Dying Too Soon: How Cost-Effectiveness Analysis Can Save Lives

Studies | Health

No. 204
Saturday, June 01, 1996
by Tammy O. Tengs

Executive Summary

The United States spends an enormous amount of money promoting health and safety, partly through government intervention and partly through private-sector activity. Since all of us will eventually die, public policy aimed at risk reduction is designed not to prevent deaths, but to prevent premature deaths. Thus one measure of the success of a policy or regulation (also referred to as an "intervention") might be the number of years of life saved. For example, if an intervention averts the premature death of someone who is 45 years old and allows that person to live to age 80, then it saves 35 years of life.

A measure of "cost-effectiveness" is obtained by dividing the total cost of a particular intervention by the number of years of life saved to obtain the cost per year of life saved. Health promotion policies vary enormously in their cost-effectiveness, yet there is no correlation between cost-effectiveness and the way we invest our health promotion resources. For example:

  • By spending $182,000 every year for sickle cell screening and treatment for black newborns, we add 769 years collectively to their lives at a cost of only $236 for each year of life saved.
  • By spending about $253 million per year on heart transplants, we add about 1,600 years to the lives of heart patients at a cost of $158,000 per year of life saved.
  • Equipping just 3 percent of school buses with seat belts costs about $1.6 million per year; but since this effort will save only one child's life every year, the cost is about $2.8 million per year of life saved.
  • We spend $2.8 million every year on radionuclide emission control at elemental phosphorus plants (which refine mined phosphorus before it goes to other uses); but since this effort will saves at most one life every decade, the cost is $5.4 million per year of life saved.

To examine the efficiency of societal investments in saving lives, the author, along with Professor John Graham and a team of researchers at the Harvard Center for Risk Analysis, systematically gleaned from the literature annual cost and lifesaving effectiveness information for 185 interventions. This information was then supplemented with expert estimates of the extent to which each intervention was implemented. Some of these interventions had been fully implemented, some partially implemented and some not implemented at all.

  • The 185 interventions cost about $21.4 billion per year and save about 592,000 years of life.
  • If that same money had been spent on the most cost-effective interventions, however, 1,230,000 years of life could have been saved -- about 638,000 more years of life than under the status quo.
  • Implementing the more cost-effective policies, therefore, could save twice as many years of life at no additional cost.

The radical differences in cost-effectiveness of current interventions raise the possibility of redirecting funds from less cost-effective to more cost-effective areas. For example, suppose we took away $45,000 per year from the money we spend regulating emissions at phosphorus plants and used it to screen the 20 percent of black newborns who are not now screened for sickle cell anemia. The effect on life expectancy of phosphorus plant workers would be negligible. However, black children would gain an additional 192 years of collective life expectancy every year.

Examination of the 139 proposed government regulations for which the Harvard Life-Saving Study had data revealed no relationship between the cost-effectiveness of government regulations and their implementation:

  • Regulations that were implemented cost $4.11 billion per year and save 94,000 years of life.
  • Investing the same $4.11 billion in the most cost-effective regulations would save 211,000 years of life annually -- more than double the current number.

Decision makers charged with protecting the survival of Americans implicitly or explicitly use a number of strategies. They may (1) invest in those interventions affecting the most people, (2) invest in those interventions yielding the greatest survival benefits or (3) invest in those interventions that cost the least money. We show that, if the goal is to save the most years of life, these strategies come up short. Only the strategy of (4) basing decisions on cost-effectiveness will result in the efficient allocation of scarce lifesaving resources.

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