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The Reaper is Cheaper

The Reaper is Cheaper

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Published by: wagneb on Jul 22, 2009
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Paul Howard
The Reaper Is Cheaper
Preventing disease is praiseworthy, but it may not reduce health-care costs.
 21 July 2009President Obama has made many promises about his health-reform agenda, but nonelooms larger than: “You will save money.” Not only has the president promised to lowerconsumers’ health-insurance bills; he says his plan will trim federal spending as well.Thus, when the head of the Congressional Budget Office (Congress’s fiscal watchdog)testified last Friday that
of the bills under consideration in the House or Senate would rein in spending—and that all would likely increase it—the president’s reformpush took a heavy hit. The CBO’s assessment underscored an important reality abouthealth care. Lowering health-care costs (which have been rising faster than inflation fordecades, except for a brief period in the 1990s) while improving quality is possible, butit’s awfully hard, for one simple reason: when it comes to health-care spending, death isthe only really cheap option. William Osler, a renowned nineteenth-century doctor and the first physician-in-chief atJohns Hopkins Hospital, once remarked, “Pneumonia may well be called the friend of the aged. Taken off by it in an acute, short, not often painful illness, the old man escapesthe ‘cold gradations of decay,’ so distressing to himself and to his friends.” If Osler werealive today, he might call pneumonia the friend of Medicare accountants, since it kills victims quickly, in contrast with the lingering and expensive chronic illnesses thataccount for about three-quarters of all Medicare spending.Few policymakers working on health-care reform in Washington stop to consider theobvious corollary: dying early is cheap, and keeping people alive long enough to collectMedicare is expensive. Instead, experts talking about health spending promulgate what Icall the Eat Your Vegetables Theory: we can save gobs of money by focusing ontechnological fixes (like electronic health records) and disease prevention, which will yield a healthier population that is cheaper to treat. The savings generated can then beused to subsidize coverage for millions of the uninsured. But this approach is unlikely to work as advertised: as Osler’s dictum suggests, increasing prevention efforts may windup costing more.Take pneumonia. We have relatively cheap and effective treatments for it, especially  vaccines and antibiotics. As a result, many older Americans who might have died frompneumonia in Osler’s day now live years or decades longer—long enough to qualify forMedicare and then develop much more expensive ailments like diabetes, cancer, and
 Alzheimer’s. Researchers at the RAND Corporation noted the conundrum across severalstudies and came to roughly the same conclusion: “Medical innovations will result in better health and longer life, but they will likely increase, not decrease, Medicarespending.”In one study, the researchers postulated three different scenarios for the health costs of seniors entering Medicare from 2002 to 2030. Scenario A took into account everythingthat we know today about the health of the current cohort of seniors entering Medicareand future enrollees, up to 2030. (This is a mixed bag. Seniors’ health started improvingin the 1980s, but rates of chronic diseases have been increasing rapidly in recent years,and newer enrollees are likely to be sicker and thus more expensive.) Scenario Bassumed that future cohorts would be as healthy as those in the 1990s. And Scenario C(the most optimistic) assumed that seniors’ health would continue to improve. Underrosy Scenario C, the researchers found, health spending would be $10,275 per Medicareenrollee in 2030—just 8 percent lower than under Scenario A. Why? Healthier seniorslive longer and accumulate more costs; also, costs are rising faster among less disabledseniors, presumably because they use more new drugs and devices that prevent themfrom becoming disabled (knee replacements, for example).In another study, RAND researchers looked at how ten important medical innovationslikely to emerge in the near future might affect Medicare spending in 2030. Theseincluded anti-aging compounds for healthy people, cancer vaccines, tiny defibrillatorsimplanted near the heart, better treatments for stroke and cancer, and Alzheimer’sprevention. Every hypothetical innovation, the researchers found, would increaseMedicare spending. Even the cheapest, an anti-aging compound taken by healthy peoplethat would cost just $11,245 per life-year saved, would increase health-care spending by 14 percent in 2030—because there would be 13 million more beneficiaries collecting benefits.Finally, RAND examined the effects of fighting four risk factors for heart disease. If wecould get all the elderly to stop smoking and control their diabetes, their health wouldimprove, of course, but costs would rise, again because those ex-smokers and diabetics would eventually be vulnerable to other health problems. If we effectively treatedhypertension and slashed obesity rates by 50 percent, however, health would improveand costs would fall. Reducing obesity produced the clearest gains because obesity,though it sharply increases costs, doesn’t reduce longevity significantly. What all three studies suggest, then, is technological innovations or disease prevention will likely result in slight savings or even increased costs (though obesity may be theexception to this trend). This doesn’t mean, of course, that we shouldn’t keep inventingdrugs and devices to keep people alive longer, or that we shouldn’t develop betterprevention strategies. It just means that we should stop pretending that good health isalways cheaper. Sometimes, you really do get what you pay for.

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