Our Health Care Costs

“If our students are getting sick because we’ve built schools in polluted areas, they are going to fall behind. The poor who get sick because of toxins in their neighborhoods are the same people who typically seek treatment in emergency rooms. That drives up health care costs for everyone. And environmental health issues hold back economic growth. Let me repeat that, because there are a lot of people who think that we can’t address these issues and strengthen our economy. In fact, we must address these issues to strengthen our economy. Environmental health issues hold back economic growth.”
— EPA Administrator Lisa Jackson at the American Public Health Association, November 8, 2009 (Lisa Jackson, “Remarks to the American Public Health Association, as Prepared for Delivery,” U.S Environmental Protection Agency, http://yosemite.epa.gov/opa/admpress.nsf/12a744ff56dbff8585257590004750b6/ 2af3d0143020edc1852576690052a953!OpenDocument (accessed November 16, 2009).)

Administrator Jackson offered up a common sense equation in her speech to the American Public Health Association: A decline in exposure to toxic chemicals will result in a decline in chronic disease and a lowering of health care costs.

While it is exceedingly difficult to quantify how much money would be saved by implementing a specific legislative or policy regimen, some sense of the potential for savings can be gleaned from economic analyses of related reform efforts.

In 2003, the European Commission, the Executive Branch of the European Union, calculated the health care savings that would be attained by modernizing European chemicals management. The European Commission estimated that its proposed chemical management reforms would reduce health care costs by one-tenth of one percent in Europe. (Commission of the European Communities, “Regulation of the European Parliament and of the Council Concerning the Registration, Evaluation, Authorisation and Restrictions of Chemicals (REACH), Establishing European Chemicals Agency and Amending Directive 1999/45/EC and Regulation (EC) on Persistent Organic Pollutants: Extended Impact Assessment.” (October 29, 2003): 30.) Applying the European Commission’s formula to the U.S. Department of Health and Human Services’ National Health Expenditure Projections (Center for Medicaid and Medicare Services, “National Health Expenditure Data: Projected,” http://www.cms.hhs.gov/NationalHealthExpendData/03_NationalHealthAccountsProjected.asp#TopOfPage (accessed September 28, 2009).) yields an estimate that U.S. chemicals policy reform could save at least $5 billion in health care costs each year.

Other analyses suggest that the European Commission calculations significantly underestimate the potential health care savings. In 2000, an expert committee of the U.S. National Academy of Sciences’ National Research Council concluded that 3% of developmental disabilities are the direct result of exposure to industrial chemicals and another 25% arise from interactions between environmental factors and genetic susceptibility. (National Research Council, Scientific Frontiers in Developmental Toxicology and Risk Assessment (Washington DC: National Academy Press, 2000).)

In 2001, a study performed for Environment Canada estimated that the U.S. spends more than $6.9 billion each year in health care costs just for the 10% of diabetes, Parkinson’s disease, and neurodevelopmental effects it attributed to environmental contaminants. (Tom Muir and Mike Zegarac, “Societal Costs of Exposure to Toxic Substances: Economic and Health Costs of Four Case Studies That Are Candidates for Environmental Causation,” Environmental Health Perspectives Supplements, 109, no. S6 (December 2001): 885–903.)

In 2002, researchers from New York’s Mt. Sinai School of Medicine Center for Children’s Health and the Environment estimated that 5% of cancer, 10% of neurobehavioral disorders and 30% of asthma in children are associated with toxic chemicals found in our air, food, water, and the places we live, work, study and play. (Philip J. Landrigan, et al., “Environmental Pollutants and Disease in American Children: Estimates of Morbidity, Mortality, and Costs for Lead Poisoning, Asthma, Cancer, and Developmental Disabilities,” Environmental Health Perspectives, 110, no. 7 (July 2002): 721–8.) The 2002 Mt. Sinai report calculated that more than $2.3 billion are spent every year just on the medical costs of childhood cancer, asthma and neurobehavioral disorders associated with toxic chemicals.

Table 4 shows the available data on the costs of cancer, Parkinson’s and Alzheimer’s disease, reproductive health problems, and asthma to provide a range of possible cost savings estimates. If TSCA reform led to toxic chemical exposure reductions that saved 10% of these listed costs, the U.S. could save more than $30 billion annually in current dollars.

While the estimation method we have used for these calculations is entirely different from that of the European Commission, the range of estimates supports the argument that if TSCA reform leads to reductions in toxic chemical exposures that translate into just a tenth of one percent reduction in health care costs, the U.S. healthcare system will save at least $5 billion every year.

Table 4 - TSCA Reform and Health Care Costs: Estimates of Costs and Savings
	Costs in $ Billions
Cancer: Direct Medical Costs 2008	$93.2 billion (American Cancer Society. Cancer Facts & Figures 2009 (Atlanta: American Cancer Society, 2009).)
Alzheimer’s Annual Cost of Care	$150 billion (Jill Stein, et al., Environmental Threats to Healthy Aging: With a Closer Look At Alzheimer’s and Parkinson’s Disease, ed. Nancy Myers (Boston: Greater Boston Physicians for Social Responsibility and the Science and Environmental Health Network, 2008).)
Parkinson’s Disease Midpoint Annual Cost	$20.8 billion (Ibid.)
Infertility Treatment 2002	$2.9 billion (The Collaborative on Health and the Environment, Vallombrosa Consensus Statement on Environmental Contaminants and Human Fertility Compromise October 2005, http://www.healthandenvironment.org/infertility/vallombrosa_documents (accessed September 28, 1009).)
Hysterectomy for Treatment of Fibroids Annually	$1.7 billion (D. Andrew Crain, et al.,“Female Reproductive Disorders: the Roles of Endocrine-Disrupting Compounds and Developmental Timing,” Fertility and Sterility, 90, no. 4 (2008): 911–40.)
Preterm Births 2005	$26.2 billion (Richard E. Behrman and Adrienne Stith Butler, ed, “Committee on Understanding Premature Birth and Assuring Healthy Outcomes,” Preterm Birth: Causes, Consequences and Prevention, (Washington, DC, Institute of Medicine of National Academies, 2006).)
Asthma Direct Medical Cost	$10 billion (Asthma and Allergy Foundation of America, “Asthma Facts and Figures,” http://www.aafa.org/display.cfm?id=8&sub=42 (accessed August 12, 2009).)
Total of Listed Health Costs	$304.8 billion
10% of Listed Health Costs	$30.48 billion
Mt Sinai Annual Savings**	$2.3 billion (Philip J. Landrigan, et al., “Environmental Pollutants and Disease in American Children: Estimates of Morbidity, Mortality, and Costs for Lead Poisoning, Asthma, Cancer, and Developmental Disabilities,” Environmental Health Perspectives, 110, No. 7 (July 2002): 721–8.)
Environment Canada***	$6.9 billion (American Cancer Society, “Costs of Cancer,” http://www.cancer.org/docroot/MIT/content/MIT_3_2X_Costs_of_cancer.asp (accessed October 5, 2009).)
Projected National Health Expenditure 2020	$5000 billion
.1% of Projected 2020 Expenditure	$5 billion

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Citations:

Clarifications:

1. The $5 billion health care cost figure was derived as follows: We used the estimates of the European Commission that 1 percent of health impacts can be attributed to chemical exposures, and that comprehensive reform of chemicals policy would reduce the associated health care costs by one-tenth, yielding an overall reduction in health care costs of 0.1 percent. Given other estimates we cite in the report of the fraction of chronic disease attributable to chemical exposures, this is a conservative estimate.
2. We then applied this 0.1 percent figure to the US Department of Health and Human Services’ estimate that the US will be spending $5 trillion annually on direct health care costs by the year 2020. We selected that year as one by which we could reasonably expect any reform to be largely or fully implemented. By using the phrase “every year” in the “Our Health Care Costs” section, we did not mean to imply that we did a separate calculation for every year or that the savings were exactly the same year after year.
3. In the sixth paragraph of the “Our Health Care Costs” section, the phrase “in current dollars” should not have been used to describe the hypothetical example of $30 billion in annual savings assuming a 10 percent reduction in the indicated costs. For simplicity, the figures drawn from different years were summed without first being adjusted for inflation, introducing a small error.
4. In Table 4 and the sixth paragraph of the “Our Health Care Costs” section, the report identifies $30.48 billion as the amount of health care costs saved assuming a 10 percent reduction resulting from improved chemical policy. The selection of 10 percent was meant only to provide a hypothetical example of resultant savings from a given level of reduction in health impacts due to chemical exposures.