"We are better off having spent our money on heart attack care than we would have been if the money had been spent elsewhere. Moreover, in view of the value of the resulting improved health, the implication is that the cost of living for heart attack victims is actually falling.
Medical treatment of cardiovascular disease, and particularly of heart attack patients, continues to grow more expensive every year. Such treatment has yielded measurable success in life extension. But in purely economic terms, does the benefit justify the cost? In The Costs and Benefits of Intensive Treatment for Cardiovascular Disease (NBER Working Paper No. 6514), David Cutler, Mark McClellan, and Joseph Newhouse conclude that it does. Their findings provide a framework for measuring overall productivity of the medical care sector, a matter of no small consequence in terms of both the national health and the national economy.
Cardiovascular disease has been the leading cause of death in the United States throughout this century, and in the coming decades is likely to become the leading cause of death world-wide. Still, between 1950 and 1990 the mortality rate for sufferers of cardiovascular disease has fallen by 60 percent, and it continues to fall to this day. In addition, the health of cardiovascular disease survivors is improving.
But knowing that cardiovascular health has improved dramatically is not enough, the authors say, especially since the cost of achieving that improvement has been so high. Recent estimates suggest that cardiovascular disease costs the United States $110 billion annually. The average cost to traditional health insurers for the first 90 days following a heart attack is $38,501. Medicare spends over $14,000 per patient on hospital bills in the year after a heart attack, plus additional amounts for physicians and outpatient care. Moreover, these amounts are rising at a rate of 4 percent annually.
The NBER study focuses on heart attack mortality for a number of reasons: heart attacks are a common and very serious consequence of cardiovascular disease; heart attacks are expensive to treat; and data on heart attack treatment are easier to obtain than are data for other cardiovascular conditions. Through a comprehensive survey of studies conducted over the last 15 years, Cutler, McClellan, and Newhouse determine that the treatment most responsible for reducing mortality for heart attack patients is pharmaceuticals (aspirin, beta blockers, thrombolytic drugs). To a lesser degree, mortality reduction may be attributed to invasive procedures (for example, bypass surgery or angioplasty). Other factors, such as "secondary prevention" and individual risk reduction, play their part. But the authors conclude that by far it is the increasing intensity of medical treatment that extends the lives of heart attack patients. Such treatment is also responsible for the increased costs.
Cutler, McClellan, and Newhouse estimate that between 1984 and 1991, life expectancy after a heart attack rose by eight months (from 5 years and 2 months to 5 years and 10 months). In that same period, the cost of treating heart attack patients rose from about $11,000 to about $15,000. Total "heart attack spending" in the same period rose from $2.6 billion to $3.4 billion.
To determine whether this expenditure was worth it, the authors consider what they call the admittedly controversial index of the dollar value of a year of life. Using a low central estimate of $25,000 per lifeyear, they compare the estimated value of the improved heart attack survival time between 1984 to 1991 -- nearly $15,000 -- to the increase in the costs of heart attack care over the same period -- $4,000. They conclude that we are better off having spent our money on heart attack care than we would have been if the money had been spent elsewhere. Moreover, in view of the value of the resulting improved health, the implication is that the cost of living for heart attack victims is actually falling.
The final issue that Cutler, McClellan, and Newhouse undertake is the effect of managed care on the treatment of heart attacks in terms of cost-benefit analysis. They do so because while only 25 percent of the privately insured population was in managed care in 1987, some 75 percent of the privately insured population is enrolled in managed care today. The researchers study the complete claims records of a large HMO in Massachusetts over a two and a half year period, and of Massachusetts hospital records for a similar period. Treatment and cost data clearly indicate that while the cost-conscious HMOs pay out considerably less than traditional insurance indemnifiers, the patients receive essentially the same care.
The authors therefore surmise that while we pay more for heart attack care than we used to, we get more in return. They caution against generalizing this finding to other types of medical care. But the authors believe that their results provide a framework for measuring productivity in the medical care sector, which they call a longstanding problem in national income accounting.