HealthCare Economics

Answer

A Proposed Rule on Revision of Nutrition Labels

Nutrition labeling is a requirement established to ensure that all packaged foods display information of the major food components. Nutrition labels intend to allow consumers to choose healthier foods (Ferdman, 2015). The clarity as well comprehensiveness of the food labels is key to ensuring that customers make an informed decision on the types of foods they are going to purchase. The FDA has in the recent past proposed significant changes to nutrition labels based on various aspects. Grossman (2017) enumerate such changes as new nutrition facts labels for packaged foods which will reflect latest scientific information and include the link between the diet and chronic diseases which include heart diseases an obesity. Additionally, the new labels proposed makes it easier for the consumers to make better as well as informed decisions when making purchases (Hieke & Taylor, 2012). On September 29^th a proposed rule was released by FDA which sought to extend the compliance dates for Nutrition Facts and Supplement Facts labels.

The proposed changes in the nutrition labels were necessitated by a need to change the existing labels which are more than 20 years old. The FDA thought it wise to ensure that consumers have access to recent as well as accurate information about the nutritional components of foods that they eat. According to Ferdman (2015), the proposed changes will be based on not only scientific data but also on the findings of new nutrition and public health research. Additionally, the proposed rules are pegged on the more recent dietary recommendations of expert groups as well as the public. The changes will, therefore, be critical in making customers make healthy food choices and understand the adverse effects of eating some foods. I believe that the FDA proposed amendments to nutrition labels will be cost-effective regarding healthcare due to decreased rates of obesity and heart diseases. As such implementing the proposed changes will be good for the customers, the economy, and the country at large.

A clear display of calorie count per serving on nutrition labels will allow the consumer to better regulate the quality and quantity of caloric intake on a daily basis. This display will lower cost from diet-related illnesses (Grossman, 2017). One of the reasons as to why the current labels have not been useful is because they have failed to be clear and customers have not been using them in making their purchasing decisions. Additionally, Lee (2016) assert that the current food labels have been ineffective as they have not been comprehensive and have only contained some food components and not others. The proposed changes will ensure that customers make healthy decisions as they will have all the scientific information that they need and hence be informed before they decide to purchase and eat some types of foods. The new changes will aid the customers in regulating their uptake of calories by monitoring their qualities each day (Lock et al., 2010). Such activities will ensure that they do not suffer from conditions such as diabetes and cardiovascular complications.

The current rate of obesity in American is alarming and calls for measures to be taken to reduce the causative factors. According to the National Health and Nutrition Examination Survey (NHANES), in 2014, more than one in every three adults were considered to be overweight. Additional, in the United States, more than two in every three adults who were overweight had obesity. Close to one in every 14 adults were considered to have extreme obesity. In children, one in every six aged between 2 and 19 years had obesity (NIDDK, 2017). 70.2 percent of men and women are either overweight or obese with 73.7 percent of those being men and 66.9 percent women. The primary causes of this high prevalence of obesity include physical inactivity and the lifestyles of people. Specifically, the intake foods rich in calories results in the high numbers of obesity. The consequences of high obesity prevalence include cardiovascular complications which result in high healthcare costs and low productivity.

The measurement of obesity is done through an examination of body mass index (BMI). The intake of calories results in BMI being higher than 30. In the US, many people exceed their caloric intake. Specifically, the Dietary Guidelines for Americans 2010, show that men who are 19 years and above reported taking an average of 2649 calories daily while women had an average of 1785 calories (Mail Online, 2017). However, the same report states that the actual statistics may be higher. The number of calories taken by individuals in the US differs with the ages of individuals as well as their physical activity. According to the US Department of Agriculture Guidelines, an average American adult should take 1800-2400 calories per day while American adult men should take 2000-3000. However, by 2010, according to Mail Online (2017), 20 percent of America consumed more calories than they required. Such calories were consumed from fast food joints and restaurants. Such behaviors have been caused by the failure of the food labels to have adequate information which can enable them to make informed decisions.

            If Food Company labeling is highly regulated, it should force these companies to produce more nutritious products. Although a healthier product may warrant higher costs on consumers in the form of tax dollars and higher food prices, I believe in the long run; this will be cost-effective due to the lower doctor and hospitalization costs. The proposed labeling requirements will ensure that information contained on the food labels is more comprehensive and includes all the essential nutrients contained in the food (Lee, 2016). Such a move will ensure that food companies are careful not to produce foods which contain high amounts of calories as they will risk getting losses. As a result, meals will be nutritious to the benefit of the consumers. One of the ways that such a move would be beneficial is that it will lead to the consumption of nutritious meals and hence save the costs of healthcare (Anand et al., 2015). Payments such as Medicare and Medicaid will be reduced, and the economy of the US will remain stable. Lower rates of hospitalization will result in not only more savings but also a higher productivity.

At the local grocery store, packaged foods that are more affordable tend to contain higher amounts of calories, sodium, saturated fats, and sugars. High food costs limit the choice of the average American regarding a healthier food product (Lock et al., 2010). Ordinary Americans cannot afford foods which contain higher amounts of essential nutrients. As such, they end purchasing unhealthy foods due to their economic conditions. Food companies take advantage of the cost implications of their products to provide unhealthy foods to the average Americans. With the proposed amendments, such problems will be cured as organizations will be forced to provide diet which is rich in critical nutrients but fewer calories (Hieke & Taylor, 2012). The choices that average American make are limited as they can only decide on purchasing what they can afford. Such limitations necessitate the proposed policy changes which will ensure that the choices they made are comprehensive in displaying nutritional components of foods.

Statistics show lower-income families who are purchasing these cheaper and less quality food products have higher rates of obesity. According to Lee (2016), although they may be saving money in the grocery line, they are incurring far more medical costs in the long run. The mindset of the low-income families is that they will save more by purchasing food with high calories which are cheap and align with their budgets. It is not that they do not want to buy healthy foods but are forced by their financial situations to eat foods which contain high amounts of calories and hence compromise on their health. Anand et al. (2015) assert that such actions have resulted in their hospitalizations which have resulted in high costs of healthcare. The savings that they have made on the grocery stores have been consumed by healthcare costs which come from conditions such as cardiovascular diseases and diabetes. It is, therefore, critical that changes are made which will ensure equal access to healthy foods irrespective of an individual’s level of income and their social status.

Although FDA’s proposed revision of nutrition labels on food products may weigh on the taxpayer temporarily, in the long run, a healthier and well-informed consumer will rely less on health insurance entitlements (Medicaid and Medicare) and in turn will lower taxes in that regard. Notably, Lock et al. (2010) opine that new and improved nutrition labels will require funds for facilitation as well as the offering of subsidies to food companies. Such costs will be shared between the companies and the government. Rubin (2016) state that the provision of healthy foods is an oversight that the government should take as a priority to ensure that the American citizens stay healthy. Public health is key to ensuring that populations do not get hospitalized. Tax increases will become apparent if the proposed nutrition labels are implemented. However, with time, the same will be forgotten with the massive benefits which will arise in the form of reduced healthcare costs.

If the proposed FDA revisions on food labels go through, taxes are likely to increase. For instance, it is estimated that the one-time cost of the new labeling proposition for American consumers will be as high as $3.8 billion. Specifically, the price will be $32 per household which are results of a study conducted by Corn Refiners Association based in Washington (Rubin, 2016). Other costs would result in increased retail prices of the foods including the segregation of ingredients, formulation of foods, as well as the testing of the biotech content in the foods. It is likely that the costs incurred by food processors in America would result in a 1.76 percent increase in the average food prices in the first year of the implementation of the proposed revisions and going on, a rise of 1.61 percent. The Washington State Academy of Sciences, Olympia adds that the other labeling costs will arise from costs of compliance and certification.

Despite the massive costs which will be incurred in the first year after the implementation of the FDA’s proposed changes, benefits will be realized later. Notably, due to healthy foods being offered in the grocery stores, customers will be healthier as they will not have to deal with conditions arising from the intake of unhealthy foods (Lewis et al., 2009). Reduced number of hospitalizations translates to low costs of healthcare. Notably, Medicare and Medicaid costs will decrease because the number of people being admitted and treated will be in decline. The benefits will be to the taxpayers who have to make contributions every month to Medicare and Medicaid (Hieke & Taylor, 2012). Additionally, the government, being the provider of healthcare services, as well as the body responsible for paying healthcare costs, will direct the funds to other areas of the economy. Decreased use of the Medicare and Medicaid health care plans reduces healthcare costs, and the government saves for other activities of the economy.

In conclusion, FDA’s proposed changes to the existing food labeling regulations are meant to provide comprehensive labels and hence ensure that customers make informed purchasing decisions. The changes have been necessitated by increased rates of obesity which have resulted in high cases of diabetes and cardiovascular complications. Low-income customers have to purchase cheap foods rich in calories to save on healthcare costs. However, with the new labeling regulations, costs of healthcare will go down despite the high initial tax incurred during implementation. Although the costs of certification and compliance will result in increased retail prices for food at first, in the end, healthy meals will be provided, and cases of hospitalizations will decrease.