive changes. And they work best for consumers. It’s a win-win for both the food industry and the public.
More than thirty countries have passed a tax on sugary drinks, including Ecuador, Barbados, Belgium, Portugal, Ireland, Spain, the United Kingdom, South Africa, Hungary, and the Philippines. And the impact on reducing consumption and forcing Big Food to reduce sugar in its products has been significant. In 2017, Saudi Arabia enacted one of the strictest policies in the world, with a 50 percent tax on soft drinks and a 100 percent tax on energy drinks. The United Arab Emirates did the same thing. The CEO of Red Bull called them, complaining that sales were down 70 percent. Since they have no ability to lobby these governments, and these countries receive no tax revenue from those businesses, their protests are ignored. India imposed a 40 percent tax on sugary drinks in 2017. The Philippines passed a tax on drinks containing caloric and noncaloric sweeteners in 2017, but those made with high-fructose corn syrup are taxed at double the rate of other drinks.
Mexico is perhaps the most powerful example of why we need more soda taxes. The country holds the dubious distinction of being one of the world’s largest consumers of soft drinks (the former president, Vicente Fox, was previously the head of Coca-Cola for all Latin America), so it’s no surprise that it has one of the highest obesity rates. In 2014, the Mexican government enacted a 10 percent tax on sugary drinks and a 5 percent tax on junk foods. Researchers found that after just one year, sales of soft drinks plunged 12 percent while sales of bottled water climbed 4 percent (the increase in water consumption was likely much greater because the study didn’t look at tap water intake).7 The findings provided the first hard evidence that such taxes nudge people in the right direction. Later studies also revealed some encouraging trends. The greatest reductions in soda intake occurred among low-income Mexicans and in households with children. One study in the Journal of Nutrition found a 16.2 percent jump in water purchases among low- and middle-income households.8 If that weren’t impressive enough, a study in the journal PLoS Medicine estimated that over the course of a decade the tax could help to save almost 19,000 lives, prevent 200,000 new cases of diabetes, and lower Mexico’s health care costs by as much as $983 million!9
The United States doesn’t have a federal soda tax. But thirty-three countries do, and more than a half dozen US cities and counties across the country have instituted them on their own—and more are expected. Berkeley was the first American city to institute a soda tax, in 2015, and it proved very successful. Researchers at the University of California–Berkeley found that soda consumption in low-income neighborhoods of the city fell by more than 20 percent and water intake jumped significantly. Philadelphia instituted a soda tax in 2017 for both sugar-sweetened and artificially sweetened drinks, and soft drink intake dropped significantly among low-income children.10
2. Use tax income to subsidize nutritious foods and incentives. The sad fact is that the price we pay for most foods doesn’t reflect the true societal cost of those foods. Thanks to crop supports, sugar tariffs, tax breaks, and absurdly cheap corn syrup, a can of Pepsi costs less than $1 in many parts of America. Obesity, diabetes, and metabolic diseases cost taxpayers and the federal government trillions in health care spending, lost productivity, and suffering. Even the way that we grow and produce corn syrup and other ultraprocessed foods has a devastating effect on our soil, air, water, and climate. Why do we allow this? Why don’t we acknowledge the true costs of foods and price them accordingly?
Dariush Mozaffarian, MD, and his colleagues at the Friedman School of Nutrition Science and Policy at Tufts have thought long and hard about this. Their proposal: Levy a flat tax of 20 or 30 percent on most packaged and processed foods, and then use that money to subsidize nutritious foods that reduce health care costs and have a less harmful impact on the environment. “Then you would use all that money to invest in and reduce the price of minimally processed healthy foods, like fruits and vegetables, nuts and seeds, plant oils [extra virgin olive oil, avocado oil, coconut oil], and fish and yogurt,” Mozaffarian says. “You would turn the prices upside down. Or at least you would make them more normal. So now you couldn’t buy a 36-ounce soda for 99 cents anymore.” Instead of paying 75 cents for an apple or an orange, you’d pay 20 cents. A pound of wild or sustainably raised salmon wouldn’t cost you $15 at Whole Foods. It would cost you just $4 or $5. Organic and grass-fed and finished beef, chicken, and eggs would be cheaper. If the animals we eat were raised regeneratively, and if the ecosystem services provided by those farms and ranches were reimbursed, who knows? We may get paid to eat regenerative animal foods because they reverse climate change, preserve water resources, and increase biodiversity!
“We should use the revenue from junk-food taxes to create incentives and systems for making healthy food less expensive while helping farmers. We don’t want to just make food less expensive by putting farmers out of business. But the price is just an absolutely crucial tool. We’ve learned from tobacco and cigarette taxes, for example, how important price is,” Mozaffarian says. “The price is clearly one tool that the government needs to use to address healthier food.”
Another way to influence prices is through fiscal incentives. We should not be handing out tax breaks to industry lobby groups or to companies for spending billions advertising junk food to kids (or the poor). We need to take away those tax breaks and provide companies with incentives for marketing, advertising, and developing healthy foods. This particular policy of ending tax breaks for bad behavior has been proposed in Congress. But it hasn’t gotten out of committee for a vote. The Food Is Medicine Working Group needs to repackage it in a new bill that changes the price structure of junk foods and healthy foods. It wouldn’t raise income taxes, and it would only affect certain foods, such as soda, potato chips, fast food, and candy. In fact, Congress could balance the taxes and subsidies so that the policy would be cost neutral. Right now, none of the consequences of our food system—the effect on chronic disease, the impact on children’s health, and the unsustainable toll on the climate and environment—are reflected in the cost of food. Those things can and must be factored into what we pay at the grocery store, restaurants, and fast-food outlets.
3. Create soda-free zones. Public and private institutions across the country—and the world, for that matter—are now showing how this can be done. More than thirty medical centers and universities in the United States alone have stopped selling sugary beverages. Many have also implemented policies to make clean drinking water and healthy foods more available.
In 2018 the Geisinger Medical Center in Pennsylvania, which provides health care to thousands of patients, eliminated sugar-sweetened beverages, removed all deep fryers, and started limiting sodium and using locally grown fruits and vegetables in its meals.
The Indiana University Health System removed sugary beverages and deep fryers and made healthy food options less expensive. It also began marking foods red, yellow, and green to help people identify the healthiest options.
The Hospital Healthier Food Initiative, which the Partnership for a Healthier America launched, says that at least 700 hospitals nationwide have committed to serving more nutritious patient meals, implementing stricter cafeteria standards, and selling more fruits, vegetables, water, and other healthy foods on their campuses.
In 2010 my institution, the Cleveland Clinic, was among the first to remove sugar-laden drinks from its campus and offer people healthier food options.11
Many large companies have also begun to change their food environments. There are wonderful services that cater to companies that want to create healthier workplaces. SnackNation, for example, helps people replace the junk food in their homes and offices with better-for-you snacks like fresh fruits, nuts, seeds, trail mix, and low-carb protein bars.
FOOD FIX: WHAT YOU CAN DO
1. Stop drinking sugary beverages. If you’ve gotten this far, then my next recommendation probably goes without saying. But I’ll say it anyway: Don’t drink sugar. The best way to reform the food system is to make sugar-laden foods less profitable. If consumers demand healthy products, then eventually companies will have to comply. It’s not just soda. Fruit juice has a health halo. But don’t be fooled by its vitamins and antioxidants. Fruit juice is loaded with sugar and is just as harmful as soda. Avoid buying it, and certainly don’t give it to your children. Cutting sugar-sweetened beverages from your diet is the single biggest thing you can do to improve your health.
2. Try my sugar detox challenge. In 2014 I challenged people to kick sugar and starch and other harmful food additives to the curb with my book The Blood Sugar Solution 10-Day Detox Diet. Six hundred people did a trial of the program and lost a total of more than 4,000 pounds in just ten days. On average their blood pressure fell 10 points and their blood sugar dropped 20 points. They also saw a 62 percent reduction in all symptoms from all diseases. This brief detox produced better results than any drug on the planet! Since I launched the detox, thousands of people have used it to improve their health and lose body fat. It is what Janice from Chapter 2 used to lose 116 pounds and reverse her diabetes, heart failure, kidney failure, fatty liver, and high blood pressure. It is also what Jennifer Lopez and Alex Rodriguez used to reboot their health.
3. Support ballot initiatives. I would love to see the US government institute a nationwide sugar-sweetened-beverage or junk-food tax. But the food lobby is so powerful that it’s unlikely to happen anytime soon (more on this in Chapter 6). So rather than work from the top down, we have to make progress from the bottom up.
Most of the local soda taxes in America came about because citizens petitioned and voted for them and because the tax revenue is used for community benefit. At least five of the big soda taxes—in places like Oakland, San Francisco, and Berkeley, California; Boulder, Colorado; and Albany, New York—were a result of ballot referendums that grassroots supporters spearheaded.
Past successes followed a few guiding principles. Marion Nestle, a nutrition professor at New York University and author of Soda Politics and Food Politics, summarizes the principles that worked. She recommends proposing excise taxes that increase the price of soft drinks by at least 20 percent and explicitly linking revenues to the support of health, activity, or school programs or to providing direct community benefit. When taxes passed it was because broad coalitions supported them, including health, university, and government organizations, and representatives of minority groups. Funding is required to counter the opposition of Big Food.
If every city or county in America had a soda tax, there’d be no need for a national one. So, I urge you to vote in favor of soda tax referendums where you live. If one is not on the ballot, then make it happen yourself. In many places all it takes to get a referendum on the ballot is a proposal with enough signatures behind it. Find out the necessary criteria in your town through a quick Google search or a trip to your local town hall.