Cost and Efficiency

Ezra Klein offers a nice distinction:

When talking about costs, folks need to distinguish whether they’re talking about getting more value for each dollar or reducing total spending. The two might not be the same. Prevention, for instance, gets far more value out of each dollar. But if it keeps people alive a whole lot longer, that’s more time for them to contract various illnesses, and when they grow old, to die from something expensive. So though prevention may mean our health dollars are doing a whole lot more good, it may not mean we’re spending less as a total percentage of GDP.

Advertisement

Right. Nothing saves money like swift death at a relatively young age. Conversely, if you’re healthy and live a long time, you’ll likely wind up needing long-term care which is hugely expensive. Everybody gets sick and dies at some point, so any successful medical treatment merely ensures that future treatments will be needed. But even though you sometimes see scary charts, there’s really nothing wrong with the share of GDP that goes to health care increasing if we’re getting good value for that money in terms of longer, more capable lives.

Photo by Flickr user waldoj used under a Creative Commons license