It turns out that we’re getting one heck of a deal for what we spend on medical treatment. An article in the latest issue of the New England Journal of Medicine tells us why. Titled “The Value of Medical Spending in the United States, 1960-2000,” the article describes how life expectancy has increased by almost seven years at a cost of a little less than $20,000 for each additional year.
Since I’m always suspicious of these celebratory studies—“Gee, isn’t our medical system great? What lucky people we are.”—I rooted around in the study and some statistics of my own.
The $20,000 per added year is an average over the 40 years from 1960 to 2000. In the 1970s, an added year of life cost $7,400. By 2000 it was $36,300. So although the $20,000 average tells us something about how well medical treatment performed in the past, the almost fivefold increase between 1970 and 2000 tells us something about what might happen in the future—namely, that the cost of increasing our lifespan will continue to rise dramatically.
By the way, these costs are for newborns. The costs go up with age. For example, 65 year-olds in 1980 could expect to live a year and a half longer than 65 year-olds in 1970 at a cost of $46,700 for each additional year. In 2000, a 65 year-old was expected to live one half year longer than in 1990 at a cost of $146,400 for each additional year. Although the absolute cost of adding a year of life for newborns is dramatically less than for 65 year-olds, the relative change between 1970 and 2000 was the same: about five times the cost.
This is for the period from 1970 on. For the 1960s, however, there was a dramatic decrease in the medical cost for an additional year of life. In other words, compared to 1960 it cost significantly less to add a year of life in 1970. In economics, we call this increased efficiency. What happened in the 1960s that might account for the increased efficiency of medical spending in extending life? And why did this change in the 1970s?
During the 1960s, workers’ real incomes increased, inroads were made against poverty, and movements for social and racial equality made progress. Since the 1970s, those have all stagnated or regressed.
White babies outlive black babies. White 65 year-olds outlive black 65 year-olds. The poor have shorter lives than the affluent. Race and class affect people’s health. It affects whether they will get sick, not just how well they will be treated by the medical system once they fall ill.
Medical spending keeps you alive for another year only if you get sick. As a recent study that compared health in England to the US pointed out, medical spending has almost nothing to do with people staying healthy. That has much more to do with social and economic justice. That’s the story I read in this latest celebration of medical spending: the costs are escalating because people’s lives have been made more difficult by inequity. Wouldn’t it be smart to do something about that? To devote ourselves to improving lives as well as improving technology?
The issues in this article are developed (with references) in issue #4 of the Progressive Health Observer in the article titled “Health Care Bankruptcy.”
Related resources are available on the Health Politics page.
