The Difference Between Health Care Costs and Investments

Kenny Lin

First posted 7/27/11 on Common Sense Family Doctor 

Now that the NFL lockout has ended, even sports fans can follow without distraction the ongoing spectacle of federal gridlock leading the government ever closer to defaulting on its more than $14 trillion in loans. With the abundance of fiery, uncompromising rhetoric and arcane terminology such as grand bargains, caps and balances, you may be forgiven for feeling, as I do, we are watching a rerun of the health reform non-debate in late 2009 and early 2010. Indeed, decisions over the next several days have almost as much potential to affect the quality of health care in the U.S., as funds for graduate medical education (and training of family doctors) are on the chopping block in proposals from both parties. While I hope that the advocacy efforts of primary care organizations and their supporters are enough to #SaveGME, the outcome is far from certain.

It’s as good a time as any to discuss the difference between health care costs and investments. According to the Centers for Medicare and Medicaid Services (CMS), the U.S. spent $2.5 trillion on health care in 2009, or more than $8000 per person. But this figure doesn’t distinguish spending that resulted in health gains from spending that did nothing to improve health. To be fair, no one’s really sure how many health care dollars are wasted, beyond administrative costs, but considering how many Americans are overtreated, it could easily run into the hundreds of billions. Whether in the form of payments for bogus preventive health screenings or unproven coronary CT scans, those wasted dollars are the “costs” of health care, money that pays salaries and makes profits for groups providing the services, but doesn’t help anyone live longer or better.

In contrast, I think of health care “investments” as spending that actually reduces morbidity and mortality. For example, family medicine professor Steven Woolf has previously made the strong case that although few clinical preventive services save money, the vast majority of screening and counseling interventions recommended by the U.S. Preventive Services Task Force offer excellent value for every dollar spent. Similarly, programs that produce primary care physicians (threatened by current deficit-reduction plans) are good investments because study after study has found that areas with stronger primary care workforces have better health outcomes.

Public health spending, which the nonprofit Trust for America’s Health reported has been falling since 2008, is another neglected budget item where modest investments result in large health gains. A recently published study in Health Affairs found that between 1993 and 2005, each 10 percent increase in local public health spending led to reductions in mortality between 1 and 7 percent. The authors put these figures in context:

Achieving this same mortality reduction by increasing the number of primary care physicians would require an additional twenty-seven physicians in the average metropolitan community, based on a recent analysis of physician supply. Increasing the physician supply by this amount would probably require new spending considerably in excess of the amount needed to achieve the mortality reduction through public health spending.

Unfortunately, essential investments in primary care and public health are likely to become casualties of budget cuts – if not directly through federal funding of graduate medical education, indirectly through the further tightening of already strapped state budgets. Meanwhile, thanks in large part to misguided advocacy groups, patients will continue to get their ineffective PSA testsProvenge for prostate cancer, and Avastin for breast cancer. And policymakers will keep scratching their heads and wondering why U.S. health care costs so much and yields so little in the way of improvements in health.

Kenny Lin is a DC-based family physician writing at Common Sense Family Doctor.

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