A Partial Solution to our Health-Care Crisis

I have made a New Year's Resolution to keep my mind active by reading one book per month starting in Dec. 2009. In December I read "The End of Food" by Paul Roberts and in January I read "The End of Oil" by the same author. I checked out both books from the Cudahy Family Library. ( I strongly recommend both of these books).

In one section, Roberts talks about what he calls "Hidden Economic Costs'. For example, consider the cost of burning coal in coal-fired power plants. Coal is actually a very dirty fuel and produces massive amounts of pollution. Economists and power company executives will consider many factors when trying to determine the cost of using coal to produce electric power. The cost of purchasing the coal is an obvious cost. Other costs include the amortized cost of building the power plant, labor and production costs, plant maintenance, pollution abatement, etc etc etc.

There are, however, "indirect costs" that are more remote and not paid directly by the power company. Consider, for example, the effects of pollution. Suppose a person contracts lung cancer as a result of pollution from the power plant. The costs of treating the cancer will never be directly paid by the power plant even though the pollution from the plant contributed to or caused the cancer. Instead, the costs are paid by the health insurance company which must then raise their premiums to cover the increased number of lung cancer claims. There is also a cost of lost productivity; the person cannot work at their job while being treated for the cancer. If they have to retire early, there is the increased cost paid in disability or lost income.

This analysis made me think of the economic benefits of our parks and the "hidden" costs of neglecting or losing them. We all know there is an epidemic of obesity, diabetes, heart disease and stress-related illness in our nation. There is a "hidden" benefit to using the parks: Exercise prevents these things. By the same token, lack of exercise does lead to obesity, diabetes, heart disease, joint problems and stress. Health insurance companies must pay the costs of treating these illnesses--which is an enormous cost--and raise premiums as a result. We all know all how health insurance premiums have risen. They have been rising faster than inflation for a long time.

I would like to ask people to consider these costs. I also work out at the South Shore YMCA (especially in the winter) but not everyone can afford a health-club membership. Also, some people don't like to exercise indoors and prefer a more natural outdoor setting. Suppose we closed all the parks and sold the land to developers to build more stores. People would not have a convenient place to walk their dogs, to run or walk, to ride their bike or even to just spend a quiet moment away from the traffic, stress and bustle of life. Their health would decline. Stress-related illness, along with illnesses caused by too much food and too little exercise, would increase, leading to higher health-care costs, higher insurance premiums and an increased number of disability claims.

Is it possible our parks actually are saving us all money? It is probably impossible to calculate the true savings but I believe they are. One way of dealing with our nation's health-care crisis, for example, would be to continue to maintain our parks so that people can maintain their health and experience less health problems.

In economics, external costs are called "externalities". See the following for more info on external costs: http://en.wikipedia.org/wiki/Externalities#Negative