Arnold Kling  

Health Care Spending, Continued

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Economists Too Linear?... Over-worked or Over-taxed?...

Alex Tabarrok finds evidence that supports more spending on health care.


It has been estimated, for example, that increases in life expectancy from reductions in mortality due to cardiovascular disease over 1970-1990 has been worth over $30 trillion dollars - yes, 30 trillion dollars (for this research see: book, papers, summary). A conservative estimate is that 1/3rd of these improvements in life expectancy were due to better medical technology. One third of the annual benefits is $500 billion - this is much more than total government spending on medical research (the budget of the entire NIH is around 25 billion).

For Discussion. Tabarrok says that on average spending on health research has been more productive than spending on treatment. Do you think that this is also true on the margin?


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COMMENTS (9 to date)
Randall Parker writes:

I totally agree with Alex on this point. Use of existing technologies when said technologies are woefully inadequate is very cost ineffective as the development of new technologies.

Over 30 years ago Lewis Thomas made the argument in his Lives Of A Cell book that diseases that have no effective treatment are very expensive to treat and that diseases that have effective treatments are cheap to treat. He cited the example of TB where sick people used to be kept for long periods of time in sanitariums at enormous expense but that the drugs that cured TB were incredibly cheap and worked very rapidly. I think this argument is correct.

I would argue a further point: funding researchers to use existing tools to investigate diseases and to develop treatments is not as effective as spending the money on the development of new forms of instrumentation and assays that let biological systems to be taken apart and figured out more quickly.

Mats writes:

Either US healthcare is lacking productivity, or its resources are wasted on people that don't really need them. Despite having the highes spending in the world, results in terms of low infant mortality are mediocre, to say the least:

http://blogofpandora.blogspot.com/2003_09_01_blogofpandora_archive.html#106313163627799020

Steve writes:

Hmmm...is it true on the margin? I guess it depends on whether or not you think the economy is competitive, no?

Randall Parker writes:

Matz, The infant mortality rate is a function of a great many things that health care providers have no control over.

Lawrance George Lux writes:

Spending on the margin always depends on the commitment of capital. Medical research always have the edge, when an essentially cheaper treatment process can be devised. The equation changes when the treatment process requires a greater expenditures of capital resources. Is a Heart Transplant really an effective treatment, when it requires sixteen hours in a surgical room, at $8000 per hour rental for the room alone? lgl

David Foster writes:

Medical research undoubtedly has a high economic productivity...but it is meaningless to compare total benefits of X with total government research expenditures of Y. Very large amounts of medical research are done by corporations and by foundations and universities with private endowments.

Mcwop writes:

>>Either US healthcare is lacking productivity, or its resources are wasted on people that don't really need them. Despite having the highes spending in the world, results in terms of low infant mortality are mediocre, to say the least:

Steve writes:

Right, which makes you question the wisdom of various plans to reign in health care "costs". I get the impression many politicians see health care expenditures as costs that need to be controlled. The problem is that the people purchasing these goods and services might heartily disagree.

I have yet to see any decent explanation as to why universal health care would reduce the rate of increase in the cost of health care and expenditures in health care.

BottomFeeder writes:

Quote lgl...
> Is a Heart Transplant really an effective treatment, when it requires sixteen hours in a surgical room, at $8000 per hour rental for the room alone?

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