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Public Health Taxes and Health Care Costs

By Matthew Yglesias on May 1, 2009 at 6:13 pm

"Public Health Taxes and Health Care Costs"

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I don’t really like it when people attribute to me views I don’t hold, so I’ll say in response to Paul Campos that I know perfectly well that if the public adopted healthier lifestyles this would do little to reduce health care costs. Indeed, as he says,depending on exactly what happens healthier lifestyles might lead to higher health care costs.

I don’t think the case for taxing public health hazards at all rests on any such claim. Instead, as I’ve been saying, the case for such taxes rests on the claim that raising revenue through some source or other is going to be necessary when the recession ends. As you can see, Obama administration’s budget (demarcated with the dotted lines) leaves revenue as a percent of GDP far too low to pay for the government services we need:

graphs_1

That dotted line already assumes you’re repealing Bush’s tax cuts for the rich. You could—and we probably should—raise taxes even further on the rich. But I don’t think there’s a realistic way to get all the way to where we need to go purely through that mechanism. So the isse becomes that if you’re going to have broad-based sources of revenue, it makes sense to obtain a decent chunk of that revenue through taxes that, at the margin, encourage healthier behavior rather than through taxes that, at the margin, discourage economic activity.

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