How the Clean Air Act Has Saved $22 Trillion in Health-Care Costs

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In an excerpt from The Silent Epidemic: Coal and the Hidden Threat to Health (MIT Press, September 2012), neurologist Alan H. Lockwood examines how even if the entire cost of complying with the Clean Air Act were assumed by the federal government, we would still be vastly ahead financially.

smokestacks-615.jpgWisconsin Department of Natural Resources

As a part of the 1990 amendments to the Clean Air Act, Congress required the EPA to conduct "periodic, scientifically reviewed studies to assess the benefits and the costs of the Clean Air Act." In other words, Congress wanted to know whether the Act "was worth it." The initial report in what is now a series was released in October 1997. The evaluation provided a detailed retrospective analysis of costs and benefits from the years 1970 to 1990 and showed that the overwhelming benefits obtained from compliance with the Act far outweighed the costs of implementation.

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In the analysis the EPA used dose-response data from the scientific literature available at the time to estimate the effects of a given increment or decrement in the concentration of a given pollutant in the air. They combined these data with values associated with a given health outcome from economics data, reported in terms of cost per case, episode, symptom-day, and so forth. These data were combined with actual measurements of air quality and estimates of air quality if the controls had not been in place. Using the modeling strategies available at the time, the EPA estimated that the Act resulted in a 40 percent reduction in sulfur dioxide, a 30 percent reduction in oxides of nitrogen, a 50 percent reduction in carbon monoxide, and a 45 percent reduction in total suspended particles. The reductions in fine and larger particles were thought to be on the order of 45 percent, based on measurements of total suspended particles. Specific monitoring for particulate matter fractions had not been instituted at that time, so an extrapolation from total suspended particles was required.

The improvements in air quality were thought to be primarily due to reductions in particulate matter and ozone. In this retrospective analysis, the modeling predicted an annual reduction of 184,000 premature deaths, 674 cases of chronic bronchitis, over 22 million lost days at work, and other outcomes.

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The EPA concluded that the total monetized health benefits from the Act during the 20-year period ranged between $5.6 and $49.4 trillion. The central estimate for benefits was $22.2 trillion. During that period, the costs to comply with the act were estimated to be approximately $0.5 trillion. Thus the net direct benefits were between $5.1 and $48.9 trillion, with a central estimate of $21.7 trillion. The benefit-cost rations were 43.4:1 for the central estimate and 11:1 and 97.8:1 for the extreme estimates. Who among us has an investment that has performed this well?

The second prospective EPA cost-benefit analysis was released in March 2011. The results of this study reflect the vast improvements in our understanding of the effects of particulate matter on the risk of premature death. These improvements are a direct result of the publication of large epidemiological studies and emphasize the importance of continuing research in this area. In addition the second prospective report adds several endpoints such as changes in visibility due to improved air quality, a better understanding of the relationship between peaks in fine particle concentrations and acute myocardial infarcts, and better mathematical modeling of air quality. Any way one may choose to interpret these data, benefits consistently outweigh costs by very large margins.

The projected benefits are attributed primarily to reductions in the concentrations of ground-level ozone and fine particles. The EPA estimates that in 2020 the Clean Air Act amendments will result in a 17 percent reduction in the direct emissions of small particles, or a reduction from 6,368 to 5,297 tons. While reductions in the emission of these primary particulates are a positive development, the most significant reductions in the total concentration of fine particles are attributed to reducing sulfur dioxide emissions.

Reductions in premature deaths are the most important source of the monetized benefits associated with the Clean Air Act amendments. By the year 2020 the scenario predicted by the amended Act avoids 230,000 premature deaths among adults age 30 and above each year. The model also predicts avoiding the deaths of 280 infants each year. The monetary value of these two causes was set at $1.7 trillion for adults and $2.5 billion for infants. Reductions in the number of cases of bronchitis, asthma, myocardial infarction, and other health effects contribute to the predicted $2 trillion in annual benefits by the end of this decade.

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Every study that has examined benefits and costs associated with curtailing sources of air pollution has shown that the benefits outweigh the costs by huge margins. In its second prospective report the EPA makes the following statement:

... the results suggest that it is extremely unlikely that costs of the 1990 Clean Air Act Amendment programs would exceed their benefits under any reasonable combination of alternative assumptions or methods which could be identified. Even if one were to adopt the extreme assumption that the fine particle and ozone pollution have no effect on premature mortality risk -- or that such risk reductions occur but they have no value -- the benefits of reduced, non-fatal health effects and improved visibility alone add up to $137 billion for the year 2020, an amount which is more than twice the estimated $65 billion cost to comply with all 1990 Clean Air Act Amendment requirements in that year.

According to data cited by the Council of Economic Advisors in 2009, 18 percent of Americans under the age of 65 are Medicare or Medicaid beneficiaries or receive health care from the military, 59 percent have employer-sponsored health insurance, and 16 percent are not insured. For Americans above the age of 65, the Centers for Disease Control report that 94 percent are enrolled in Medicare. In other words, large portions of all health care costs are borne by federal, state, and municipal governments in addition to employers and those who make out-of-pocket health care expenditures. It follows that health care savings due to improved air quality are realized by all of these groups.

In what might be considered to be a modest proposal, one could conclude that even if the entire costs associated with complying with the mandates of the Clean Air Act were to be assumed by the federal government, the government would be ahead financially now and in the future.

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Alan H. Lockwood, MD, is a professor emeritus of neurology and nuclear medicine of the University at Buffalo. He is the lead author of a Physicians for Social Responsibility report on coal's adverse health effects.

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