CLIMATE CHANGE: THE FISCAL RISKS FACING THE FEDERAL GOVERNMENT
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 Assessment
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
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- ↑ 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.
