NCPA - National Center for Policy Analysis

Health Costs And Longer Lives

August 3, 2001

Rapidly rising health-care costs have some people searching for a restraint mechanism. But those increases must be balanced against increases in life expectancy. A study by Harvard University researcher David Cutler and Stanford University's Mark McClellan, forthcoming in the journal Health Affairs, takes up this issue.

  • In 1984, Medicare spent nearly $4 billion in 2001 dollars paying for the treatment of heart attacks, a figure which exceeded $6 billion in 1998 -- even though the number of heart attacks had fallen almost 10 percent.
  • But while heart attack victims in 1984 lived slightly less than five years longer on average, victims in 1998 lived an average of six years longer.
  • Each heart attack cost Medicare nearly $12,000 more in 1998 than it did in 1984.
  • But many would say that extra cost is worth the extra year of life.

The lesson the researchers draw is that a misguided race to hold down health-care costs can retard technological progress.

Source: David Wessel, "Capital: Rising Medical Costs Can Be a Good Thing," Wall Street Journal, July 26, 2001.

For WSJ text


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