Paul Krugman has a column in yesterday’s NY Times “Dumbing Deficits Down” in which he says that the government can save money by preventing disease:
“Limiting health costs, therefore, requires a smarter approach. We need to work harder on prevention, which can be much cheaper than a cure.”
I can understand how this would work for a private insurer. If a person can be prevented from getting any disease until age 65, for example, the insurance company saves a lot of money. Or if a group of employees can be prevented from getting any disease until they quit their job and transfer to some other insurance program, that’s great. If these folks develop expensive problems on their 65th birthdays, the insurance companies have done everything perfectly. They’ve spent exactly the minimum necessary on prevention and all the costs of treatment will be dumped onto the taxpayer through Medicare.
How does Krugman’s idea work financially for the federal government, though? Barack Hussein Obama may live like a king, but there is no evidence that he is a god. Neither he nor the bureaucracy has been able to keep humans alive and healthy forever. The American whose heart disease was prevented at age 70 may simply die of cancer at age 80. Whatever Medicare would have paid to treat the heart disease they spent on treating the cancer. Meanwhile, Social Security sent out an additional 10 years of benefit checks.
At the end of the article, Krugman complains that “[the Republican] side sneers at knowledge and exalts ignorance”, implying that people (like Krugman?) with a head full of knowledge would be able to cut Medicare costs through prevention. But how exactly would it work?
[Obviously one could make a moral or ethical argument that we should try to help prevent other people from getting diseases (though no doubt many Illinois taxpayers will be sorely tempted to send cartons of cigarettes to retired public employees), but Krugman was writing as an economist, not a moral philosopher, and he was explicitly talking about cutting costs to the taxpayer.]
Preventive medicine for a person who would get the disease will save money, sure. But since we don’t know beforehand who will get the disease, we have to give preventive care for people who never would have contracted anything. And, not surprisingly, that means higher costs, not lower.
I read a book recently called Younger Next Year: Live Strong, Fit, and Sexy – Until You’re 80 and Beyond. They have a chart showing, if you keep fit, your health stays ok for a long time and then you get a sudden decline right before you die. In general, you are healthier for longer, and less lingering at the end
The current US way of living is to get sick early – overweight, diabetic, etc – and hang on for 20 years costing money all along the way, and then kicking off maybe 10 or 20 years early.
When or if you get cancer or get hit by a bus are still a bit of a crap shoot
If this hypothesis bears out, then prevention will save money over time
INAE – but obvious argument: surely people don’t die of every illness they need professional treatment for. If someone’s unhealthy, they’ll be more prone (by definition) to illnesses that need to be treated – most? of which will be non-fatal.
Long term coronary care, diabetes. If we can reduce the incidence of these, we can reduce overall costs.
Assumption: Preventing heart disease is cheaper than treating it in a patient for 20 years – costs of multiple heart attacks, angina, exploratory procedures, bypasses, stents, pacemakers per patient less than tv adverts and cheaper gym memberships, for example.
Economically speaking dying right after you start your pension is best for the economy. See this serious study in the British Medical Journal that that concludes smoking would help the economy:
http://www.mindfully.org/Health/Tobacco-Helps-Economy.htm
Each year people live longer while they are not economically productive is worse for the economy unless people also work longer. (There are lots of moral issues here that I am not getting into)
If on one hand you believe that nobody ever gets so ill to stop work and require care during their tax paying working life, prevention is waste of money, that might only increase the life of those useless pensioners.
If on the other hand you are trying to squeeze every drop of blood out of real people, who might have had the prescience to set in stone that someone will have to pay for their care, then you want to prevent every possible ailment that might affect people of lower than pension age. Plenty of people do go to early retirement, which is a problem because you might actually lose skilled workers, and because you might be legally bound to pay for someone who is not actually working.
I agree that trying to prevent ailments that are most common in the 75+ is not exactly money well spent (I say 75 because my dad retired at 77, after winning a 2 years retirement deferment), but the statement: ‘investing in preventing diseases and ailments that affect the young and those of working age’ is pretty spot on from an economic standpoint.
Your assuming than any way a patient will die, the cost to Medicare will be the same. Here in Canada almost all cost of medical treatment falls to the government and still prevention is widely accepted as reducing costs for the system. I think the main difference is the average cost of treatment that varies from disease to disease.
If you live in relative good health to 80 and then have a fatal heart failure then you would have required a minimal amount of Medicare. While someone with emphysema and then lung cancer dragging it’s way through the last 15 years of their life would have required several hundred thousands dollars. The fact that people who live their life in good health in the end cost less to the system is pretty well established. So the question is, would those costing the most would cost less if they had a healthier lifestyle and how much would it cost to convince them to change?
If you can stop folks from getting serially and majorly sick at 50, 60, and 70 so that they die of old age at 80, then you save money. If you can prevent (or delay) folks from getting diabetes, then you save (or reduce) the huge costs of their treatment. There are lots of diseases that by delaying or preventing them we would save money by not having to pay for their long-term treatment. Issues related to being fat seem to be chief among them.
Jean-Francois: How is Medicare going to induce a sudden fatal heart attack? Where is your source for “The fact that people who live their life in good health in the end cost less to the system is pretty well established”? Anyone who lives long enough, for example, will eventually succumb to cancer.
Bill: “die of old age”? That doesn’t sound like a condition that my hospital could bill to Medicare. Therefore, at my hospital, nobody over 65 will die of “old age”. See http://www.cbsnews.com/stories/2009/11/19/60minutes/main5711689.shtml for how hospitals collected $50 billion in 2008 from Medicare for treating people who were old and then died.
Yes, everyone dies from something, but preventive care does save money in the long run. Childhood immunization costs less than treatment for diphtheria, tetanus, pertussis, measles, ect. The cost of screening for colon cancer and catching it in the early stages is much less than the cost of treatment and long-term maintenance. You also need to factor in the savings from reduced work loss.
Article about this in the New England Journal of Medicine:
http://www.nejm.org/doi/full/10.1056/NEJMp0708558
Of course the more likely scenario is that the 70 year old survives the heart disease with the required multiple surgical interventions, ICD, drugs, etc. and then dies at 80 from cancer, stroke or some other entirely different mechanism. As a result you pay twice.
The challenge is that our interventions have become pretty good. We can, with intensive and expensive treatment, address many of the chronic diseases of aging. Each of these comes at a cost, frequently a very high one. And it isn’t just an issue of the aging. What about the 35 year old with coronary artery disease. Now you may be looking at 40 years of meds, angioplasty, bypass, etc. Would probably save everyone a bunch if it could have been prevented.
“Where is your source for ‘The fact that people who live their life in good health in the end cost less to the system is pretty well established’?”
I’m guessing Jean-Francois was referring to this Canadian study on the impact of seniors with chronic conditions: seniors with three or more chronic conditions accounted for 40 per cent of health care use among those 65 or older, even though they’re only 24 per cent of the population over 65. The article goes on to say: “While the risk of developing chronic conditions increases with age, good primary care like having a family physician plays a strong role in managing them and perhaps delaying or preventing their onset.”
I thought the more interesting part of Krugman’s column was about comparative effectiveness research, i.e. figuring out where the system is spending money on treatments that are expensive and not useful (or even harmful); that seems like an obvious way to save money, so it’s puzzling that the Republicans in Congress are trying to cut it. (Or perhaps not, since the pharmaceutical companies, for example, would have a strong interest in cutting this kind of research.)
An example of comparative effectiveness research is BC’s Therapeutics Initiative:
A more detailed discussion of where the Canadian system is spending too much money: Too Much Health Care, by Dr. Charles Wright (2009). He gives a couple examples:
In the UK, the agency which does comparative effectiveness research is the National Institute for Health and Clinical Excellence.
Arthur Laffer made a related argument years ago about smoking: The government saves a lot of money on Medicare and Social Security when people die young. Therefore, it should actually encourage smoking, not try to stop it. Similarly, there is no evidence that smokers have higher lifetime health care expenses.
JD: Thanks for the New England Journal of Medicine link. It certainly does not it sound as though prevention has immediate significant cost-saving potential: “Sweeping statements about the cost-saving potential of prevention, however, are overreaching” and “Studies have concluded that preventing illness can in some cases save money but in other cases can add to health care costs.” You talk about “Childhood immunization” saving money; I don’t think anyone is disputing that. We’re already doing it, so we can’t cut health care costs by starting to do it. You say that “The cost of screening for colon cancer and catching it in the early stages is much less than the cost of treatment”. That might help a private insurer who is responsible for a patient for 10 years, but I don’t see how it helps Medicare, which might save Joe Retired from colon cancer only to have to pay for his lung cancer treatment a decade later. Meanwhile Joe Retired has consumed another 10 years of Social Security checks or perhaps another $500,000/year in public employee pension checks.
Russil: I’m glad that you share Paul Krugman’s faith in comparative effectiveness research. It is a shame that roughly half of published medical research conclusions are false, according to John Ioannidis. So which half of the new research conclusions would you and Krugman plan to use? The intent of the posting was to examine just the prevention = saving money hypothesis put forward by Krugman. But your comment broadens the discussion to all of Krugman’s ideas. One idea that is missing from Krugman’s article is tearing down the system of Medicare paying per-procedure. If I ran a hospital, if all of Krugman’s ideas were implemented, my Medicare revenue would not be reduced. I would simply give each patient more of whatever Medicare was paying for. Krugman’s cost-savings ideas depend on government employees being smarter and harder-working than my hospital staff members.
How likely is it that the government will outsmart my hospital and actually cut taxpayer costs (which I prefer to think of as “my revenue”)? http://cityroom.blogs.nytimes.com/2010/10/13/44-charged-in-huge-medicare-fraud-scheme/ chronicles some guys who collected at least $35 million from Medicare without ever having even one bricks-and-mortar clinic. A lot of those guys weren’t even native speakers of English.
“So which half of the new research conclusions would you and Krugman plan to use?”
Here’s what the Therapeutics Initiative does for drug assessment (example). The Atlantic article on Ioannidis notes: “80 percent of non-randomized studies (by far the most common type) turn out to be wrong, as do 25 percent of supposedly gold-standard randomized trials, and as much as 10 percent of the platinum-standard large randomized trials.” Disregarding all non-randomized studies would be a good start.
“One idea that is missing from Krugman’s article is tearing down the system of Medicare paying per-procedure.”
True. It’s usually referred to as “fee-for-service” (vs. “capitation”, paying per patient). Comparison Between Fee Capitation And Fee-For-Service Primary Care.
Just the daily stretching & bending of kitchen gardening would provide enough exercise & key nutrition to change systemic ill health trends away from the consequences of sedentary food-consumer lifestyles. Add the exercise of design skills, life-science at hand & good thinking time and you have people like, well – Einstein, who was an allotment gardener & cleaned up his precious plot promptly when threatened with eviction for messy gardening. Waiting lists for allotment plots are years-long in London & Stockholm. I may write the book about some healthy gardeners who are renown for other things. 🙂
That guy Atul Gawande, whose New Yorker articles have been referenced on this blog in the past, thinks that comparative effectiveness research can be useful. http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande
Of course, as a medical school professor, he has an interest in promoting the idea that research not of waste of resources.
On the other hand, if half of medical research is wrong, and it’s difficult to determine which half that is, does this present an oppurtunity to save some money for the taxpayers by eliminating NIH and CDC?
Vince: Does the CDC primarily fund research into therapies or track epidemics, etc.? As far as NIH goes, there probably are folks who would argue that with the drug companies and hospital chains as large and wealthy as they are, there is little reason for the federal government to fund medical research (we would still have NSF for the biology research). On the other hand, NPR might get defunded first… http://www.youtube.com/watch?v=xd9OYJMX9t4
There is a big common misconception that we can just “prevent” health care costs, but that NEJM article really points out that most things that save money are already being done. And a great number of things that have been commonly thought to have been “money saving” turned out to both be cost increasing and health impeding when they were critically studied.
The UK has a good system; it determines how much money each procedure takes to increase a “quality-adjusted life year” by one. The procedures are all sorted by this, and the NHS only pays for things below a certain amount.
That’s how you get the most effective health care for your dollar. Whatever we decide the government should spend on health care (even if it’s only $50), we need a rational way of allocating it to people. Right now there is an ad-hoc system that basically comes down to “what the doctor says” if you are politically represented, but there’s no evidence this either decreases costs or even that it improves health.
“We need a rational way of allocating [the spend] to people”?? Oh, you mean like a market. Great idea. Health care is far too important not to be left to the market.
“The UK has a good system”: um, not really. If NICE (the body you describe) decides the cost of a drug doesn’t increase your quality of life sufficiently, tough luck: you can’t get it on the NHS. And if you decide it is worth it to you (after all, you might value your quality of life a bit higher than some bureaucrat) and buy it yourself, you’ll be punished by being excluded from the NHS entirely. Despite the fact that you’ve been paying for it in taxes your entire working life. Good system? If it’s so good why does every employer in the UK provide health insurance?
Krugman has a perverse attraction: Even if I disagree with almost everything he writes, I still often read him because I want to see what wacko thing he says next. Comments from last week’s entry triggered by Krugman included a link to a great piece “How did Paul Krugman get it so Wrong?” by U of Chicago professor John Cochrane: http://faculty.chicagobooth.edu/john.cochrane/research/Papers/krugman_response.htm. Cochrane concluded what has been long obvious to those of us with any economics training at all — that Krugman is a political writer, not an economics one, Nobel prize and previous accomplishments notwithstanding. One should read any Krugman piece with the expectation that any assertions therein are at best incompletely thought through, and likely are serving an agenda other than truth.
As Phil are others have illuminated, there will be offsetting effects to “prevention,” assuming any such a campaign is rationally pursued (we know with certainty politics will intrude and it will not be, but I am working with the premise): less care and expense now for higher pension payments and possibly more care later. Anyone who claims to know the net effect a priori is lying.
All the suggestions made here about how to figure out what is truly preventative or how to rationally ration health care spending ultimately demonstrate that those who do not trust markets will end up replicating them badly and expensively.
Sam: Whether Krugman is an economist or a political writer should not affect the question in my original posting. You don’t need to know anything about economics or politics to recognize that keeping someone alive at age 70 so that they can finally die of an equally expensive-to-treat disease at age 80 isn’t likely to save money for an organization such as the U.S. government (that has to pay for 10 extra years of routine medical care and also Social Security). Krugman, of course, could have argued that preventive care for the elderly would be a good idea on non-economic grounds, but he did not do so.
It doesn’t worry me so much that one nytimes writer (Krugman) is unable to do simple accounting. But look at the 474 comments. I didn’t read them all, but it doesn’t seem as though more than a handful of readers ever questioned Krugman’s premise regarding prevention. (Most reader comments were complaints about how stupid Republicans are, which I guess is reasonable considering that Republicans have had an approximately equal share in spending this country into bankruptcy.) Let’s suppose that Ron Schiller was right in http://www.youtube.com/watch?v=xd9OYJMX9t4 when he said that the liberal NPR/nytimes listeners/readers are the best educated people in the U.S. If the most educated among us think that we can save money by keeping everyone alive from retirement (age 41 for a bus driver in Boston; age 50 for many public employees nationwide) until age 115, that’s not a great argument for continuing funding of education in the U.S.
Phil: The question in your original posting is indeed unaffected by Krugman’s credentials.
Krugman’s statement looks to me like a throwaway. He gives himself ample wiggle room by stating that prevention “CAN be much cheaper than a cure.” Who can argue with that? It does not qualify as a serious proposition.
Your question is serious, but IMO the article does not deserve to be taken seriously. Your answer is sensible and rational, but neither the article’s author nor the actors in the passion play he describes care a wit about sensibility or rationality. You say that Krugman is not resorting to non-economic grounds to argue his point, but the whole article drips with righteous indignation about these morally depraved fools he has to suffer. He as much as states that his superior intellect and moral standing trumps whatever counterarguments anyone might pose.