!!Ted Buckley is the Head of US Government Relations and Public Affairs for Shire in Washington, D.C. Ted is responsible for the development and execution of advocacy, education and public healthcare policy for Shire in the U.S.

Prior to joining Shire, Ted Buckley was the Chief Economist at Bloomberg Government, where he led the analytics team. The analytics team conducts research to analyze the impact of government actions, whether legislative or regulatory, on business.

He previously was the Director of Economic Policy at the Biotechnology Industry Organization (BIO). In this role, Dr. Buckley was responsible for examining the economic impact of policy proposals on the biotechnology industry. In addition he conducted and commissioned analyses that support the creation of an environment where innovation can thrive.

Dr. Buckley worked as a consultant at McKinsey and Company where he advised a variety of companies including health insurance and pharmaceutical companies.

Prior to joining McKinsey and Company, Dr. Buckley was the first National Center for Health Statistics (NCHS)/AcademyHealth fellow, where he completed his dissertation research.

Before graduate school, Dr. Buckley worked in a range of fields including IT consulting, operations and logistics management and served as a live-in assistant for mentally handicapped adults in L'Arche communities in both Canada and Germany.

Dr. Buckley received his BA in Mathematics from the University of Pennsylvania, his MA and his PhD in Applied Economics from the Wharton School of Business, University of Pennsylvania.

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Wellness Tax Effect & Price Elasticity

Upon analyzing the DC Councils proposed implementation of the tax on fitness and wellness services, I believe the tax will negatively modify behaviors we should be encouraging. A 5.75% sales tax on fitness and wellness services is sufficiently high enough to negatively impact people purchasing gym memberships, yoga classes, and other wellness services.

Evidence shows that price is a strong variable in a current or prospective buyer:

A study that examined retention rates at a gym surveyed former gym members. Of those surveyed 84% of those that dropped their gym membership said that cost was a factor. 1

Surveys of local gyms show that between 11% and 27% percent of people who cancelled their memberships quoted price as their reason for canceling.

If price does not affect a persons decision to purchase a gym membership, than why do gyms run specials to increase membership?

If price does not affect a persons decision to purchase or retain a gym membership, why dont gyms raise their prices?

There is no reason to believe that gym memberships do not follow normal economic rules. That is, as price increases, demand decreases:

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Price

Quantity

Demand

Supply (before the tax)

Supply (after the tax)

QQ

PP

As price increases from P to P, quantity demanded declines from Q to Q

http://www.sportseconomics.com/Images/PDF/SE_Perspectivevol3.pdf 1

! Many companies recognize the benefits of gym membership in keeping their employees

healthy and subsidize gym membership because they know that price matters!

The District of Columbia needs to encourage, not discourage, physical activity

The obesity rate in Washington, DC in 2012 was 21.9%. By comparison, in 1990 no 2

state has an obesity rate above 14%. 3

Overweight and obese people have increased risks for the following conditions: 4

o Coronary heart disease o Type 2 diabetes o Cancers (endometrial, breast, and colon) o Hypertension (high blood pressure) o Dyslipidemia (for example, high total cholesterol or high levels of triglycerides) o Stroke o Liver and Gallbladder disease o Sleep apnea and respiratory problems o Osteoarthritis (a degeneration of cartilage and its underlying bone within a joint)

There are medical and other costs associated with obesity:

o Obese employees miss more days from work due to short-term absences, long-term disability than non-obese employees. 5

o Medical spending is $2,741 higher for obese individuals than for individuals who are not obese. 6!

Exercise is beneficial and should be encouraged

Exercise can help an help people stay at a healthy weight or lose weight. 7

exercise increases bone strength, decreases stress, improves brain function and battles dementia, combats Type 2 diabetes, aids recovery from cancer, increases life expectancy and decreases late-life disability. 8

Cardiovascular risk factors are increasing, and the No. 1 risk factor is obesity," Dr. Sharon Mulvagh, director of the Women's Heart Clinic at the Mayo Clinic, told me. A

http://www.fasinfat.org/states/dc/ 2

http://www.fairfoodnetwork.org/connect/blog/obesity-and-rising-cost-healthcare-america 3

http://www.cdc.gov/obesity/adult/causes/index.html 4

http://www.hsph.harvard.edu/obesity-prevention-source/obesity-consequences/economic/5

Crawley J, Meyerhoefer C. The medical care costs of obesity: an instrumental variables approach. J Health Econ. 2012; 631:219-30.

http://www.hsph.harvard.edu/obesity-prevention-source/obesity-causes/physical-activity-and-7obesity/

http://articles.chicagotribune.com/2013-07-10/health/sc-health-0710-fitness-pay-for-8gym-20130710_1_hsas-health-care-health-savings-account

Boston Marathon qualifying runner, Mulvagh is a big advocate of exercise to dramatically reduce risk of disease and promote longevity. "More and more evidence is accumulating to prove what common sense already dictates. There are great studies out now about how exercise increases longevity as well as reduces cardiovascular disease risk." 9

!Edward Buckley

http://articles.chicagotribune.com/2013-07-10/health/sc-health-0710-fitness-pay-for-9gym-20130710_1_hsas-health-care-health-savings-account