Death and Taxes: Why longer lives cost money



Political short-termism trumping best practice in the NHS


The IEA's 2015 Progress Report

How healthy living is costing us more in the long term and Taxes December 2015.pdf

The British population is getting older. In 1948, life expectancy was 68. Thanks to healthier lifestyles and medical advances, it is now 81 and is expected to rise to 87 by the end of the next decade. The rapid growth of the elderly population will put a strain on healthcare, social care and welfare provision.

The Office for Budget Responsibility predicts that health spending in the UK will rise from 6.2 per cent of GDP in 2019/20 to 8.0 per cent of GDP in 2064-65. Spending on long-term care is expected to nearly double from 1.2 per cent of GDP to 2.2 per cent of GDP in the same period, and spending on state pensions will rise from 5.1 per cent of GDP to 7.3 per cent of GDP.

Despite the costs associated with the ageing population, it is sometimes claimed that people who are at risk of premature mortality due to lifestyle factors are a ‘drain on the taxpayer’. Smokers, drinkers and the obese, in particular, are blamed for rising costs to the general taxpayer.

These claims do not stand up against evidence. If one looks at the lifetime costs to all public services, it is clear that the ‘longevity-related’ costs of healthier people are considerably higher than the ‘lifestyle-related’ costs of less healthy people. Acute healthcare costs are usually higher, long-term healthcare costs are invariably higher, and welfare costs (eg. pensions) are vastly higher.

End-of-life costs are similar regardless of the age at which a person dies, but older people consume additional years of healthcare, thereby pushing up their lifetime costs at a time when they are economically inactive.

In recent decades, healthier lifestyles and longer lifespans have been associated with a rise in the number of years spent in poor health. There has been a rise in the number of people suffering from chronic and non-fatal conditions which are often expensive to treat and manage. Medical science and healthier living do not eradicate the costs of disability and disease, they merely postpone them and pave the way for more expensive non-fatal conditions amongst very old people.

Long-term healthcare and nursing home costs are strongly associated with age and cannot be driven down by healthier lifestyles. Pensions and social care costs dwarf the healthcare costs associated with ageing and are intractable in an ageing society. These costs cannot be mitigated by policies that encourage healthy lifestyles. On the contrary, healthy lifestyles directly lead to higher costs by increasing the size and age of the retired cohort.

There is strong and consistent evidence that smokers incur less public expenditure than non-smokers. People who do not smoke have lower annual healthcare costs but higher lifetime costs due their longer lifespans. They also incur much higher social security costs as a result of their extra pensionable years. The general taxpayer therefore saves money if other people smoke.

Evidence on the full costs and savings associated with obesity is scanty and mixed. If obesity reduces life expectancy by five to ten years, as some claim, it is likely to be cost-saving for the same reason as smoking is cost-saving. However, if it shortens lives by only a year or so, the healthcare costs associated with obesity probably outweigh the savings from premature mortality. Like smoking, obesity may be cost-saving.

There is evidence that drinkers do not consume more healthcare than non-drinkers, but accurate statistics for the UK are not available. It is clear, however, that revenues from alcohol duty comfortably exceed all alcohol-related costs to public services.

Long term planning of public finances should not be based on the fantasy that people can live longer lives without incurring additional costs, nor can it be based on the delusion that healthcare costs will fall if unhealthy lifestyles are stamped out. The reality is that it is healthy, not unhealthy, lifestyles that have driven up costs and they will continue to do so. It makes no sense to blame escalating public sector budgets on people whose lifestyle choices tend to be cost-saving.

Read the press release here

2015, Discussion Paper No.67

Fullscreen Mode

Head of Lifestyle Economics, IEA

Christopher Snowdon is the Head of Lifestyle Economics at the IEA. He is the author of The Art of Suppression, The Spirit Level Delusion and Velvet Glove; Iron Fist. His work focuses on pleasure, prohibition and dodgy statistics. He has authored a number of papers, including "Sock Puppets", "Euro Puppets", "The Proof of the Pudding", "The Crack Cocaine of Gambling" and "Free Market Solutions in Health".