Increased Medical Care Price Tag Comes With Benefits, WSJ Columnist Says

The increased spending on medical care is "worth it," as life expectancy has increased and the chances of developing a debilitating disease have diminished, Wall Street Journal columnist David Wessel writes. Using the example that an "average lifetime's worth of health care" has increased from $8,000 for a child born in 1950 to $45,000 for a child born in 1990, Wessel writes the $37,000 increase is not "excessive," given the benefits that come with spending "increases of that magnitude." For example, treating heart attacks cost $12,000 more in 1998 than in 1984. However, in 1984, only 10% of heart attack patients had any surgery, compared to more than half of heart attack patients in 1998 who had cardiac catheterization. Life expectancy increased from less than five years after a heart attack for such patients in 1984 to about six years of life expectancy for patients in 1998. "Better medical care" accounts for 70% of the difference, which is "not a bad deal" for the cost, Wessel writes. Harvard economist David Cutler said, "The benefits from just lower infant mortality and better treatment of heart attacks have been sufficiently great that they alone are about equal to the entire cost of medical care over time."

Pressure on Costs
Measure as a portion of all the goods and services produced in the country, Wessel writes, health care costs did not rise from 1992 to 1999. However, premiums are expected to increase significantly in the future, resulting in new attempts to "squeeze" the health care system by increasing efficiency and eliminating "unnecessary procedures." Wessel predicts there will be calls for "more competition or more regulation," and governments and employers will push providers to "spend less" by cutting "price or quantity or both." While the risk of "unconstrained" health care spending is that more is spent without "getting more" in return, by "focusing" on costs, spending may drop too much. Cutler said, "We've acted as if the increased spending is increased waste. That isn't right. The increased spending is buying more valuable stuff. We invent something. It's good. Then we overuse it. But we're still better off." With this push to control costs, Wessel writes there are "two reasons to worry." The first is that care will be "den[ied]" to those who need it and the second is that a "war on waste" will stifle "technological progress." While funds will not be used for technology that does not exist, Wessel concludes that "we will be worse off" (Wessel, Wall Street Journal, 7/26).