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Climate Change: The Fiscal Risks Facing The Federal Government/Air Quality and Health Care

< Climate Change: The Fiscal Risks Facing The Federal Government


Additional health expenditures due to climate change 2100.png

By 2100, tens of thousands to hundreds of thousands of additional Americans could suffer from illnesses due to the effects of climate change on air quality, requiring billions of dollars in additional Federal health care spending each year. This is just a small portion of the total fiscal risk posed by the health impacts of climate change.

Climate Change and Health CareEdit

The USGCRP’s Climate and Health Assessment further established that climate change is a significant threat to the health of the American people. Climate change endangers our health by affecting the nation’s food, water, air quality, weather, and built and natural environments.

Increased extreme temperatures are projected to increase heat-related death and illness, which is generally expected to outweigh any benefits from a reduction in extreme cold and cold-related death and illness (USGCRP, 2016). Changing weather patterns, including warmer temperatures, and increased incidence of wildfire are also projected to increase exposure to two local and regional air pollutants with significant health impacts—fine particulate matter (PM2.5) and ozone—across large swaths of the country (Garcia-Menendez et al., 2015). These pollutants are associated with premature mortality as well as increased incidence of non-fatal respiratory and cardiovascular disease. Climate change is also expected to alter the risk of vector-borne disease by changing the distribution of existing disease vectors and causing new vector-borne pathogens to emerge. Risk of food-borne illness may grow with increased exposure of food to certain pathogens and toxins. Risk of exposure to water-borne pathogens and algal toxins may also increase as water temperatures rise (USGCRP, 2016).

All of these pathways can cause an increase in both premature death (mortality) as well as non-fatal health problems (morbidity). Higher morbidity rates in particular cause health care utilization to grow over the long-term, increasing total health care expenditures by private insurers as well as public programs like Medicare and Medicaid.

In order to identify the full breadth of Federal fiscal risk related to climate change and health, more work is needed by climate scientists, epidemiologists, and others to quantify potential morbidity outcomes from the broad set of climate change health effects pathways. Despite a rapidly growing body of scientific literature, quantitative projections are not available even for several health effects for which the link to climate change is clear—for example, Lyme disease or West Nile virus (USGCRP, 2016).

In this assessment, OMB and CEA examined just one health effects pathway where quantitative projections are available: the impact of climate change on outdoor air quality and associated health effects. Given the breadth of health effects pathways, including several that could prompt appreciable increases in health care utilization, the results of this assessment reflect a small portion of the total health-related fiscal risks of climate change.

Risk AssessmentEdit

By late-century, Federal health care spending could increase by billions of dollars each year, as tens of thousands to hundreds of thousands of Americans suffer from illnesses due to the effects of climate change on air quality—including non-fatal heart attacks, emergency room visits for asthma attacks, and hospital admissions for respiratory and cardiovascular conditions. The mean estimate of the analysis conducted for this assessment is an increase of roughly $8 billion in Federal spending, with a range of roughly $1 billion to $20 billion in 2015 dollars,[1] the equivalent of approximately $1.2 billion per year ($100 million - $3.2 billion) in today’s economy.

Due to available modeling, this estimate reflects increased costs in an unmitigated climate change scenario compared to a mitigation scenario, rather than current weather conditions as in the other assessments in this report. The full impact by late-century compared to current weather conditions is likely to be larger, although air quality modeling indicates that GHG mitigation results avoids the vast majority of increases in average population-weighted annual PM2.5 and ozone concentrations that would otherwise occur by late-century (Garcia-Menendez et al., 2015).

However, the mid-century estimates likely understate the full fiscal burden compared to current conditions by a wide margin, as mitigation avoids roughly less than half of the increases in population-weighted annual PM2.5 and ozone concentrations that would occur by 2050 due to unmitigated climate change. The estimated mean effect in mid-century is nearly $600 million each year, with a range of $21 million to $1.5 billion, they equivalent of approximately $100 million per year ($10-$700 million) in today’s economy. The full effect relative to current weather conditions could be twice as large.

This assessment builds on Garcia-Menendez et al. (2015), who evaluated the impact of climate change on U.S. air quality and health in mid- and late-century using the same model that the U.S. Environmental Protection Agency (EPA) uses to evaluate the health effects of air quality regulations. Garcia-Menendez et al. (2015) quantified the extent to which climate change would significantly affect ozone and PM2.5 concentrations in the United States, due to a number of feedbacks between climate and air pollution. They also examined the potential rise in health problems associated with these local and regional pollution increases related to climate change. Although the final published study was limited to mortality results due to the fact that premature mortality accounts for the overwhelming majority of total economic damages from air pollution, the study authors also estimated impacts of climate-related air pollution increases on morbidity endpoints (non-fatal heart attacks, respiratory hospital admissions, cardiovascular hospital admissions, and emergency room visits for asthma) and provided these new results for this assessment. Estimated morbidity results were then converted to expected changes in Federal health care costs. For more information on the approach, see Garcia-Menendez et al. (2015) and the Technical Supplement accompanying this report.

Key Limitations and UncertaintiesEdit

Health outcomes attributed to climate change are sensitive to assumptions and limitations in underlying global change and atmospheric chemistry models, and the concentration response functions that translate pollution exposure levels to expected health outcomes (USGCRP, 2016). For example, although Garcia-Menendez et al. results show significant increases in PM2.5 concentrations, the strong influence of changes in precipitation and atmospheric mixing on PM2.5 levels—combined with variability in projected changes to those variables—has prevented consensus in the scientific literature with regard to the net effect of meteorological changes on PM2.5 levels in the United States. In addition, the simulation used here does not factor in the possibility of future changes in air quality regulations,[2] population distribution, healthcare or other technology, or human behavior that may impact the extent and pattern of air pollution exposure across the United States and associated morbidity outcomes. For example, Americans may migrate to areas of the country with cleaner air, install air conditioning in greater numbers, or make greater efforts to stay indoors when air quality is poor.

The model also does not capture the effects of climate-related increases in severe wildfire on PM2.5 and ozone formation, morbidity outcomes like acute bronchitis that do not result in hospitalization but may still lead to significant health care costs, the effects of climate-related changes in airborne allergens on allergic disease, or changes in health care costs associated with premature mortality. Changes in wildfire in the western United States in particular could have a significant impact on PM2.5 concentrations (Spracklen et al., 2009). Also not captured are the possible effects of warmer temperatures on human physiological responses to air pollution—for example, increasing the risk of mortality from exposure to a given level of ozone on warmer days. These assumptions and limitations are generally consistent with the existing peer-reviewed climate and health assessment literature.

In addition, estimates of fiscal burden attributed to modeled health outcomes may be sensitive to several economic and policy assumptions such as Medicare enrollment growth rates and health care cost growth. However, even significant changes in these assumptions (e.g., reducing Medicare enrollment growth to match total population growth, or toggling excess cost growth between -1 percent and 2 percent) do not on their own alter the order of magnitude of results. This assessment also does not consider the effect of modeled health outcomes on Federal subsidies to private insurance coverage, or changes to Federal health care policy or economic trends that may impact the Federal share of health care costs—except to the extent that these changes or trends are represented in the health care cost and enrollment growth assumptions used.

  1. This range reflects differences in the way PM2.5- and ozone-related morbidity results were reported for this assessment. The range reflects 95 percent of the distribution of results for PM2.5, and 90 percent of the distribution of results for ozone.
  2. Although the Garcia-Menendez et al. estimates used in this assessment draw on a mitigation scenario, the study was designed to isolate the “climate penalty” on air quality and did not include the benefits associated with simultaneous reductions in co-emitted pollutants in the mitigation scenario.