The Cost of Saving Lives

Using cardiovascular disease as an example, [the authors] note that 44 percent of the reduction in mortality from 1980 to 2000 was due to improved health behaviors. Another 22 percent of the decline was due to inexpensive Category I treatments such as aspirin and beta blockers, 12 percent was due to Category II treatments like angioplasty, and perhaps 10 percent was due to Category III treatments. On the cost side, the spread of Category I and II treatments appears to have contributed only modestly to cost growth, suggesting a larger role for Category III spending. Despite the rapid diffusion of “home run” technologies like beta blockers during this period, the average cost of saving an additional life-year tripled, to nearly $250,000.

Source:  Jason Shafrin summary of an NBER paper by Amitabh Chandra and Jonathan Skinner.

Comments (10)

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  1. Greg says:

    $250K is getting outside the range of the implicit value people place on their lives when they make labor market choices invoving tradeoffs bewteen wages and risk.

  2. Brian says:

    I think somewhere in the rogue political discussion of ‘death panels’, important numbers like these get lost.

  3. Ian Kodanik says:

    So the real story is that taking care of yourself and observing aspirin therapy saves society more money than any other remedies. Imagine that: common sense.

  4. Davie says:

    This calls to mind the opening example from Malcolm Gladwell’s latest book, Outliers.

    When heart disease was the #1 killer of Americans, scientists studied a small Pennsylvania town which had the lowest rates of heart disease in the nation. After lifestyle choice, genetic and climate-based explanations failed, researchers were stumped. They soon theorized that social factors were the explanation. The low levels of anxiety and close sense of community connection explained more than scientific data could.

    This could explain why behavior, rather than beta-blockers, stands as the best and most common corrective.

  5. Linda Gorman says:

    Which still leaves 54% of the gain, the majority, due to what?

    Failing to explain the majority of the improvement doesn’t do much for the claim that simple, cheap, treatments are better medicine (not that beta blockers were cheap to discover). This is a problem, as cynics everywhere understand that ObamaCare advocates have to make that claim plausible in order to make people compliant about its rationoing of advanced medicine.

    What if the majority of the gain really is due to better imaging and testing leading to more precise diagnosis, new (expensive) surgical techniques and medical devices, and a host of other drug treatments like Lipitor?

    Given the circumstances, I’m surprised that lower mortality wasn’t related to the reduction in smoking. Maybe it was; I read this summary, not the paper.

  6. Devon Herrick says:

    The low-hanging fruit of public health has long since been plucked from the tree of life. Sanitation, improved drinking water, food safety, immunization… These are responsible for the most life-years saved at the least cost. Recognition of smoking as a health hazard and better treatment for cancer and heart disease has also improved longevity. But as more medical interventions are required, the cost of prolonging life expectancy is rising.

  7. Hoads says:

    I see potential for future cost savings: Give Medicare recipients a choice when category III treatments are the last option available: after detailing risk/prognosis, offer patient a percentage of procedure/treatment cost as cash payout based upon patient’s risk profile for that particular medical intervention if the patient decides to forego that treatment and rely upon less expensive treatment.

    I’m only half kidding…

  8. Bob Hertz says:

    One thing I like about this blog is that it entertains unpopular opinions. In that spirit, let me advance one of my own politically-incorrect ideas.

    Saving lives is incredibly expensive. And not from just the medical cost of heroic procedures, but from all the other costs that come with increased longetivity.

    When we save the life of a heart attack victim, they may live long enough to need a hip replacement. When we save the life of a Stage IV cancer victim, at enormous expense, they frequently get another expensive cancer. This does not even include the extra years of social security and private pension payouts.

    Most of the people whose lives are saved are past or near the end of their working lives. They will not be paying future Medicare taxes anywhere close to the costs that have been incurred.

    If a saved person lives to age 90, they may need nursing care that can bankrupt their families.

    A few years ago David Cutler produced an article that used some type of econometrics to prove that life-saving medicine made America wealthier.
    I reread it several times and never understood it.

    Now, there are a lot worse activities for America to excel in than saving lives.

    But we should recognize the enormous cost that is entailed. Instead of being paid
    large salaries to save lives, I sometimes think that doctors should have to pay $250,000 to the rest of us for what they do.

  9. Linda Gorman says:

    The cost of saving a life would, if past experience in other industries is any guide, fall by 30 to 40 percent if health care were deregulated.

  10. Blob Hertz says:

    Linda, I have admired your writing but here I may disagree.

    Other industries have achieved cost reductions by
    automation, offshoring, finding cheaper raw materials, and frankly by busting seniority systems and using cheaper, younger labor.

    We could save money in medicine by busting patents and getting cheaper drugs, and by crushing the large salaries that now go to hospitalist doctors and registered nurses.

    But I do not see how we can automate the hands on care that is so much a part of life saving medicine.
    I guess we could expect relatives to start doing some of the nursing tasks, which does happen in Japan.

    Besides, my point was that the medical cost of saving lives was the tip of the iceberg on the real cost of saving lives. One of the reasons Medicare is going broke is that life expectancy has moved from 70 years to almost 79 years. This means that retirees are on Medicare for 14 years instead of 5 years.

    Again, not the worst problem in history, but a major financial challenge nonetheless. Making it cheaper to save lives would only aggravate the challenge!