Regulatory Lapses Inflate Health Care Costs, Reports Find

A new report has found that foodborne illnesses take a $152 billion toll on the American economy each year. Other hazards that regulators keep tabs on, such as air pollution, can increase medical costs if the public is not adequately protected.

A portion of the economic impact of foodborne illnesses, more than $9 billion, takes the form of health care costs, the report finds. The nation sees almost 82 million cases of foodborne illness annually, and the average cost of each case is $112, the report says. The report counts physician services, pharmaceutical costs, and costs associated with hospitalization.

The March 3 report, Health-Related Costs from Foodborne Illness in the United States, was sponsored by the Produce Safety Project at Georgetown University, an initiative of the Pew Charitable Trusts.

The remainder of the $152 billion economic impact is attributable to deaths and losses in quality of life. The report's author, former Food and Drug Administration (FDA) economist and current Ohio State University professor Robert L. Sharff, used typical cost-benefit analysis methods to determine these values. The Make Our Food Safe Coalition, of which Pew Charitable Trusts is a member, said it "does not necessarily endorse any single method to develop such estimates, [but] coalition members agree that this study highlights the magnitude of the problem and the need for action to reduce foodborne disease."

Major food recalls have raised public awareness of food safety and foodborne illness risk. Peanuts, peppers, and ground beef are among the many foods that producers have recalled in recent months after consumers became ill. The Centers for Disease Control and Prevention (CDC) estimates that foodborne illnesses hospitalize more than 300,000 people every year and kill 5,000. An ongoing salmonella outbreak, traced back to a line of meats seasoned with red and black pepper, has sickened 245 people in 44 states and the District of Columbia, according to the CDC.

Calls for reform have grown louder, too, as the public has lost confidence in the ability of regulators, especially those at the FDA, to detect and solve foodborne illness outbreaks or prevent them in the first place. A December 2009 CBS News poll asked more than 1,000 Americans, "How would you grade the U.S. on ensuring the safety of the food supply in the U.S.?" 34 percent of respondents said "C." 33 percent said "B" while only seven percent said "A." 18 percent said "D" while six percent gave the U.S. an "F."

Pew Charitable Trusts seized on the findings of Sharff’s report to renew calls for reform. "This report makes it clear that the gaps in our food-safety system are causing significant health and economic impacts," Erik Olson, Pew’s director of food and consumer product safety, said in a statement. "Especially in challenging economic times we cannot afford to waste billions of dollars fighting preventable diseases after it is too late."

Olson called on the Senate to quickly consider and pass a food safety bill. In November 2009, a Senate panel approved the FDA Food Safety Modernization Act (S. 510), but the bill has yet to be taken up on the Senate floor. A similar bill passed the House in July 2009, 283 to 142.

In another study released March 2, the Rand Corporation determined that air pollution can have a significant impact on health care and health insurance industries, particularly when air pollution exceeds levels deemed safe by regulators.

"Meeting federal clean air standards would have prevented an estimated 29,808 hospital admissions and ER [emergency room] visits throughout California over 2005-2007," the report says. The admissions cost almost $200 million, leading Rand to conclude that "improved air quality would have reduced total spending on hospital care by $193,100,184 in total."

Rand studied air pollution and hospital admissions trends in California from 2005-2007. The report links air pollution levels that exceeded federal standards to hospital admissions for problems such as asthma attacks, pneumonia, and bronchitis. The admissions included in the report are attributable to violations of the U.S. Environmental Protection Agency’s (EPA) standards for particulate matter and ozone. The report acknowledges that exposure to particulate matter and ozone can also lead to heart attacks and premature mortality, but those health endpoints were not included in the study.

The majority of air pollution’s health effects are indirectly paid for by taxpayers, the report emphasizes. Medicare covered more than $100 million of the hospital care costs included in the report, and government-provided health care for low-income individuals (Medicaid at the federal level and Medi-Cal in California) covered more than $27 million, Rand said. Private insurers spent almost $56 million, according to the report.

Like the report on the costs of foodborne illness, the Rand report adds yet another dimension to the debate over health care policy and President Obama’s desire to reform the system. "Dirty air is the forgotten topic when it comes to health care reform," Clean Air Watch's Frank O’Donnell told the EPA in 2009.

While the health care costs associated with regulatory failures are likely a small fraction of the more than $2 trillion spent on health care in the U.S., they remain significant. Preventable workplace injuries and illnesses, injuries and illnesses associated with consumer products, automobile crashes, and water quality degradation, to name a few, can lead to both short-term and long-term health care costs.

Image in teaser by flickr user, used under a Creative Commons license.

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