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NOMAS, INC

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On average, the increases in medical spending since 1960 have provided ... at least half the life expectancy gains since 1950 are due to medical advances. ... – PowerPoint PPT presentation

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Title: NOMAS, INC


1
Muntazari Safieddine 9/26/06
The Value of Medical Spending in the United
States, 1960-2000David M. Cutler, Allison B.
Rosen and Sandeep VijanNew England Journal
of Medicine
2
The Study (I)
  • The increased use of medical therapies has led to
    increased medical costs. To provide insight into
    the value of this increased spending, they
    compared gains in life expectancy with the
    increased costs of care from 1960 through 2000
    for four age groups Newborn, 15, 45, and 65
    years.
  • On average, the increases in medical spending
    since 1960 have provided reasonable value. Two
    possible benefits of health care
  • People on average live longer and that long life
    has value to them.
  • It allows them to work more and thus contribute
    financially to others and to Social Security.
  • Annual medical spending per person has increased
    from approximately 700 in 1960 to more than
    6,000 today, tripling as a share of GDP.
  • United States spends more on health care than
    other countries do with similar or worse results,
    although all else is not equal.
  • The main question How has medical spending
    translated into gains in survival?

3
The Study (II a.)
  • Rate of Return The life expectancy for newborns
    increased by 6.97 years between 1960 and 2000.
    Between 1960 and 1970 it was 0.86 years, between
    1970 and 1980 was the most at 3.12 years, 1.5
    years between 1980 and 1990, and 1.49 years
    between 1990 and 2000. The mortality rate fell
    for each age group between 1960 and 2000.

4
The Study (II b.)
  • From 1960 through 2000 the life expectancy for
    newborn increased by 6.97 years. However,
    lifetime medical spending (adjusted for
    inflation) increased by approximately 69,000,
    and the cost per year of life gained was 19,900.
    At 65 years of age, costs rose more rapidly than
    did life expectancy the cost per year of life
    gained was 145,000 between 1990 and 2000.

5
The Analysis
  • Lifetime spending from birth increased by a
    factor of nearly six from 14,000 to 83,000 from
    1960 to 2000. For people 65 years of age or
    older it increased by a factor of more than 13,
    from about 12,000 in 1960 to 159,000 in 2000.
  • Analyses aggregated from treatments clearly shown
    to be medically effective suggest that at least
    half the life expectancy gains since 1950 are due
    to medical advances. About 90 percent of the
    gains in life expectancy are attributable to
    improvements in the rates of death in infancy and
    the rates of death from cardiovascular disease.
    They assumed base-case analysis that 50 percent
    of the gains were due to medical care.

6
The Comparison
  • Regional Comparison The U.S. spends
    significantly more on health care than other
    countries that share the same life expectancy
    rate such as Western Europe.
  • Historic Comparison Between 1900 and 1940 life
    expectancy grew by 13 years, 90 percent of all
    improvements in mortality in that four-decade
    span was caused by a fall in mortality below age
    45. From 1960 to present, the trend has
    reversed, nearly two-thirds of life expectancy
    improvement is from people at older ages living
    longer.

7
The Future/Problem
  • From a financial perspective this may prove to be
    problematic as people over 65 years of age may be
    a burden on social security, as opposed to those
    below the age of 45
  • One possible scenario stated by the authors for
    the future of health care is that the costs per
    year of life gained will continually increase,
    resulting in wasted resources.
  • Although medical spending has increased
    substantially during the past 40 years the money
    spent has provided good value. However, temporal
    trends suggest that the value of health care
    spending is decreasing over time, particularly
    for older age groups.
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