Is Our Health Care Spending Worth It?

Is Our Health Care Spending Worth It?


“One big question in figuring out where to direct dollars to improve lives is how effectively we can get people to change behavior,” said Anupam Jena, a physician and an economist who does research at the Harvard Medical School. “It may be true that diet and exercise affect health a great deal, but getting people to make lifestyle changes is sometimes vastly more difficult than getting them to take a pill or undergo a procedure.”

Another limitation of studies like this is that they rely, in part, on assumptions and estimates. But careful work can help us gain confidence that they’re not driving the results. For example, according to research by the Harvard economist David Cutler and colleagues, reduced smoking rates and other changes known to have big effects on mortality — like fewer deaths from auto accidents — can explain only 21 percent of the nearly eight-year increase in longevity between 1960 and 2000. So it’s not implausible that the health system could explain a fairly large share of the rest of that gain.

Mr. Cutler’s work also compared the life-lengthening benefits of the health system with what it costs. In total, each additional year of life gained between 1960 and 2000 attributed to the health system cost nearly $20,000. When focused just on the same gain for 65-year-olds, the average cost was about $85,000.

Both figures are below the typical amounts that society is willing to spend to gain a year of life. There’s no ironclad way to pin down the willingness to pay for a year of life in good health, of course — and it’s quite a controversial subject, as you might imagine — but estimates extend to at least $150,000.

It’s findings like these that have led some scholars to argue that health care is so valuable that we should be willing to spend even more on it.

Since 2000, we certainly have. In that year, to obtain an additional year of life from the health system for a 65-year-old cost nearly $160,000, more than double what it was in 1980, according to Mr. Cutler’s study.

“What we really want to know is, how much does an extra dollar spent on health care buy us today?” Dr. Jena said. “Just as you can overdo it with exercise — jogging six days a week isn’t going to give you appreciably more benefit from jogging five days a week — you can do so with health care.” Studies are mixed on this point: Some suggest that spending more provides substantial additional benefit; some suggest it doesn’t.



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