By Bailey Kennedy
With the pain of tax day now a month behind us, it’s worth talking about something that we don’t often associate with the tax code: health. It’s not easy to imagine that the tax code could truly do much to make Americans happier and healthier — but there are ways that it could. Federal and state tax codes could both be reformed in small ways that might encourage Americans to make healthier decisions.
The easiest way that this might happen is by allowing Americans to claim a deduction for expenses that they spend on activities designed to promote health and wellness. To a certain extent, this happens already. The medical expense deduction allows Americans to deduct what they spend on medical and dental care, as well as on certain medical devices, like glasses. However, this deduction is really only available to Americans who have truly high medical expenses; the medical expense deduction only covers expenses that exceed 10% of one’s income. A person whose medical expenses amount to a few pairs of glasses and a new contact prescription every year will certainly not reach this threshold.
Other areas where the government allows Americans to deduct expenses tend to be reactive, rather than proactive. For example, Americans can deduct the money that they spend on weight-loss programs — if they are already obese. The types of expenses that are covered are also limited. For example, bariatric surgery is covered, but diet food is not. Though tax deductions are probably not a deciding factor for most people in making health decisions, it does seem rather perverse that the government has chosen to structure its allowable deductions in a way that arguably incentivizes steps like surgery over slower lifestyle changes. Similarly, smoking cessation programs are covered, but drug store products like Nicorette are not. This seems to indicate that the government has a specific vision of the steps that Americans should take to get healthy — and that simply isn’t a vision that will work for everyone.
More importantly, the current medical expense deduction tends to cover the type of care that is truly essential, rather than proactive steps that Americans might take to maintain their health. Gym memberships, for example, aren’t tax deductible in most circumstances. But given the enormous costs that obesity places on the health care system, it arguably would be preferable for the government to use small incentives to encourage people to take steps to improve their physical fitness, rather than waiting to foot the bill when people need more active health interventions. It’s also possible to imagine more creative forms of deductions — perhaps the government could issue a standard $500 refund to people who manage to move from a BMI designated overweight or obese, to a BMI designated normal, and maintain the new weight for at least 6 months. While administering this would present complications, it’s not obvious that it would necessarily be significantly more difficult to administer a program like this than it already is to administer many arcane provisions of the tax code.
One objection to this proposal might be that it would benefit people who can already afford to stay healthy and fit, while doing little for people who struggle to access a healthy lifestyle. If a lawyer wants to spend thousands of dollars a year on an Equinox gym membership, does it really behoove the rest of America to subsidize that? But healthy behaviors should be encouraged for all Americans. Just because this proposal might not help everyone equally does not mean that it should not help anyone at all.
Additionally, although many of the benefits of this program might be concentrated at the upper end of income brackets, it would arguably be an effective way to help people who are just at the threshold of being able to comfortably afford fitness programs. For someone who is struggling to make ends meet and working 50 hours a week, a tax deduction will probably not help with fitting the gym into a daily routine. But for someone who is a little bit more comfortable in their financial life, a tax incentive might help nudge a healthier decision.