High Cancer Spending Pays Off — Literally
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By Sally C. Pipes
British prostate-cancer patients just received a rare bit of good news. The country's government-run healthcare system announced that it would pay for a drug known as Abiraterone, an innovative new treatment for the disease that can extend life for several months.
But they almost weren't so lucky. The National Institute for Health and Clinical Excellence (NICE), Britain's health rationing board, initially ruled in February against paying for the treatment. The decision had nothing to do with the drug's health benefits, which the regulators admitted were real. Instead, they said that it cost too much.
Of course, the nearly $4,800-a-month drug has been available in the United States for more than a year.
America undoubtedly spends more on cancer treatments like these than other countries. But the data are increasingly showing that the money we spend on cancer treatment is worth it.
Greater levels of spending on cancer treatment correspond with longer lives. In a recent issue of Health Affairs, University of Chicago health economist Tomas Philipson and several co-authors compared cancer spending in the United States with spending in 10 European countries between 1983 and 1999.
Those diagnosed with cancer in countries that spent more had longer life expectancies. Slovakia, which spent $39 per capita on cancer treatment, averaged a little more than five years of life expectancy following cancer diagnosis. Sweden spent $134 per capita and showed life expectancy of 9.9 years.
The United States spent more than any other country -- $207 per capita. Yet it also exhibited the longest life expectancy following diagnosis. On average, patients in the United States lived 10.8 years after finding out they had cancer.
America isn't just delaying cancer death. It's beating the disease back. Cancer mortality rates in the United States during the study period dropped faster than those in Europe.
The extra spending in the United States produced better results because it paid for more intense, more aggressive treatment -- and better medical technology. U.S. cancer patients had more rapid access to new drugs. More aggressive screening and early detection efforts for those at risk for breast and prostate cancer also played a role in Americans' longer life expectancy.
Despite data like these, the World Health Organization (WHO) has ranked the U.S. healthcare system 37th worldwide. Of course, WHO attributes 25 percent of its ranking to "health distribution," which assigns more importance to treating everyone equally than treating them well. In other words, a nation where everyone is treated poorly would do well on the WHO's scale.
U.S. cancer patients don't just live longer. The economic gains associated with increases in life expectancy were actually greater than the costs of treatment.
Researchers have estimated the statistical value of a life for a worker in his prime to be between $5 million and $12 million. When the study's authors compared the extra costs incurred by the United States as a result of cancer care to the statistical value of the lives saved, they found an average net gain of about $61,000.
Spread across the entire population, the total economic gain was $598 billion over the study period. That averages to about $43 billion in economic activity gained each year just from keeping people alive.
America's decision to spend more on cancer care, in other words, has made it healthier and wealthier. Stingy European countries have lost lives and economic value by comparison.
Not only is spending more on cancer care a clear win-win for patient health and the overall economy. It's also what Americans want.
A separate study in the Health Affairs symposium by Sean Seabury of the RAND Corporation and coauthors surveyed 4,800 patients and found that, on average, those patients valued metastatic cancer treatments at 24 times more than their cost.
That's much higher than the values typically assumed by cost-benefit calculations. The study concluded that colorectal cancer patients "placed a greater value on survival than has previously been recognized by health care regulators and payers."
Should we really be surprised? This may be news to the bureaucrats trying to force rationing on unwilling Americans, but it's no shocker to the rest of us. People want to live -- and they're willing to pay great sums to do so. We're all better off for it.
Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare (Regnery 2012).
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