July 26, 2009
American Health Care
Mortality from Disease and the American Health Care System-Becker
Many Democratic Congressmen, member of the Obama administration, and others writing about American health care envy the 'European" health deliver system since they attribute Europe's lower mortality rates, despite much lower per capita spending on health care than by the US, partly to the European model of health care delivery. This model involves government domination of spending on medical care that involves extensive government regulation and rationing of access to medical care. Envy of the European model explains why the Democratic proposed "reforms" of the American system involve large increases in government involvement in health care, including a government-run health insurance plan. In evaluating whether envy of the European approach is justified, it is crucial to determine whether the higher mortality rates in the US than in many European countries is due to defects in the American health delivery system, or to other factors. Mortality rates are affected not only by health care, for they are also very much dependent on personal behavior, such as smoking, eating habits, exercise, stress, how carefully individuals follow the medical advise they receive, and many other kinds of behavior under the control of individuals rather than the medical profession. The US has relatively high incidences of obesity, partly because Americans consume lots of high fat and high cholesterol foods, and Americans were heavy smokers in the past, just to mention a few unhealthy forms of behavior. Perhaps then the higher US mortality rates are due much more to differences in personal habits and personal care than to defects in the US health delivery system? One way to separate health care from personal behavior is to consider survival from serious diseases, such as various cancers and cardiovascular diseases. In my post on health care on June 7 of this year I referred to a study published in Lancet in 2007 that compares five-year cancer survival rates for the US, the United Kingdom, and the European Union as a whole. The study examines early diagnosis, early treatment, and access to the best drugs, and finds that the United States does very well on all three criteria. As a result, five-year cancer survival rates are much better in the US: they are about 65% for both men and women, whereas they are much lower in these other countries, especially for men. Early diagnosis helps survival, but it may also distort comparisons of five or even ten-year survival rates since some cancers would be discovered at very early stages. An alternative that avoids this distortion is to compare age-adjusted mortality rates for different diseases. Early detection and other medical care that improved life prospects would show up as lower mortality rates. A recent excellent unpublished study by Samuel Preston and Jessica Ho of the University of Pennsylvania compare mortality rates for breast and prostate cancer. These are two of the most common and deadly forms of cancer-in the United States prostate cancer is the second leading cause of male cancer deaths, and breast cancer is the leading cause of female cancer deaths. These forms of cancer also appear to be less sensitive to known attributes of diet and other kinds of non-medical behavior than are lung cancer and many other cancers. These authors show that the fraction of men receiving a PSA test, which is a test developed about 25 years ago to detect the presence of prostate cancer, is far higher in the US than in Sweden, France, and other countries that are usually said to have better health delivery systems. Similarly, the fraction of women receiving a mammogram, a test developed about 30 years ago to detect breast cancer, is also much higher in the US. The US also more aggressively treats both these (and other) cancers with surgery, radiation, and chemotherapy than do other countries. Preston and Hu show that this more aggressive detection and treatment were apparently effective in producing a better bottom line since death rates from breast and prostate cancer declined during the past 20 by much more in the US than in 15 comparison countries of Europe and Japan. US death rate rates from prostate cancer went from about 7% above those of the comparison countries in 1990 to over 20 % below the average of these other countries in recent years, or almost a 30% greater fall in US rates. American death rates from breast cancer declined from about 10% above the average of these other countries in 1990 to slightly lower. These results suggest that the US health care system does deliver better control over serious diseases than systems in other advanced countries. Of course, American health care delivery is much more expensive, so a natural question would be whether the greater apparent benefits are sufficient to justify the greater cost? To get a very rough answer to this question, suppose generously that the American health care system adds 1 life year on average to persons above age 50 compared to what they would have with the average health care system in the 15 comparison countries used by Preston and Hu. Suppose also that people over age 50 value each additional life year by $120,00- since this is a ballpark figure often used for the average American, the dollar value may be lower (or higher!) for older persons. Given that about 4 million Americans reach age 50 each year, the aggregate value placed on these additional life years with these assumptions would be close to $500 billion. This is a little over 4% of American GDP, so this assumed improvement in mortality rates, even aside from improvements in the quality of life, could justify much of the additional spending by the US on health care compared to other wealthy countries. Of course, the assumption that the American health system produces one additional life year for each person over age 50 may be much too generous, and perhaps older people place a much smaller value on an additional year than $120,000. Still, these calculations suggest that America should hesitate without additional evidence of the type I have used before jumping on the European bandwagon, and conducting radical surgery on the American health care delivery system.
American Health Care--Posner's Comment
Last December, the McKinsey consulting firm published a report which states that despite the much higher per capita spending on health care in the U.S. compared with peer countries, the longevity of Americans (even if only that of white Americans is considered) is lower than the average of the comparison countries. This is true, according to McKinsey, even though the prevalence of disease is less in the United States than in those countries (with the principal exception of diabetes, a consequence of Americans' obesity). Because Americans smoke less than the people in those countries, smoking-related diseases are actually lower in the United States.
The report attributes to the higher cost of health care in the United States to higher physician incomes, physicans' control over the number of medical procedures and their ownership of testing and other facilities, which drives up utilization, much higher prices for procedures, higher drug prices, and other factors. To which should be added the exemption of employer-provided health benefits from employees' income tax and the very high overhead costs of health insurers.
Against this, the Preston-Ho article that Becker summarizes points out that the more extensive screening and aggressive treatment of selected cancers, notably breast cancer and prostate cancer, in the United States result in lower mortality from those cancers than in the peer countries.
That is an important point, but it does not establish the superiority of our health-care system. To establish (or refute) that superiority would require conducting a cost-benefit analysis. I have my doubts that such an analysis would vindicate the U.S. system. We spend some $2.5 trillion a year on health care. Our peer countries spend about 60 percent as much per capita on health care and this implies that if we spent at the same level as they, our annual health-care expenditures would be $1.5 trillion. The question, therefore, is what benefits are we obtaining for the additional $1 trillion that we are spending? Suppose the additional screening for and treatment of cancer that we do compared to what the peer countries do is $100 million a year (I have not been able to find an estimate of that cost); that would leave $900 million in "excess" health-care expenditures to explain.
A related point is that the causes of the lesser emphasis in the peer countries on cancer screening and treatment have not been explained. Is it simply a lack of money? Or is it a medical judgment? There is some skepticism in medical circles concerning the overall efficacy both of mammography and of screening for and treatments of prostate cancer. Treatments for prostate cancer are expensive in dollar terms but more so in side effects, which often are permanent. Different people, and perhaps different populations, make different tradeoffs among the various factors that affect a decision on screening and treatment.
I also question the Preston-Ho suggestion that the shorter average life span in the United States compared to that in the peer countries should be treated as a completely exogenous factor. Treating it as such results from an artificial distinction between medical care and public health. Obesity is not a disease, but it is a serious public health problem. A rational allocation of health-care resources might require a shift in resources from end-of-life medical treatments to preventing obesity. Such a shift might increase longevity much more cheaply and effectively than more screening for cancer. So might greater efforts to reduce the murder rate, improve prenatal and infant medical care, reduce speed limits, reduce unsafe sex, increase liquor and cigarette taxes, improve education, reduce poverty, and prohibit motorcycles.
It might be argued that the additional costs of health care that are created by obesity have an offsetting benefit: they reduce the cost of being obese and so increase the net benefits of heavy eating. But the higher health costs of the obese are externalized, in part anyway, to the taxpayer (also to the other members of their insurancce risk pool, if health insurance companies aren't allowed to discriminate). I doubt, moreover, that the obese gain more in enjoyment of food than they lose in the health and other costs of being obese. Much obesity is a result of ignorance (both of calories and of the health effects of obesity), bad habits picked up from parents and peers, negligent parenting, and poor impulse control (i.e., very high discount rates).
And speaking of obesity, its prevalence in the United States undermines studies that find that people attach great value to small improvements in quality and quantity of life. The fact that so many Americans eat badly, don't exercise, drink (or "text") when they drive, and otherwise endanger their life and health, implies, since one can eat well, drive sober, and exercise, etc., at relatively low cost, that people don't value small improvements in quality and quantity of life very much--unless the improvements are paid for by someone else!
Even if we are receiving $1 trillion in benefits from the "extra" $1 trillion that we paying for medical care, it doesn't follow that the $1 trillion in extra costs isn't too much. The reason is that we face, in my opinion, a fiscal crisis; something will have to give and maybe it should be some medical care. The national debt this year will almost equal the Gross Domestic Product (true, the "public" debt--debt owed to entities outside the federal government--is lower than the overall national debt, but the debt owed the social security trust fund, for example, is a real measure of likely future fiscal obligations), and it will continue to soar at least until the economy, and with it federal tax revenues, recover. But it probably it will soar beyond that because the Bush Administration established a precedent of $500 billion annual federal budget deficits that the Obama Administration will follow and probably raise. The health-care reform wending its way through Congress will expand benefits without, it now appears, controlling costs. It is a misfortune that Congress didn't begin with trying to control costs, and then consider whether the nation can afford to expand benefits.