Increased medical spending during the period 1999–2012 generated significant health gains that outweighed the financial costs, according to a National Bureau of Economic Research (NBER) working paper.
Researchers led by David M. Cutler, PhD, the Otto Eckstein Chair of Applied Economics, Harvard University, Boston, Massachusetts, measured spending, mortality, and quality of life among elderly Americans. They found that quality-adjusted life expectancy (QALE) rose by about 1 year from 1999 to 2012 and that annual healthcare costs increased by about $4800 per person among those older than 65.
“Basically, we found that, overall, health has improved a lot, enough so that we should be happy spending the money we’re spending,” Cutler told theheart.org | Medscape Cardiology.
Spending rose from $13,103 per capita in 1999 to $17,897 per capita in 2012, an increase of $4794 annually.
The increase in QALE reflected offsetting trends: improved life expectancy for patients with chronic disease and a greater prevalence of disease among the population. Had disease prevalence not increased, average QALE at age 65 would have risen by 1.7 years.
“None of this says, however, that there wasn’t wasteful spending. It’s undoubtedly the case that we could have done better by, for example, doing fewer unnecessary tests, paying less for medications like other countries do, or prescribing medications better, etc,” said Cutler.
“Of course, it also doesn’t mean that if we just spend more, that’s even better. Certainly, in the case of cardiovascular disease, it’s likely we haven’t maxed out on value, because we have so many with uncontrolled hypertension, cholesterol, etc, but, again, the money has to be well spent,” he added.
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Some Dollars Better Spent Than Others
The researchers found considerable heterogeneity in productivity growth across the 80 prevalent conditions they studied.
Productivity is economics-speak for “what you get out for what you put in,” said Cutler. The researchers assessed productivity by comparing the increase in lifetime costs to the increase in QALE that was attributable to changes in treatment.
The research improves on existing measures of healthcare productivity in several important ways. In an interview, Cutler described the process as being similar to cost-effective analysis, but rather than assessing each technology independently, they assessed the healthcare system as a whole to see how, for example, one treatment affected the use of other treatments.
“Can I explain the total trend in mortality from kidney disease on the basis of the studies on individual kidney medications? The answer is no, because they are only a small part of what’s going on,” said Cutler. “This is an attempt to sort of say, here’s how the whole system is working.”
Healthcare for cardiovascular disease (CVD), which in the study comprised ischemic heart disease, heart failure, stroke, cerebrovascular disease, and “other heart and vascular disease,” has been especially productive and had the highest productivity growth rate of all conditions assessed.
“Cardiovascular disease risk factors are better controlled than they were, and people who have had cardiovascular events live longer than they did in the past,” write Cutler and colleagues. “This survival gain has come at minimal cost increase, leading to large productivity growth.”
QALE for patients with CVD increased by nearly a year, while the present value of lifetime costs rose by only $5157.
Most, but not all, of the benefits seemed to come from pharmaceutical interventions for primary and secondary prevention of hypertension and dyslipidemia, said Cutler.
Musculoskeletal conditions, on the other hand, were among the few conditions with negative productivity growth, meaning the money spent on these conditions during the study period offered little bang for the buck. The researchers attribute this to expanded use of opioids, which are expensive and appear to do little to reduce chronic pain.
“The question we asked is, given what we did, would it have been better if we hadn’t done it? In the case of opioids, I think it’s pretty clear it would have been better to not do it,” Cutler said.
Overall, from 1999 to 2012, healthcare costs went up. Annual healthcare spending increased by about $4800 per person among those older than 65. Only 60% of this additional cost is attributable to changes in treatment; the remainder reflects higher disease incidence.
“I really like the approach these researchers took and the context it provides. It really puts a lens on chronic disease that we didn’t have before and is a great foundation on which future comparisons can be made,” said cardiologist David Alter, MD, PhD, from the University of Toronto, Ontario, Canada.
He was not surprised by the good value seen in CVD. “Our treatments continue to evolve, but most of the newer treatments for cardiovascular disease are not transformative but rather are working at the margins. Or if they are more transformative and expensive, like PCSK9 inhibitors, they are aimed at a small niche,” he said.
One thing he feels is missing from this research is some assessment of the impact of lifestyle change.
“The study doesn’t address therapeutic lifestyle modification, and it would be interesting to see how much more bang for the buck — including a profound impact on morbidity and mortality — we might achieve when we shift perspective from provision of care to adherence, lifestyle factors, and disease prevention,” he added.
The differences in productivity growth across conditions suggest scope for improving efficiency in the use of healthcare resources. Cutler’s team is working on updating this study to include more recent data. The researchers note that since about 2010, the improvement in cardiovascular mortality has slowed, which may change the productivity estimates.
NBER working papers are produced as part of the NBER’s research program and are circulated for discussion and comment. The current paper was posted online in September 2020 and was reposted with revisions (based on peer comments) in March 2021. It has been submitted to a journal for publication.
The NBER was founded in 1920 with the goal of conducting and disseminating nonpartisan economic research.
Cutler has disclosed no relevant financial relationships. The researchers have received support from the National Institute on Aging of the National Institutes of Health.
NBER. A Satellite Account for Health in the United States. Published online March 2021. Full text