The authors argue that the increased medical costs that we faced between the years of 1960 to 2000 have been a good investment. They point out that the life expectancy in that time frame increased by 6.97 years. The increase in medical costs per person, divided by the increased expenditures per person, yields a cost-per-year-of-life-gained of $19,900.
The Value of Medical Spending in the United States, 1960–2000
D. M. Cutler, A. B. Rosen, and S. Vijan
Abstract | Full Text
Background The increased use of medical therapies has led to increased medical costs. To provide insight into the value of this increased spending, we compared gains in life expectancy with the increased costs of care from 1960 through 2000.
Methods We estimated life expectancy in 1960, 1970, 1980, 1990, and 2000 for four age groups. To control for the influence of nonmedical factors on survival, we assumed in our base-case analysis that 50 percent of the gains were due to medical care. We compared the adjusted increases in life expectancy with the lifetime cost of medical care in the same years.
Results From 1960 through 2000, the life expectancy for newborns increased by 6.97 years, lifetime medical spending adjusted for inflation increased by approximately $69,000, and the cost per year of life gained was $19,900. The cost increased from $7,400 per year of life gained in the 1970s to $36,300 in the 1990s. The average cost per year of life gained in 1960–2000 was approximately $31,600 at 15 years of age, $53,700 at 45 years of age, and $84,700 at 65 years of age. At 65 years of age, costs rose more rapidly than did life expectancy: the cost per year of life gained was $121,000 between 1980 and 1990 and $145,000 between 1990 and 2000.
Conclusions On average, the increases in medical spending since 1960 have provided reasonable value. However, the spending increases in medical care for the elderly since 1980 are associated with a high cost per year of life gained. The national focus on the rise in medical spending should be balanced by attention to the health benefits of this increased spending.
If you don't have access to the full article, you can see a synopsis at the University of Michigan Health System PR site, here. [Anytime their researchers (Rosen and Vijan, in this case) get a paper published in a big-impact journal, they make sure the world notices.]
The authors make a good point: whenever you hear someone arguing about the increased cost of something, it is important to balance that against the increased value.
The authors intended this to be a fairly focused article, looking just at one aspect of the whole health-care-cost debate. Bloggers, of course, are free to range a bit more widely.
As it happens, one of the newest SciBlings, David Dobbs, posted on a different aspect of the debate a couple of days ago: Single-payer and the cost game. Mike (The Mad Biologist) chipped in here. They point out that there are two sides to this game. When you look at the costs, you also have to look at the consequences of those costs. The consequences can have costs of their own.
I have a different point to make. When you talk about whether something is a good value, you have to look at the question of whether the same outcome could have been gotten for less, somewhere else. Skeptics may looks at the NEJM article, and point out that other countries have gotten gains in life expectancy, at much loser cost.
Another potential criticism is that it is difficult to know how much of the increase in life expectancy was attributable to health care. The authors did address this, but they acknowledge that it is difficult to know how large of an adjustment to make in the calculations. They settled on an assumption that 50 percent of improvements in longevity resulted from medical care. They appeared to take care to make sure their assumption was at least reasonable, but they admit that there is no way to know for sure.
Incidentally, their analysis also shows that a large part of the improved longevity resulted from decreased cigarette smoking.
The other point I would like to make about the debate is this: the paper addresses the value of health care expenditures. It is important to note that most of the public debate is not really about health care expenditures directly. Rather, the debate is about the cost of health insurance. While the primary component of the cost of health insurance is the cost of health care, the two are not the same.
What I would like to see the authors tackle next, is an analysis of the value gained by the overhead costs of the health insurance industry. That is, how much effectiveness (or efficiency) does are health care system get for all the money spent on insurance overhead?
Comments
$19K, or any direct price for an extra year of life would seem cheap--I imagine the only ones who wouldn't pay would be those who couldn't.
I think it is interesting to think of who subsidizes who in all this -- the $121K to add an extra year to a 65+ person might be subsidizing some fraction of months onto the sub-65-ers. But if we're just optimizing for life expectancy, maybe we could buy 4 years for the 15 year-olds instead.
Trade-offs, substitutions and all seem like horrible questions in health care.
Posted by: Dave | September 3, 2006 1:31 AM
Here in the US, the interplay between manufacturers, health care deliverers and consumers, all of whom behave irresponsibly, has created a medical dystopia.
Physicians tend to practice a very aggressive form of medicine that is most appropriate for medical crises. They show little to no understanding, let alone respect, for vis medica naturae, and consequently employ very powerful and dangerous interventions to treat even self-limiting health problems. This results in many medications being prescribed for the sole purpose of controlling side effects from other meds.
Most medical manufacturers are in it strictly for the money. They stoke consumer demands for the very latest, most expensive meds with little or no net benefit when compared to last year's (expired patent) model. And they employ very smart people in their marketing departments who know how to push the buttons of MDs and consumers. When they have a drug on the shelf that isn't effective against any known disease, they manufacture new diseases where the drug will be "effective." They lie (or at least, don't tell what they know) about the risks associated with their products. And despite all this, they operate with profit margins that loan sharks can only dream about.
Consumers are willing participants in the charade, claiming "entitlement" to whatever the latest medical fad might be -- the more expensive, the better. The one thing consumers will not tolerate is leaving their doctor's office without a prescription. This is just a perverse form of keeping up with the Joneses.
And what do we get for committing about a sixth of our GDP to this game? Well, if you look to the WHO statistics on health status around the world, we are _marginally_ ahead of countries that spend very little on medical care, but do manage to provide decent public health services. In other words, if you have a reasonably clean environment, good nutrition, and then provide decent prenatal and postnatal care (up to the age of about 5 or 6), there's not a lot more benefit (on the scale of populations) provided by US style "healthcare."
Posted by: bob koepp | September 3, 2006 12:31 PM
Dr. Koepp,
I appreciate your comments. In fact, I would like for you to consider starting your own blog. I've long thought that there would be a place for someone to keep a blog that posts commentary on all the open-access articles published by NEJM, for example.
Anyway, I don't think I can agree that this is a medical dystopia, but I sure do think there are some pretty screwed up aspects to our system. The perversion of the drug-development priorities is one good example, as is the empahsis on acute care, high-tech interventions.
Fortunately, there is a trend toward having medical students spend less time in tertiary-care hospitals, and more time in community hospitals or outpatient clinics. In those settings, they are more likely to be exposed to the benefits of watchful waiting and less aggressive treatments.
Also, there is some evidence that primary care docs are getting to be better at counseling patients to lay off antibiotics when they are not needed. Granted, the effects still are fairly anemic, but I do think there is a positive trend. The growing use of hospice care indicates a trend away from spending a gazillion dollars on health care in the last few months of life.
The point about entitlement is a good one, but I am at a loss as to how to address the problem on a system-wide scale. Training medical students to say "no" to patients is difficult, because it is hard to do that when you are not yet in a position of authority.
Posted by: Joseph j7uy5 | September 3, 2006 9:36 PM