NCPA - National Center for Policy Analysis

Is Higher Health Care Spending "Worth It" in the Case of Cancer?

April 17, 2012

One of the most discussed rationales for health care reform is that the United States spends more on health care than most other developed nations, but its health outcomes are dubbed subpar.  The crucial question seems to be whether or not the additional spending actually yields better health outcomes, and if so, do these superior outcomes justify the financial outlay.

In a new study released by Health Affairs, researchers sought to compare cancer treatment outcomes and costs in Europe and the United States.  Assigning financial benefits of superior treatment to a standard dollar amount per year of additional life after treatment, the study found that America's spending is in fact worth it.

  • In line with overall trends in U.S. health care costs, U.S. spending on cancer treatment has risen greatly over time, from $13.1 billion in 1980 to $72.1 billion in 2004.
  • This exceeds costs and cost growth observed in Europe.
  • Five-year relative survival rates from cancer diagnosis appear to be higher in the United States, relative to Europe, for most solid tumors.

After confirming that the United States does spend significantly more per cancer patient, the study looked into the claimed superior health outcomes.  It found that for cancer survival gains from 1983 through 1999, U.S. survival gains after cancer diagnosis exceeded survival gains experienced in the European countries for most cancer types.

The researchers then ascertained whether these superior health outcomes, which averaged 1.8 additional years of survival between 1995 and 1999, were worth the additional financial outlay.

  • The value of additional survival gain was highest for prostate cancer ($627 billion in excess U.S. gains) and breast cancer ($173 billion in excess U.S. gains).
  • These gains were partially offset by higher European survival gains for several other cancer types, such that the net value to all U.S. patients was $598 billion.
  • This is greater than the costs in excess of European costs that totaled $158 billion.

Therefore, higher cancer spending does seem to be "worth it."

Source: Tomas Philipson et al., "An Analysis of Whether Higher Health Care Spending In the United States versus Europe Is 'Worth It' in the Case of Cancer," Health Affairs, April 2012.

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