Though Vermont has been ranked the healthiest state in the nation for the fourth year in a row, according to United Health Group, statistics show that Green Mountain residents are getting fatter faster than ever and the costs associated with obesity are rising.
Obesity, as Harry Chen, the commissioner of the Department of Health, put it this week, is an “epidemic” in Vermont. “It’s the No. 2 modifiable risk factor for death, and there is a tremendous cost associated with it to the health care system,” Chen told reporters at the governor’s weekly press conference on Tuesday.
The percentage of Vermonters who are obese has more than doubled over the last 22 years, according to the United report. About 10.7 percent of Vermonters were obese in 1990; now 25.4 percent of the overall population of the state is severely overweight.
Overweight Vermonters are more susceptible to an array of medical problems, including asthma, diabetes, cancer and heart diseases. Estimated medical spending for obesity related diseases in 2010 dollars was $163 million, according to a UVM report.
While health advocates and state officials agree that obesity has reached epidemic proportions in Vermont, and the costs to taxpayers are escalating, they disagree on what to do about it. Health advocates want to impose an excise tax on sugar-sweetened beverages to curb consumption rates among children; the state’s leading politicians oppose such a tax because they say it would be regressive.
Lobbyists for grocers and the beverage industry oppose the tax proposal, and they say it will do nothing to change consumer behavior.
Tax on sugary drinks seen as a deterrent
The Alliance for a Healthier Vermont, which represents 35 organizations including the Vermont Medical Society, Fletcher Allen Health Care and the American Heart Association, says one of the biggest risk factors for childhood obesity is consumption of sugary drinks.
The alliance wants the state to place a penny per ounce tax on sugar-sweetened beverages as a way of deterring Vermonters, and children in particular, from consuming so much soda, sweetened tea and energy drinks. Flavored milk and juices would be exempted.
Americans drink twice as much soda and sugary drinks now as they did 30 years ago. Children are consuming between 41 and 108 gallons of the beverages a year, according to the alliance. In 2009, Medicaid paid for surgical tooth extractions for 421 Vermont children under the age of 5 at a cost of $2.2 million.
A 1 cent an ounce excise tax or a 10 percent increase in cost for a 12 ounce can of soda or other sugary drinks could be the most significant measure against childhood obesity, according to a March 2010 Health Affairs article. The slight increase in price generated by the excise tax would reduce consumption by 8 percent.
The tax would raise about $27 million in Vermont based on figures from the Yale Rudd Center for Food and Policy. The money could be used to pay for an anti-obesity campaign, much like the anti-tobacco public awareness advertising that health advocates have successfully used to deter Americans from smoking, according to Tina Zuk, of the American Heart Association.
Zuk said the $27 million from the sugar sweetened beverage tax could also be used to hold low-income Vermonters harmless who otherwise might face significant increases in out-of-pocket health care costs and premiums when the exchange begins and Catamount and VHAP go away in 2014.
“The governor has stated that he doesn’t believe the state has a revenue source for this $15 million to $18 million expense,” Zuk said. “But the sugar sweetened beverage tax could provide a win-win on two fronts – reducing obesity and ensuring that low- to middle-income Vermonters have affordable health care.”
Though excise taxes have been imposed on alcohol, tobacco and gasoline at the wholesale level, the penny per ounce excise tax proposed by the alliance would be the first such levy on food in Vermont, and, some experts say, in the nation.
Democratic leaders unenthusiastic
Excise tax legislation on sugar-sweetened beverages is now being drafted at the behest of Rep. Dave Sharpe, a vice chair of the House Ways and Means Committee.
Sharpe says the penny per ounce proposal could be an effective deterrent because consumers would have an opportunity to see the difference in the per unit shelf price between, say a bottle of water and a container of Coca-Cola.
The Democrat from Bristol is aware that the proposal could be doomed at the outset, as the state’s political leaders, all Democrats, are lining up against the idea of a penny an ounce excise tax on sugary drinks just like they did in 2010.
Sharpe is unfazed by opposition from members of his own party.
“It’s like the smoking thing,” Sharpe said. “It took a long time for people to accept smoking is a bad habit and it ended up costing the health care system millions. When that realization came to fruition, it became easier to pass bills.”
Gov. Peter Shumlin and John Campbell, the Senate president pro tem, adamantly oppose a tax on sugar-sweetened beverages. Shap Smith, the House Speaker, says he has “real reservations” about the proposal because he is concerned “about how it would be implemented and its regressivity.” All three men, who have worked hard to burnish their fiscal conservative credentials, have pledged not to raise “broad based taxes,” including sales and use, rooms and meals and income taxes. (Meanwhile, provider taxes on health care institutions, fees on Vermont Yankee and other revenue-raising maneuvers sailed through the legislative process in the last biennium.)
At the governor’s press conference on Tuesday, Chen, the state’s health commissioner, stopped short of endorsing a plan to tax the sugary drinks.
“I certainly would like to see sugar-sweetened beverages taken out of schools,” Chen said. “As far as a tax policy goes, that’s certainly a question we’d have to decide, but I certainly think that the less sugar-sweetened beverages people drink the better. I think the policy issues are a different issue entirely.”
Lest there be any question on that point, the governor quickly stepped into the fray. Shumlin told reporters he wanted to “just to make sure we answered the question accurately.” He explained that he sees obesity as a national problem, and he pointed out that Vermont’s rate of obesity growth is slower than most other states.
“My feeling about taxing to get outcomes in this area are pretty clear,” Shumlin said. “I believe that the best way you can deal with questions of obesity is by education and ensuring that we get to both kids and parents to get them the information they need. We can make great progress, and that’s where I’d start. One of the challenges with taxing sugar as a method of reducing consumption is it’s a very regressive tax, it puts a tax on those who can least afford it to pay the most. So I would suggest that we start with education.”
Chen then proceeded to solidify his stance: “A sugar-sweetened beverage tax clearly is not a magic bullet; we’re going to have to attack this from a broad cultural perspective.”
When Bob Kinzel of VPR asked whether the state’s approach has been a total failure given the scope of the problem, Shumlin said awareness of the obesity issue has “moved leap years” in his view.
“If we can move to a health care system where we reward our providers for outcomes instead of the number of services, and we insist that through education in our schools and communities that we educate Vermonters about what’s healthy and what’s not I would argue we’ve failed pretty miserably … on all of those fronts. We’re making great progress now.”
Education efforts so far, haven’t done enough to shift public perception, according to Zuk, the American Heart Association representative.
Zuk argues raising the price of sugary drinks in combination with a public awareness campaign is the most effective way to curb consumption. This is what ultimately led, she said, to a broad public understanding of the dangers of smoking and a corresponding reduction in use of tobacco products.
She pointed to newfound support from the Vermont Low Income Advocacy Council as a sign that the issue of tax “regressivity” might not be as important to poor Vermonters as concerns about their health are.
Peter Sterling, the executive director of the Vermont Campaign for Health Care Security, says the “regressivity” rallying cry is a red herring. The governor had no problem passing a 67-cent increase in tobacco taxes in 2002, Sterling says, and he recently left open the possibility of taxing heating fuel oil to pay for a new thermal efficiency program.
“I feel that the governor is being a bit hypocritical by emphasizing the regressively of the sugar sweetened beverage tax,” Sterling said. “He doesn’t seem to have any problem raising low-income people’s health care costs. I find it concerning that he is taxing something people need like heating oil, but he’s not willing to tax something they don’t need like a soda.”
What galls Sterling the most, though, is Shumlin’s apparent unwillingness to continue subsidizing health care for low-income Vermonters.
“The governor is willing to raise health care costs for low-income people by thousands of dollars and won’t ask them to pay 12 cents more for a can of Snapple,” Sterling said.
Opposition from grocers, beverage association
John McClaughry, the founder of the Ethan Allen Institute, a conservative think tank based in Kirby, wrote a scathing analysis of Sorrell’s “nanny” tax proposal, which he argued used dubious data attributing $600 million in productivity costs associated with obesity.
The proposal didn’t resurface in the second half of the biennium.
Two lobbying groups — the Vermont Grocers Association and the American Beverage Association — both oppose the bill.
Jim Harrison, head of the grocers, says his members are sensitive to tax increases of any kind because of cross border competition issues with Massachusetts, New York and especially sales-tax free New Hampshire. None of these states have a similar excise tax on sugar-sweetened beverages.
“You could argue this is a tax buried in the price of the product and passed on to consumers, so why care?” Harrison said. “In essence, the retailer is purchasing items for its customers. Any time there is an increase in the cost of a product we sell … it’s a straight pass through.”
Harrison said “every little bit counts” and the small tax on sugary drinks could “push sales across the border.” The state already loses a “phenomenal” amount of business to New Hampshire, he said.
Jane Kolodinsky, a UVM professor and head of the Center for Rural Studies, surveyed consumers this year about whether the excise tax would impel them to shop for sugar sweetened beverages in New Hampshire. Results showed that the excise tax would not have an adverse impact on stores along the border, she said. Consumers, who tend to buy single beverages when they are thirsty, would pay the 12 cent tax or switch to diet drinks, water and 100 percent juices instead.
The state, Harrison says, can’t tax its way out of its obesity problem. “There is no question some people consume too many calories,” Harrison said. “You can’t tax yourself out of obesity, if you don’t want to gain weight, you have to exercise and burn fewer calories. Just trying to tax something isn’t going to be the magic answer.”
If the state starts taxing certain beverages, it’s hard to know where officials will draw the line, Harrison said. “Why not put taxes on basic food commodities in hopes of changing behavior? Once you start taxing everyday food and beverages, where do you draw the line? What’s next salty foods? It’s a slippery slope we should all be cautious of.”
Chris Rice, of the lobbying firm MacLean, Meehan and Rice, says soda consumption has declined as a percentage of beverages consumed by Americans from 51 percent to 33 percent of the overall market. Rice, who represents the American Beverage Association, says there has been a 24 percent decline in calories per serving across all beverages.
The real problem, he says, is consumption of fats and grains, which are the two largest sources of calories consumed by Americans.
Members of the Alliance for a Healthier Vermont include: American Cancer Society, American Heart Association, VT Medical Society, American Academy of Pediatrics VT Chapter, VT State Dental Society, Fletcher Allen Health Care, Northwestern Medical Center, Vermont Low Income Advocacy Council, American Diabetes Association, Vermont Cancer Center, VT Campaign for Health Care Security, AARP-VT, VT Dental Hygienists’ Association, VPIRG, Voices for Vermont’s Children
Health Care Ombudsman’s Office, VT Academy of Family Physicians, VT NEA, VT Nurse Practitioners Association, VT Association of Naturopathic Physicians, VT Dental Assistant Association, VT Association for Health, Physical Education, Recreation, and Dance, VT Citizens Campaign for Health, VT Association of Nurse Anesthetists, Vermont Association of Diabetic Educators, VT Pharmacists Association, Health Connections of the Upper Valley, VT Public Health Association, VT Chiropractic Association, Meeting Waters YMCA
Healthy Communities Coalition of Windham County, VT Association of Orthodontists, VT Chapter of the American Physical Therapy Association, VT State School Nurses Association, VT Association of Periodontology
Correction: The health care exchange goes into effect in 2014. The story originally stated that the exchange started in 2012.