Preventive Medical Care: Really Worth It?

Is preventative medical care really worth it? I can see how eating a sensible diet, exercising, and such could lead to health care savings overall, but these are all things that don’t really need to involve medical care.[1] How about those preventative measures that do involve the medical industry? The CBO says, “Hang on a minute there…”

Preventive medical care includes services such as cancer screening, cholesterol management, and vaccines. In making its estimates of the budgetary effects of expanded governmental support for such care, CBO takes into account any estimated savings to the government that would result from greater use of preventive care as well as the estimated costs of that additional care. Although different types of preventive care have different effects on spending, the evidence suggests that for most preventive services, expanded utilization leads to higher, not lower, medical spending overall.

Well…yeah. Consider Joe who goes in for cancer screening. He’s clear. So how much did we save? Nothing. In fact, we are in the hole since we spent money screening a person with no cancer. Bob goes in next and it turns out he has cancer. How much did we save? Hard to say. We spend money on the screening and treating his cancer. Now, maybe we’d save some money for Bob than if he got no screening and his cancer progresses, but it is also possible that the cancer progresses to the point that whatever treatment is undertaken is not that great because Bob’s cancer is so far advanced he dies shortly after treatment starts.

Then there is just the number of people involved. Here is how the CBO puts it,

That result may seem counterintuitive. For example, many observers point to cases in which a simple medical test, if given early enough, can reveal a condition that is treatable at a fraction of the cost of treating that same illness after it has progressed. But when analyzing the effects of preventive care on total spending for health care, it is important to recognize that doctors do not know beforehand which patients are going to develop costly illnesses. To avert one case of acute illness, it is usually necessary to provide preventive care to many patients, most of whom would not have suffered that illness anyway. Judging the overall effect on medical spending requires analysts to calculate not just the savings from the relatively few individuals who would avoid more expensive treatment later, but also the costs of the many who would make greater use of preventive care.

In other words, if the preventive care saves us $1 million (treating diseases earlier), but costs $1 million (increased number of screenings) there is no savings.

However, in chasing cost savings this is one area where we might want to proceed with caution. After all, preventive screening can save lives.
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[1] I say could because if it leads to increased life spans and that most health care expenditures come from those over 65, then having more people live past 65 could have the overall effect of increasing health care expenditures. If a person were to suddenly drop over dead at 49 of a heart attack, chances are he’s saving us far, far more money than the guy who runs 5 miles every day, eats right, and goes to his annual check up.

FILED UNDER: Economics and Business, Health, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Davebo says:

    Consider Joe who goes in for cancer screening. He’s clear. So how much did we save? Nothing. In fact, we are in the hole since we spent money screening a person with no cancer. Bob goes in next and it turns out he has cancer. How much did we save? Hard to say. We spend money on the screening and treating his cancer. Now, maybe we’d save some money for Bob than if he got no screening and his cancer progresses, but it is also possible that the cancer progresses to the point that whatever treatment is undertaken is not that great because Bob’s cancer is so far advanced he dies shortly after treatment starts.

    Bob number 1 is likely still alive due to early detection.

    Bob number 2 will probably face serious consequences if not death due to a delayed diagnosis.

    I know which Bob I’d rather be.

    However, in chasing cost savings this is one area where we might want to proceed with caution. After all, preventive screening can absolutely does save lives on a daily basis in this country.

  2. kth says:

    Obviously the CBO isn’t saying we shouldn’t do preventive care, just throwing water on the notion that the cost curve can be easily bent. I get that, and it’s a fair point.

    But the apples-to-apples comparison would be, on an individual level, not between someone who gets preventive care and one who dies from the lack thereof, but between 2 guys who make it to the same age, and one had the pro-active care and the other didn’t. Do the costs of the early treatment and medication the first guy gets add up to the dialysis and angioplasty the second guy has to have? Hard to imagine that they would.

  3. Because of a family history of colon cancer, I’ve been having colonoscopies every five years since before I was forty. This certainly qualifies as preventative care, and it’s not cheap in dollars or lost work. Thus far I’ve had nothing but a clean bill of health. As long as the choice is mine I will continue to have these every five years as is commonly recommended and I will have a full physical each year as well. I can only guess at what decisions I will no longer get to make as I age concerning my health maintenance under Obamacare.

    I guess I’m having trouble figuring out why my preventative care would be anyone’s business but mine and my doctor’s and why what it costs would be anyone’s business but mine and my insurance company as long as I am willing to pay for it. Why any health czar or bureaucratic lackey would have any say, permitting or denying, the preventative measures I choose to take and pay for myself in the interests of their progressive social engineering plans completely eludes me. And the real kicker is I think I am expected to pay more for less to make these utopian dreams come true.

    What am I missing?

  4. Herb says:

    However, in chasing cost savings this is one area where we might want to proceed with caution. After all, preventive screening can save lives.

    This is key, I think.

    Expensive but useful is okay with me. It’s the expensive but wasteful stuff we should cut down on. Unmanned drones are quite expensive too. So are F-22s. However, one is more useful these days…

  5. Michael says:

    I say could because if it leads to increased life spans and that most health care expenditures come from those over 65, then having more people live past 65 could have the overall effect of increasing health care expenditures.

    Presumably increased lifespans means that people over 65 will be healthier than they are currently, otherwise they wouldn’t be living much longer than they are currently.

  6. PD Shaw says:

    I look at this way: Most immunizations are legal obligations, and consequently, I believe the government should pay for them. The policy makes sense because the failure rate of immunizations makes herd immunity a public good, the costs of which should be shared.

    Similarly, if you can put together a credible study showing that a preventive treatment would reduce total U.S. expenditures on healthcare, I say print the vouchers. We don’t need new programs, just some good studies and some means of determining price. In other words, I am willing to accept that total healthcare expenditures are a public good.

  7. Stan says:

    I wonder if Charles Austin would explain why he thinks he wouldn’t have coverage for annual colonoscopies if “ObamaCare” passes through Congress? And what does he mean by “ObamaCare”

  8. Steve Verdon says:

    I look at this way: Most immunizations are legal obligations, and consequently, I believe the government should pay for them. The policy makes sense because the failure rate of immunizations makes herd immunity a public good, the costs of which should be shared.

    Similarly, if you can put together a credible study showing that a preventive treatment would reduce total U.S. expenditures on healthcare, I say print the vouchers. We don’t need new programs, just some good studies and some means of determining price. In other words, I am willing to accept that total healthcare expenditures are a public good.

    No, externalities, and the last one is pecuniary due to the way we’ve structured health care. We could end up with the same thing for food, housing, and such with similarly rotten policies.

  9. PD Shaw says:

    I wonder if Charles Austin would explain why he thinks he wouldn’t have coverage for annual colonoscopies if “ObamaCare” passes through Congress?

    I don’t mean to speak for C.A., but these types of wellness visits are frequently the hardest to get an appointment for. Trying to obtain financial savings from increasing colonoscopies without increasing the facilities and staff for conducting them could reduce his access.

  10. Stan, my point is that no one knows what Obamacare is going to do, and by Obamacare I mean the 1,000+ page bill that the Masters of the Universe want to pass without debate. The bill is so long and obtuse that its implications are near impossible to predict, even though it has to be passed yesterday! Can you guarantee that I won’t have any problems getting these procedures when I’m 65? 70? 80? Regardless of cost pressures on the tax rolls?

    The burden of proof is on those who want to change the system to convince me that it will work, not on me to accept bland pronouncements to just trust them. So, I’m all ears — convince me.

  11. Steve Verdon says:

    The burden of proof is on those who want to change the system to convince me that it will work, not on me to accept bland pronouncements to just trust them. So, I’m all ears — convince me.

    This.

    For example, Obama has said repeatedly, “If you like your doctor you get to keep your doctor. Period.”

    Suppose I like my doctor. Suppose my employer stops offering coverage under my chosen plan. What then? Do I get to keep my doctor? Suppose my employer says, “Fuck it,” and goes with the fee/penalty and tosses all of us employees into the “public option pool” cause in the end its cheaper. Do I get to keep my doctor? Do I get the same plan at the same cost that I initially had?

    I’m thinking the answer is likely to be no. Its easy to make the kinds of statements that the President has made. If it doesn’t work out for 20% of the population, who cares. He can still quite possibly win relection without them. Heck they might not even blame him for their current problems. He’s a nice guy after all….right?

  12. Stan says:

    Charles, the insurance reform bills passed by the House committees have been endorsed by the AMA and AARP. From what I understand, the bills 1) require employers (with exceptions for small businesses) to either provide insurance for their employees or pay a tax surcharge, so much for each uninsured employee, and 2) require individuals who do not receive insurance benefits at work to purchase insurance, with a subsidy based on income. The bills forbid recission, the practice of refusing to renew the insurance of a family with big expenses, and the denial of coverage based on a pre-existing medical condition. It is closely based on the insurance model used by Germany, Switzerland, the Netherlands, and, here in the US, by the state of Massachusetts.
    As I’ve described it, it does not contain a public plan. I do not think a public plan will be included because of opposition from the insurance industry.
    Turning to colonoscopies, my wife and I have had them every five years since we turned 60. My brothers and their wives have also had them, but they had to pay for them out of pocket until recently because their insurance didn’t cover colonoscopies until a few years ago. Private insurance is not always as good as you think it is.
    With regard to your complaint that members of Congress won’t read the “ObamaCare” bill, nobody in Congress reads any but the shortest of bills. Their staffs read the long ones and summarize them.
    Finally, I simply don’t understand how people can say they love Medicare and Social Security AND the government can’t do anything right. When I was in college they called this cognitive dissonance.

  13. Stan,

    Being endorsed by the AMA does not impress me. One cartel bargaining with another to keep it’s power. Being endorsed by the AARP I take as more of a contra-indicator of what is right, but YMMV.

    What if I cancel my company’s insurance plan becuase of this “tax surcharge?” I believe I’ve read that if one of my employees ops for the government plan then I get hit by the surcharge. Screw that.

    Wrt recission, apparently the government has decided to redefine insurance as somthing else, but keep calling it insurance. But surely that won’t affect the “insurance” to be offered, is that it?

    I don’t know much about Germany’s, Switzerland’s, or the Netherland’s plans, but as I understand it, the Massachussetts plan is falling apart as we speak. Surely we aren’t going to follow that train wreck over the cliff.

    Is it my responsibility to defend the insurance companies or individual policies now? You don’t get what you don’t pay for. Nothing new here.

    As for the length of the bill, perhaps I could have phrased that better as to the scope fo the bill. How about taking smaller incremental steps rather than a massive, unpredictable overhaul that will be next to impossible to back out of if it turns out to really, really suck. Unintended consequences seem to grow exponentially with the import of the legislation, and this is the mother of all legislative edicts.

    Please show me where I have ever written that “I love Medicare,” that “I love Social Security” or that “the government can never do anything right.” When I was in college they called those strawmen.

  14. Steve Verdon says:

    It is closely based on the insurance model used by Germany, Switzerland, the Netherlands, and, here in the US, by the state of Massachusetts.

    I’m skeptical because last I read the Netherlands has a system similar to the one in France. The Dutch system has been described by Michael Tanner as one of the most market oriented systems in Europe. And the changes in the Dutch system appear to be having a downward impact on cost growth.

    Switzerland is making use of the same concept as Massachussetts, but it having problems…like Massachussetts. The Swiss have a very low percentage of health care paid for by the government. In Switzerland the individual buys insurance, in the Netherlands the employer pays half the individual the other half. I think this is important in that the current method in the U.S. of having employers buy it with pre-tax dollars can lead to overly excessive benefits packages. I don’t see the Obama plan doing anything like this.

    As for Germany it is very different. People below a given income level enroll (its mandatory) in “sickness funds” which are finance via a payroll tax. If you are above the income level you can enroll in a sickness fund or pursue another option. Expenditures have been rising dramatically, one proposed solution is to cut back on benefits.

    So to say the plan is similar to other countries is somewhat misleading given differences across countries. Yes some of the basic principles are similar, but so is a horse drawn cart and a car. Both have wheels, axles, a bottom, and even sides and seats. But they are also quite different.

    I’d be all in favor of moving to a system where people have to buy their own health care and not their employer. If such legislation also had employers pay employees the same dollar amount they currently contribute to their health care in wages, and such additional income starts out as untaxed and taxes are phased in, it might be a good place to start. It would certainly get people to start thinking about some of their plans. Do they really want certain things in their plan.

  15. Stan says:

    charles, I can’t imagine where you’ve read that “if one of your employees opts for the government plan … “. Every version of the public plan I’ve seen explicitly says that it’s limited to people whose employers do NOT provide health benefits. I think you’re misinformed.

    I mentioned the use of the Obama plan by Switzerland and other European countries because I’ve read hundreds of articles explaining how awful these health systems are and how much they’re hated, and yet, despite vigorous conservative parties in all the countries I mentioned, there is no move in any of them to adopt an American style health system. I didn’t mention the UK, which has a fully socialized medical system, much like the health system in our active duty armed forces. Margaret Thatcher was prime minister in Great Britain for a long time. She was very conservative. Yet she always claimed to be a supporter of the National Health Plan, and she made no move to undo it. I also note that the health system in Massachusetts was brought in under a Republican governor, Mitt Romney, and that the Republican party in Massachusetts is not attempting to reverse it. The Massachusetts system is not falling apart. It’s struggling with costs, but as far as I can see, the plan is popular. If plans like this are unworkable, as you feel and as Dr. Joyner feels, why are they so popular in the places where they’re used? Are you claiming that these people, the Dutch, the Germans, et al, are too stupid to understand their own interests?

    If you oppose plans like this out of self-interest, I understand it, and I also understand people who oppose social welfare policies because of their ideological position. What I can’t understand is people who say that plans like ObamaCare (Germany, et al), single payer (France, Canada), and the National Health (the UK, Spain) don’t work. You’re entitled to your own opinions, but not to your own facts.

  16. Stan says:

    Steve Verdon, the system you support, having people buy their own insurance, would represent a massive upheaval in people’s personal finances. It has zero chance of being enacted by Congress, barring a complete breakdown of the present system of employer-provided health insurance AND, simultaneously, a complete collapse of the Democratic Party. What you’re actually opting for is the status quo.

    I’m aware that the health systems in the Netherlands and Germany are different in detail than ObamaCare, to the extent that ObamaCare exists as a coherent plan. I think the concept is similar, which is why I referenced these countries. More about the Dutch plan is contained in this article:

    http://tinyurl.com/lple22

    I’m going to return to a previous point. When I see people like John Stossel stating that the health system in country x is a complete disaster, I ask myself why it hasn’t been replaced. Many if not most of Lyndon Johnson’s Great Society programs were ended or whittled down when movement conservatism took control here. Why hasn’t something similar happened in Europe? Do the people suffer from false consciousness? Or is it possible that conservative commentators, even ones as intelligent and civil as the people who run this blog, are simply blinded by ideological fervor?

  17. steve says:

    I have made an effort to find out what is going on in Massachusetts. Right wing sources say it is falling apart, left wing sources say it is working. What a surprise. I think you need to separate out problems with Medicaid because of the economic downturn, and the state run insurance program. They are also still paying off start up costs just as the economy, and therefore revenue, tanked.

    Steve

  18. kth says:

    Having people buy their own insurance, would represent a massive upheaval in people’s personal finances.

    It would be a big accounting change. But it wouldn’t dramatically affect the bottom lines of households currently ensured by employers, because the money the employer was spending on insurance, could now be spent on wages. Or the employer could just effectively cut everyone’s wages, but the supply and demand of labor markets would mostly take care of that.

    Employers don’t offer health benefits now because they are big-hearted, but because competition for employees demands it (and because an employee takes home more from a dollar of health insurance than from a dollar of wages, due to the tax incentives). So there’s no reason total compensation would dramatically drop if the tax laws were changed.

    The trouble with individuals buying their own insurance today is those policies are for shit, compared to employer-provided coverage. They really aren’t worth the paper they are written on: as soon as you get sick, they will stop insuring you, which they can’t do with a group plan, especially a large one.

    That’s why I can live without a public option (though I’d prefer one), as long as coverage is mandatory, rating is community rather than individual, and rescissions are not permitted.

  19. Franklin says:

    Charles Austin says:

    What am I missing?

    Even current private health insurance providers may decide you don’t need that colonoscopy, even if you’ve paid your premiums to them on time for 30 years.

    My aunt had the same insurance basically forever, and they decided they didn’t want to pay for her anti-nausea drugs during chemo. She couldn’t afford them, she started refusing her chemo because it made her sick all the time, and now she’s dead. Would those anti-nausea drugs have made the difference? Impossible to know, but hey it’s good to know those premiums are in somebody’s fat pocket rather than actually insuring somebody’s, you know, health.

    I agree with your overall point, though. In what way would ObamaCare improve this situation? I have no idea. All I am saying is that the Obama’s supposed “death panels” exist right now at your private insurer.

  20. anjin-san says:

    Can you guarantee that I won’t have any problems getting these procedures when I’m 65? 70? 80?

    Can you “guarantee” that you will still have private coverage then? Or that they will continue to pay for your procedures even if you are still covered?

  21. “In other words, if the preventive care saves us $1 million (treating diseases earlier), but costs $1 million (increased number of screenings) there is no savings.”

    But you’re getting better outcomes for the money. Which is a big chunk of the idea. Very few reformers would actually say we should be looking to reduce overall healthcare spending just for the hell of it, just that, at the very least, we ought to be getting more for the money.

  22. BJ Feng says:

    The largest contributors to illnesses are linked to lifestyle choices. Obesity/heart disease/diet are linked to the top two causes of death, heart disease and cancer. They also cost a lot to treat, a person with hypertension or Type II Diabetes has to take drugs for the rest of his life, often several drugs.

    I don’t see how preventative health care changes anything for lifestyle caused disease. A doctor will tell you you’re fat and have high blood pressure, but he can’t make you exercise or eat better. Most likely he’ll just prescribe a pill, or a drug cocktail to deal with your symptoms. All of which would be less effective than losing weight and exercising.

    A huge number of Americans are obese and don’t take drugs because they haven’t visited the doctor recently. I shudder to think what would happen if all the nation’s obese took drugs thanks to preventative care. The system would be bankrupt in short order and without much gain since the drugs can’t cure the underlying disease which is obesity.

  23. Dave Schuler says:

    Steve, I think you’ll find that a lot of the arguments amount to the appeal to consequences fallacy.

    If we can’t get substantial savings through preventive care or electronic recordkeeping or comparative effectiveness (which isn’t the same as evidence-based medicine, BTW, although it seems to be confused with it), then in order to achieve substantial savings (which we MUST do for fiscal reasons) we’ll need to implement systemic changes in healthcare, a politically enormously painful process.

    I’ve already reached the conclusion that we need systemic change.

  24. anjin-san says:

    As for the length of the bill, perhaps I could have phrased that better as to the scope fo the bill. How about taking smaller incremental steps rather than a massive, unpredictable overhaul that will be next to impossible to back out of if it turns out to really, really suck. Unintended consequences seem to grow exponentially with the import of the legislation

    Here we agree…

  25. Our Paul says:

    I have often wondered why it is so difficult for Americans to understand the European health care systems and to characterize it as “socialism”. Central to the successes of the European health care systems is the larger social network these countries support.

    You cannot tease health care out of this social network. As the health care system in the Netherlands had been brought up in this thread with out an examination of social structure, I would recommend Russel Shorto’s fun article titled “Going Dutch” in the NY Times Magazine. It is a fun read, as Mr. Short examines the quirky Dutch social network and health care through the eyes of an expat steeped in the tradition of American exceptionalism.

    On a more whimsical, yet telling note is an analysis by the by the Canadian Council of Social Development of indicators of social development. It is titled Canada Beats USA – But Loses Gold to Sweden and each country is assigned an Olympic medal depending on its “place”. Final tally out of 26 indices: Gold Medal — USA(2), Canada (4), Sweden (20).

    For those who have more than a passing interest in European Health Care, this web site should prove helpful. The magic blue box on the left of the European Observatory on Health Systems and Policies home page will link you to what ever country you wish to examine.

    I should point out that one of the Swedish gold medals was in literacy rate, while the other was in percentage of the populace voting in National elections. Something to ponder, as we contemplate the Decleration of Independence phrase of government by the people and for the people.

  26. An Interested Party says:

    re: Our Paul August 11, 2009 12:04

    This seems like a hostile place to make this case, as I’m sure you can already see the arguments that will be made against your position? The European systems involve a bunch of deadbeats leeching off the system and too many people have to pay for other people and its unsustainable and socialism is evil, wrong, bad, etc. etc….

  27. Steve Verdon says:

    Stan,

    Steve Verdon, the system you support, having people buy their own insurance, would represent a massive upheaval in people’s personal finances.

    It is what they do in the Netherlands and Switzerland, two countries you likened to the Obama Plan. Care to back off of that claim now?

    Further you are attacking a strawman. You are not addressing my actual claim. My claim is the followig:

    Stan is paid: $25,000 in salary, and $5,000 for health care (i.e. employer provided benefits).

    Unders Steve’s plan: Stan would be paid $25,000 for his salary, and $5,000 tax free (the first year) to buy his own insurance. In future years the tax rate on Stan’s “insurance pay” goes up (by how much is not yet established).

    This would not cause a huge upheaval in people’s finances. Further, if part of that “insurance” pay remains tax free it provides a subsidy/incentive to buy insurance. If you take all of the pay without purchasing insurance you are taxes fully at the highest applicable marginal rate. Please try to deal with what I’ve written, not what you think I’ve written.

    It would be a big accounting change. But it wouldn’t dramatically affect the bottom lines of households currently ensured by employers, because the money the employer was spending on insurance, could now be spent on wages. Or the employer could just effectively cut everyone’s wages, but the supply and demand of labor markets would mostly take care of that.

    Employers don’t offer health benefits now because they are big-hearted, but because competition for employees demands it (and because an employee takes home more from a dollar of health insurance than from a dollar of wages, due to the tax incentives). So there’s no reason total compensation would dramatically drop if the tax laws were changed.

    Ding ding ding ding. Winner. Somebody who actually paid attention in their fundamentals of economics class and grasps reality. Lets repeat this…employers do not give you health benefits because they are big kind hearted people, they do it because its cheaper for them. They can offer you say, $55,000 in salary in benefits with our current tax structure at a cost of $53,000. A win-win.

    This seems like a hostile place to make this case, as I’m sure you can already see the arguments that will be made against your position? The European systems involve a bunch of deadbeats leeching off the system and too many people have to pay for other people and its unsustainable and socialism is evil, wrong, bad, etc. etc….

    Bullsh*t. The Dutch and Swiss systems are actually rather market oriented. But when I pointed it out Stan jumped in poo-pooing it.

    We need more market incentives to help bend down the cost curve. We also need to try and expand coverage, and rationalize our system. Dave is right, we need systemic change. Yet, some systems are better than others. For example, the Dutch system has costs growing at 3% annually. We we could replicate that and improve health outcomes (or at least not have them deteriorate) by moving to that system…lay it on me baby. I’ve been right here all along saying:

    “Moving to the French system might be a good start.”

    “The Netherlands has a reportedly decent system.”

    This canard that there is dogmatic opposition here at OTB to European systems is. Just. Not. True.

  28. An Interested Party says:

    re: Steve Verdon | August 11, 2009 | 02:44 pm

    Our Paul wasn’t just referring to health care…he was also talking about the larger social network that these countries have…his links specifically reference the Dutch welfare state as well as the array of social programs available in Canada…there is no opposition to these things on this blog?

  29. Our Paul says:

    An Interested Party (August 12, 2009 | 12:28 am) Any chance we can get Steve Verdon to chow us his passport? Surely ha must have attended some Economic conference dealing with health care in some far-off land…

  30. An Interested Party says:

    Our Paul, your point about larger social networks and their connection to health care is well taken, but there are far too many people in this country who are opposed to those networks (certainly with government involvement) to ever allow them to exist here, so we’ll never know if such a connection could work in this country…