NCPA - National Center for Policy Analysis

PREVENTIVE MEDICAL SERVICES DO NOT SAVE MONEY

June 30, 2009

Preventive medical care usually adds to overall health care costs, but this does not mean that it is bad.  Diagnostic tests showing that no disease is present benefit patients by relieving anxiety and reassuring them of their health.  Most of the time, preventive care is like a consumer good that creates benefits in return for a cost.  It is not like an investment good that promises a positive economic rate of return, says John C. Goodman, President, CEO and the Kellye Wright Fellow of the National Center for Policy Analysis.

Consider the cost of screening for breast cancer (including the costs of treatment for those discovered to have cancer) per quality adjusted life year (the cost to add a year of life adjusted for its quality) as a result of the screening and subsequent treatment.  In this context, a QALY is worth more than a year of life confined to bed, says Goodman. 

In a 2006 study, Natasha Stout and her colleagues found that:

  • When compared to no screening, giving mammograms to women every five years, starting at age 55 and ending at age 70, costs about $43,000 for every QALY saved as a result of the screening, when all costs are considered.
  • Decreasing the screening interval from five years to every three years could buy additional QALYs at a cost of about $46,000 for every additional year of life.
  • Increasing the last screening age to 75 while screening every three years would add $51,000 in costs per incremental QALY.

This does not mean that mammograms are wasteful, says Goodman.  On the contrary, they are a very reasonable investment for many women.  Economists who have studied the price people will pay to avoid various risks have found that people were willing to pay between $110,000 and $220,000 for each year of life saved.  These numbers are based on the amounts people were willing to pay to avoid risk when the risks were small and the amount of money was also small (for example, the extra wages required to induce people to take riskier jobs).

Since the cost of a mammogram is below that range, regular mammograms probably seem worthwhile to most women.  However, more frequent screenings make the costs rise in relation to the benefits.  Despite the preference of many doctors for annual screening, the tradeoff is not in keeping with the kind of choices people typically make to avoid risk in other areas of life, says Goodman.

Source: John C. Goodman, "Preventive Medical Services do not Save Money," Fraser Institute, June 2009.

For text:

http://www.fraseramerica.org/Commerce.Web/product_files/PreventiveMedicalServices_US.pdf 

 

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