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Growing Health Care Costs: Worth the Price?

healthcare cost v. benefit



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The increasing sums of money spent on health care in the U.S. over the past 40 years have provided good bang for the buck, even if some of the spending was wasteful, researchers report. The strength of that bang seems to be waning over time, however, especially for the elderly.

The health care debate typically hinges on the finding that the U.S. spends twice as much on medical care as other industrialized nations and yet its citizens are not as healthy as their global peers. "We spend a lot less time talking about whether health is improving with that spending," says health policy researcher Allison Rosen of the University of Michigan Health System. Hoping to provide some measure of the value reaped from this apparent excess, Rosen and her colleagues examined medical costs per year of additional life expectancy for four different age groups since 1960. Broad analyses of medical treatments suggest that half or more of recent gains in life expectancy result from the benefits of medical care, particularly on infant health and cardiovascular disease.

By this accounting, the health spending per year of life added has been rising since the 1970s, the group finds. For newborns, whose life expectancy increased by seven years between 1960 and 2000, each additional year of life cost $19,900 (in constant 2002 dollars)¿well below various estimates of the monetary value of a year of adult life. That value is pegged at $50,000 to $200,000, based on various measures such as people's willingness to pay for medical procedures. In other words, despite inefficiencies, "the increased spending has, on average, been worth it," the researchers write in the August 31 New England Journal of Medicine.

"That is rubbish. It's worth it compared to what?" asks San Francisco-based health care consultant Matthew Holt. "You could argue that if we spent the money in a different place we'd have a lot greater societal value," he contends. For example, spending on the elderly seems to be veering into the "unworthy" category. The cost of tacking another year onto a senior citizen's life grew from $46,800 in the 1970s to $145,000 in the 1990s, the group notes, although they have yet to factor in the value added by possible improvements in seniors' quality of life.

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