Study: More Medicare Spending = Better Health
[There is a] a positive and statistically significant relationship between medical spending and better health: 10 percent greater medical spending over the prior 3 years (mean = U.S. $2,709) is associated with a 1.9 percent larger [Health and Activity Limitation Index] value (p=.045; range 1.2–2.2 percent depending on medical spending measure) and a 1.5 percent greater survival probability (p=.039; range 1.2–1.7 percent).
Policy wonks are fond of saying we spend too much on health care; and spend much of it on the wrong people (i.e. the worried well-off rather than the poor). It should be self-evident that we probably get some benefit at the margin from excess medical spending (albeit, probably while suffering diminishing returns). These arguments are all academic, however. You rarely hear people say we spend too much on transportation. Yet, most families spend more on transportation than on out-of-pocket health care according to the Bureau of Labor Statistics. The difference is that consumers can buy the method of conveyance they prefer (or at least willing to pay for). In health care patients are almost discouraged from spending their own money. Purportedly, it’s better to give it to a third-party and let them spend it on you!
If true, this study’s findings undermine everything the guys at Dartmouth have been saying.
Agree with Jeff. This undermines the whole Darmouth message.
Interesting finding. I’d be more excited if I weren’t responsible for paying for a portion of it.
Isn’t this what is supposed to happen? More health care, better health.
I am a fan of Prof. Hadley but I have trouble accepting this. To make such a claim, you would have to draw two samples at random from the senior population, keep one on Medicare, and eliminate Medicare benefits for the other one – or give the other ones their Medicare payroll taxes back and ask them to spend the money on their own health care!
What this study might be telling us is that medical spending is beneficial. But that does not mean that Medicare is the best way to finance it. It also leads us to the conclusion that we should jam more medical services into seniors who don’t believe that they need them. Not something I’m willing to allow the government to do.
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