September 4, 2020 Reading Time: 6 minutes

There is growing awareness of something we’ve known for probably five months: that Covid-19 is overwhelmingly dangerous only to the elderly, individuals with compromised immune systems, and those with major or numerous comorbidities. Because of this, realization of the needlessly destructive nature of pandemic policies – foremost among them, lockdowns – has been increasing as well. 

In the United States, it’s a story of a people increasingly disposed to paternalism suffering beneath the dictatorial and clumsy policies of politicians. The extended cast of characters includes court scientists (many more epidemiologists than immunologists and virologists), a media frustrated with several years’ decline in influence, an oligopoly of social media venues with increasingly transparent political biases, and an academy more interested in scoring points against the current administration than applying intellectual resources to solving problems caused by the novel coronavirus. For the left, the spread of the virus has led to lobbying for egalitarian policies; for the right, to rattle swords against America’s economic and military rivals. 

The left sees an opportunity to push for massive socialized health and economic redistribution programs. The right, an excuse to expand and familiarize anti-immigration policies and – in the wake of widespread civil disturbances – the further militarization of “law and order.” Rather than deferring to medical specialists, idealogues, activists, and elected officials have turned Covid-19 into a bully pulpit of sweeping proportions.

The Other Epidemic

With the possible exception of the passage of Obamacare, the major story in American healthcare over the past two decades has been another epidemic: obesity. Between 1999 and 2018 it increased from an estimated 30.5% to 42.4% of the population, while morbid obesity (defined as a BMI of 40 or over) essentially doubled from 4.7% to 9.2%. Young Baby Boomers and most GenXers remember a time when roughly one of ten Americans was overweight and less than that morbidly obese. (This is not to imply some generational superiority, but rather to express the rapidity with which this particular malady has grown.) In some US states today, obese citizens number four in ten. For children and young adults between 12 and 19, the rates of obesity in the United States are roughly one in five. 

The ubiquity of obesity masks the fact that it is a serious affliction. It creates a wide range of comorbidities including hypertension, cardiovascular disease, stroke, type 2 diabetes, and is believed to be linked to certain cancers. It is also associated with a wide range of additional effects, from sleep disorders to lower earnings to bullying and psychological problems. 

In 2014 it was estimated that the global economic impact of obesity had reached roughly 3% of global GDP. A systematic literature review by Tremmel et al (2017) reported that 

[d]irect per-capita costs of obesity were reported in seven studies and indirect per-capita costs were calculated in one study in Sweden. When comparing the results of two studies in the USA estimating annual direct costs per capita, the costs increased from US $2741 in 2005 to US $6899 in 2011. Both these studies used data from the Medical Expenditure Panel Survey. Alter et al estimated the direct per-capita costs attributable to obesity over a time frame of 11.5 years to be CAD $8294.67 (2006) while the direct per-capita costs over a lifetime (>65 years) amounted to US $171,482 (2010) in the USA. Total per-capita costs in the USA were predicted, using a Markov-based microsimulation, to be US $33,900 and US $70,200 (2013) over a time frame of 5 and 10 years, respectively.

And, it bears mentioning, obesity generates negative externalities: most in the form of disproportionately higher healthcare costs. As noted in this 2006 paper.

If rational individuals pay the full costs of their decisions about food intake and exercise, economists, policy makers, and public health officials should treat the obesity epidemic as a matter of indifference. In this paper, we show that, as long as insurance premiums are not risk rated for obesity, health insurance coverage systematically shields those covered from the full costs of physical inactivity and overeating … Using data on medical expenditures and bodyweight from the National Health and Interview Survey and the Medical Expenditure Panel Survey, we estimate that, in a health plan with a coinsurance rate of 17.5%, the obesity externality imposes a welfare cost of about $150 per capita. Our results also indicate that the welfare loss can be reduced by technological change that lowers the pecuniary and non-pecuniary costs of losing weight, and also by increasing the coinsurance rate.

The per capita costs are, undoubtedly, much higher today. People with higher BMIs tend to consume more medical resources per capita than people with lower BMIs, and both pooled insurance and taxes levy the same premia/costs on participants and citizens agnostically. 

More recently, arguments that obesity is a “market failure” have been made: that consumers are not well-informed about the dangers of excessive weight gain. If there is a market failure, it is only that private insurance firms and taxes do not, or are not permitted, to let the prices charged to individuals directly reflect their personal choices and habits. In fact, by not requiring that prices immediately reflect the cost of people’s habits, insurance inarguably contributes to the promotion of unwellness. 

Obesity and Operation Warp Speed

As far as government healthcare goes, Operation Warp Speed represents a unique, threefold waste of taxpayer funds. First, it’s a government project with all of the inherent inefficiencies that such an undertaking features: paperwork, red tape, duplication of effort, a bureaucratic maze, and so on. Calling it a “public-private partnership,” whether it is or is not, isn’t mitigating. 

Second, it is developing a vaccine for a virus that should primarily be addressed by herd immunity and the protection of the most vulnerable among it. The CDC is now requesting approval for Covid-19 vaccine sites to be approved for a November 1st rollout. Even if one were to overlook the concept of scientific research undertaken subject to a deadline, the proposed date – the Saturday before a highly contentious Presidential election – should remove any doubt that this process is political through-and-through. 

Third, there is a good chance that a Covid-19 vaccine may not work or may prove less effective for one of the largest susceptible categories of American: the obese. Healthy immune systems see varying levels of inflammation with the onset of infection. The chronically inflamed state of individuals with elevated blood sugar, high blood pressure, and other consequences of being overweight dulls the immune response, which consequently limits the effectiveness of vaccines. In the 1980s, it was discovered that tetanus, rabies, hepatitis A & B, and other vaccines tend to generate suboptimal immune responses among overweight individuals.

And although pot committed politicians and technocrats will undoubtedly feign surprise or make an appeal to their having “taken action,” this is not new news. It is quite possible that the outcome of the Operation Warp Speed project is a vaccine with between limited and no efficacy for about half of all Americans. Whether that would lead to an Operation Warp Speed II, further lockdowns, or combinations of other draconian developments is anybody’s guess.

BMI-Driven Policy

Soda taxes – the most recent in a wave of coercive attempts to fight obesity – have popped up in cities all over the United States. And while in some places they’ve cut into the sales of soft drinks, they’ve done little to stem the spread of obesity. Politicians apparently haven’t yet learned of the significance of substitute goods, and perhaps that is a good thing: it would likely lead to more heavy handed policymaking. But as with other costs of obesity, everyone pays the soda tax, regardless of their weight, height, fitness, daily activity, genetic predisposition, or other factors. 

States at all levels have vastly expanded their public health mandate. But whether owing to the polarizing nature of the current President or just another stage in the ongoing increase of government scope (as vs. size), the recent interventions should be particularly alarming. In the past, even collectivist states have recognized the value, however qualified, of having certain firms or sectors operating in relatively unfettered markets. Yet in 2020, many of the most market-oriented nations on Earth saw fit to asphyxiate commerce in what became a political chess match: nominally over a virus, but in truth over access to the apparatus of power.

Obesity is undeniably a public health problem; one in which individuals, families, and voluntary communities, operating independently and leveraging the responsiveness of markets, should work toward solving. But rising levels of obesity alongside an increasingly interventionist policy environment are greatly expanding the list of negative externalities generated. The combination of progressively lower thresholds for public health interventions and an increased propensity to act peremptorily when a novel virus or new bacteria is discovered is a troublesome development; all the more so with an increasingly unhealthy U.S. population. 

History proves that today’s huge government overreach is tomorrow’s minimally acceptable policy initiative.

Peter C. Earle

Peter C. Earle

Peter C. Earle is an economist and writer who joined AIER in 2018. Prior to that he spent over 20 years as a trader and analyst at a number of securities firms and hedge funds in the New York metropolitan area, as well as running a gaming and cryptocurrency consultancy.

His research focuses on financial markets, cryptocurrencies, monetary policy-related issues, the economics of games, and problems in economic measurement. He has been quoted by the Wall Street Journal, Bloomberg, Reuters, CNBC, Grant’s Interest Rate Observer, NPR, and in numerous other media outlets and publications.

Pete holds an MA in Applied Economics from American University, an MBA (Finance), and a BS in Engineering from the United States Military Academy at West Point. Follow him on Twitter.

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