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U.S. Health Care Extending Lives, Saving Money

But study suggests this trend may not continue

WEDNESDAY, Aug. 30, 2006 (HealthDay News) -- Looking at the U.S. health care system in business terms, a new analysis finds that the country has been getting its money's worth.

Innovations in health care account for more than half of the recent rise in U.S. life expectancy, researchers report. Spending on health care has also been cost-effective in terms of years of productive life saved, they note.

But whether this good return on investment will continue is uncertain, the experts added.

"Over the last 40 years, we have been getting good return on our money," said Dr. Allison B. Rosen, assistant professor of internal medicine and health management policy at the University of Michigan, who co-authored the study with a colleague, Dr. Sandeep Vijan, as well as an economist.

Their analysis, published in this week's New England Journal of Medicine, is based on the per-person value gained by one extra year of life -- a yardstick routinely used by insurance companies and medical decision-makers. That figure that ranges from $50,000 to $200,000.

But adding up the numbers, the team calculated that the seven-year increase in life expectancy for newborns from 1960 to 2000 -- from about 69.9 to 76.9 years -- has cost each person just $19,900 per year, the researchers concluded.

That's good news, "But there are signs of trouble for the future," warned David M. Cutler, a professor of applied economics at Harvard University and the economist on the team. "The rate of return has been decreasing over time. It was highest in the '70s and has declined since then. If that trend continued, it would not be good," Cutler added.

Adjusting for factors -- such as a decline in smoking and reductions in deaths from auto accidents -- the researchers concluded that about half of the increase in U.S. life expectancy can be credited to improvements in health care. They also estimated that 70 percent of the gain was due to fewer deaths from cardiovascular diseases. A drop in infant mortality accounted for another 19 percent of the surge in life expectancy.

However, gains have been small when it comes to people who manage to make it to age 65. According to the report, lifespan for Americans 65 and older has increased by just 3.5 years -- at a per-person cost of $84,700 for each added year.

And it's unclear whether these cost-effective gains will continue. "There are storm clouds on the horizon," Cutler said. "Whether they stay away is a question."

One way to head off those clouds is to "reorient payments, not just pay for what is being done but pay for doing a better job," Cutler said. Many professional medical societies have published practice guidelines, "but three-quarters of patients are not properly managed according to those guidelines," he said.

Experiments have started in several parts of the country to measure the quality of care provided by doctors, Cutler said. Estimates of the cost of ineffective care run as high as 20 percent to 30 percent of medical funding, he said, but "we hope we can get doctors to do the effective stuff without the ineffective stuff."

The study is "a first step toward moving to a deeper level of understanding of the value of medical spending," Rosen added.

For example, extending the life expectancy of older people is just one aspect of the value of medical care, she said. Reducing disability for older people is also important, "but we are not a nation that has measured quality of life and disability over time," the Michigan expert said.

In addition, "trends over time suggest that increases in medical spending are outpacing improvements in life expectancy," Rosen noted. "We need to focus on what areas we are getting the best value from, on diseases that have a higher impact on morbidity and mortality."

More information

There's more on U.S. medical care spending at the National Coalition on Health Care.

SOURCES: David M. Cutler, Ph.D., professor of economics and dean of social sciences, Harvard University, Boston; Allison B. Rosen, M.D., assistant professor, internal medicine and health management policy, University of Michigan, Ann Arbor; Aug. 31, 2006, New England Journal of Medicine
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