An Ounce of Prevention Often Costs a Ton of Money

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Washington Post columnist Charles Krauthammer has a smart column today about the myth that preventive care will lower overall health care costs. This is a constant trope of health-care-reformer-in-chief President Barack Obama. As Krauthammer details:

Sprinkle fairy dust on every health-care plan, and present your deus ex machina: prevention.

Free mammograms and diabetes tests and checkups for all, promise Democratic leaders Nancy Pelosi and Steny Hoyer, writing in USA Today. Prevention, they assure us, will not just make us healthier, it also "will save money."

Obama followed suit in his Tuesday New Hampshire town hall, touting prevention as amazingly dual-purpose: "It saves lives. It also saves money."

This all sounds great—who hasn't heard Benjamin Franklin's aphorism: "An ounce of prevention is worth a pound of cure." While that may be true for individuals, all that preventing (mammograms, MRIs, statin drugs) can really add up. As Krauthammer explains:

Overall, preventive care increases medical costs.

This inconvenient truth comes, once again, from the CBO. In an Aug. 7 letter to Rep. Nathan Deal, CBO Director Doug Elmendorf writes: "Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness."

Krauthammer then provides an example of how this works:

What's the real-life actuality? In Obamaworld, as explained by the president in his Tuesday town hall, if we pour money into primary care for diabetics instead of giving surgeons "$30,000, $40,000, $50,000" for a later amputation—a whopper that misrepresents the surgeon's fee by a factor of at least 30—"that will save us money." Back on Earth, a rigorous study in the journal Circulation found that for cardiovascular diseases and diabetes, "if all the recommended prevention activities were applied with 100 percent success," the prevention would cost almost 10 times as much as the savings, increasing the country's total medical bill by 162 percent. That's because prevention applied to large populations is very expensive, as shown by another report Elmendorf cites, a definitive review in the New England Journal of Medicine of hundreds of studies that found that more than 80 percent of preventive measures added to medical costs. 

But as Krauthammer notes, most of us want medicine to keep us healthy or restore us back to health when we're sick. That's why we spend money on treatments and preventives like vaccines. Prevention prevents illnesses not higher costs.

Finally, the only reliable technique humanity has ever discovered for lowering the costs of products or services over time is market competition. That will be true for health care too.

It seems the president isn't above spreading a bit of health care reform "misinformation" himself.

Whole Krauthammer column is here. See also some of my colleagues' insightful thinking on this issue here and here

NEXT: Peter Bagge's Everybody Is Stupid Except For Me (And Other Astute Observations)

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  1. Obama is doing a fine job of alienating the AMA and physicians on this. His problem on that front is that can’t demonize them in public, but slip them a back-door fee increase to buy their support – all the plans on the table call for grinding down their fees. The physicians are beginning to wonder why they are at the table at all, if he is going to both spit in their face and pick their pockets.

  2. “Finally, the only reliable technique humanity has ever discovered for lowering the costs of products or services over time is market competition. That will be true for health care too.”

    Fascist.

  3. I blogged about this in May in a post called An Inconvenient Truth About Prevention (it’s here: http://bit.ly/zZ1yQ).

    Study after study show that while there may be public health benefits to prevention, it costs more than it saves.

    It doesn’t mean we shouldn’t do it, but it does mean we should be honest that the reason to do it isn’t the money.

  4. RC Dean,

    You’re aware the AMA is sponsoring another $12 million round of pro-Obamacare commercials, right?

  5. Also I don’t think people have caught on to this being doublespeak on another level. Obama complains about there being too many supposedly needless tests now, so his answer is to do even more testing. There’s just so much doublespeak coming from Obama. What also bothers me is how even if this is “deficit neutral,” there’s $900B that could be used for deficit reduction instead. I haven’t really heard much talk about how Obama is tying his hands (as well as future Presidents) on options to reducing the deficit/debt.

  6. I’m reminded of Colbert’s press club speech. Obama’s pursuit of truthiness and disdain for facts is phenomenal.

    We’re *almost* at the point where someone could start up a counter-Colbert.

  7. “Researchers who have examined the effects of preventive care generally find that the added costs of widespread use of preventive services tend to exceed the savings from averted illness.”

    Sure, but that letter is speaking only about medical spending. It doesn’t address things like lost productivity, unemployment/disability spending, etc., all expeditures which may have been avoided if the person hadn’t gotten sick in the first place.

    Let’s say “disease X” will hit 1/100 people if they aren’t vaccinated. The treatment for a person with X costs $1,000, and the vaccination costs $15. It costs more to vaccinate 100 people than it costs to treat the person who would become infected. But if that illness also causes the person to miss work for six months, that’s a cost of X that Krauthammer’s argument doesn’t take into account. That’s over and above even Evan’s statement:

    “For each life that is touched by avoiding a chronic disease, finding a tumor early on, staying out of the hospital, there is enormous value. But the value is not financial.”

    I guess my point is that there *is* a financial value that these arguments seem to ignore, beyond the value which, as Evan implies, can’t be measured. I’d be interested in seeing if that’s been quantified. However, if I took the time to do that today, I’d probably get fired and lose my health care.

  8. None of that stuff is prevention. It’s early detection. And only if it detects something.

  9. Seitz: Of course you’re right, but the claim being made is that preventive care will reduce health care costs, not produce other benefits. In addition, the notion of “benefits” is again being looked at a societal rather than individual level. It is very possible that some people are willing to make tradeoffs that harm their health, e.g., smoking, drinking, indulging in “non-safe” sex come to mind.

    The point has been made before that fat smoking alcoholics, on average, use less medical resources than other people because they die so early and so quickly, e.g., they never become eligible for Medicare.

  10. You’re aware the AMA is sponsoring another $12 million round of pro-Obamacare commercials, right?

    I knew they were still nominally on board, but their members are getting royally pissed.

    We’re still at the easy stage of this thing, for the big lobbying groups. Everything is still in flux – there are four major bills floating around, so there isn’t even a single vehicle settled on (although the House bill that cleared committee is the whipping boy of the moment).

    As this thing starts to gel, “special interests” that have been making vaguely supportive noises will start to drop off. The odds that the AMA will support the final deal, whatever it is, are going down.

    Sure, but that letter is speaking only about medical spending. It doesn’t address things like lost productivity, unemployment/disability spending, etc., all expeditures which may have been avoided if the person hadn’t gotten sick in the first place.

    If we’re talking second-order costs, don’t forget to leave out the drag on the economy that will come from financing all this.

  11. Invisible digit: Hmmm. Good point. But prescribing statins and beta blockers and installing arterial stents would count as prevention, yes?

  12. I am somewhat under the impression that the US already engages in more preventive care. Diagnostic tests are more likely to be performed earlier and more often and cancers and the like are detected earlier. Hence, in spite of our poor longevity numbers (which likely have little to do with healthcare, but with other societal and demographic ills), we tend to have higher cancer survival rates.

    Furthermore, the longevity number always cited is life expectancy at birth. I’d be interested in seeing how the US stacks up for life expectancy of geezers who make it to sixty.

    Some anecdata: A frind of mine knows a retired English policeman who comes to the US every year and pays for, out of pocket, a colonscopy at the UF Medical Center in Gainsville. The NHS will not pay for the procedure in spite of the fact that he is over fifty and has a family history of colon cancer. The procedure here is virtually automatic for anyone for such a history.

    I know this is only one case but I hear so many of these stories I find it hard to believe there isn’t some substance. Smoke and fire, don’t you know.

    Of course, there are bad outcomes, accidents and malpractice everywhere, no matter who is paying.

  13. How are our statistics skewed by the extraordinary efforts we take to keep premature infants alive? I know that affects our infant mortality rate, because of simply aborting a troubled fetus, we’ll often take measures to fight to keep it alive.

  14. Seitz: Of course you’re right, but the claim being made is that preventive care will reduce health care costs, not produce other benefits.

    Fair enough.

  15. But prescribing statins and beta blockers and installing arterial stents would count as prevention, yes?

    Preventing death, perhaps. But they are cures more than prevention. Would a beta blocker be prescribed to someone with no health problem? Would you get an arterial stent just to be on the safe side?

  16. Call me crazy, but I guess I just feel like there is a slight bit of difference between misinformation like “preventive care will lower overall health care costs” and misinformation like “The president is a foreign-born fascist socialist who is planning to euthanize your grandmother and disabled child”.

  17. Would a beta blocker be prescribed to someone with no health problem? Would you get an arterial stent just to be on the safe side?

    Statins are certainly prescribed to people with high cholesterol level but no history of heart disease, despite the fact that the evidence on whether that actually reduces heart disease (as opposed to just cholesterol) is mixed at best.

    KT,

    perhaps, but I don’t think that there’s a bit of difference between the Speaker of the House calling insurance companies “villains” for disallowing end of term care and people referring to a government panel that would do the same thing (only more so, according to the President) as “death panels.”

  18. Call me crazy, but I guess I just feel like there is a slight bit of difference between misinformation like “preventive care will lower overall health care costs” and misinformation like “The president is a foreign-born fascist socialist who is planning to euthanize your grandmother and disabled child”.

    I agree. The former is much more dangerous because it has a chance to affect policy.

  19. you’re all fucking fasco-racist nazis

  20. ProL: FYI, I addressed some of your questions in my 2008 column “Accidents, Murders, Preemies, Fat, and U.S. Life Expectancy.”

  21. Ron,

    Good article. It strikes me as a better explanation for the difference in mortality between the U.S. and other nations than the “their socialized healthcare is why!” argument. I hadn’t thought about the higher homicide and accidental death rate as being contributing factors, either.

  22. I get my annual flu shot because I’m over fifty and the last time I had the flu I spent three days thinking “this is how people die from the flu”.

    My employer pays for my shot, because he’d rather not pay me three days of salary to stay home a contemplate another near death experience. He also doesn’t want me sucking it up and coming to work then spreading the joy to my co-workers.

    So there is very positive business case for my employer to pay for me to get a flu shot every year.

    Yet none of this actually goes toward reducing the total cost of “medical care”.

  23. I would like to know if this study has factored in other savings, like less lost time at work because of disability and increased consumer spending because our we aren’t just sitting on our ever-widening asses. However, the ultimate case to be made is not financial but moral. The question is whether you are willing to decrease quality and length of life to save money. Or, to put it another way, “How much could I pay you to kill your mom ten years before her time?”

  24. David: Who gets to decide when it’s Mom’s time? The government “death panels”? 😉

  25. “Some anecdata: A frind of mine knows a retired English policeman who comes to the US every year and pays for, out of pocket, a colonscopy at the UF Medical Center in Gainsville.”

    With all the theme parks in Florida this is the ride he goes on?

  26. Except Krauhammer is also being misleading about what the NEJM article said. The article said that prevention and treatment usually end up being a wash. There are some prevention techniques that are very cost effective and those that aren’t. Those that aren’t generally have a very small proportion would fall ill if there is no treatment, but intelligently targeted prevention (like statins to patients at high risk for coronary disease) are very cost effective. So it’s not that prevention is necessarily expensive, many forms of prevention are very good investments.

  27. Ron,
    Sarah Palin gets to choose.

  28. ProL: FYI, I addressed some of your questions in my 2008 column “Accidents, Murders, Preemies, Fat, and U.S. Life Expectancy.”

    Are there any studies on survival rates beyond ages, say, 50 or 60?

    I think those numbers might be quite instructive.

  29. Mo: Perhaps, but from the NEJM article: Sweeping statements about the cost-saving potential of prevention, however, are overreaching.

    Can you say, panacea?

  30. Preventing death, perhaps. But they are cures more than prevention. Would a beta blocker be prescribed to someone with no health problem? Would you get an arterial stent just to be on the safe side?

    Actually, yes, there are drugs used for prevention. One example would be ACE inhibitors given to people with diabetes to help prevent the development of kidney disease.

  31. Krauthammer is correct about the surgeon’s fee. However, the overall cost, including the hospital bill, is likely to be near $30,000 for an amputation… before medicare/insurance discounting, of course.

  32. Has anyone mentioned the enormous possibility of fraud if ‘prevention exams’ are paid for by the gov’t.
    Medicare is already saddled by multi-millions of fraudelent examples.

  33. However, the overall cost, including the hospital bill, is likely to be near $30,000 for an amputation

    I can assure you that, under Medicare at least, the total charge for an amputation without complications is highly unlikely to exceed $5,000, all in. The hospital gets a flat fee for the admission, and the surgeon and anesthetist also get flat fees for the procedure.

  34. Oops, meant to add:

    The nominal “charges” for any medical procedure are a joke – absolutely no one ever pays them. Medicare/Medicaid pay off their own fee schedules, as do the big insurance companies. Even the smallest third-party payer will get a discount off charges. Individuals who somehow get stuck with a bill will either (a) get a discount for paying cash, (b) get a payment plan that is discounted, or (c) walk without paying a dime.

  35. However, the overall cost, including the hospital bill, is likely to be near $30,000 for an amputation

    I can assure you that, under Medicare at least, the total charge for an amputation without complications is highly unlikely to exceed $5,000, all in. The hospital gets a flat fee for the admission, and the surgeon and anesthetist also get flat fees for the procedure.

    Which isn’t to say that they won’t show it as $30,000 on the bill. It’s just that they’ll be a $25k write-off line.

    The disparity between the “official” price of various procedures and the total the BCBS and medicare pay (leaving $0 for me and the SO) is quite astounding at times.

    Someone is getting ripped off.

    First and foremost anyone who actually pays the “official” price and to a lesser extent the doctor/clinic/hospital.

  36. I think things are being misrepresented here.

    Preventative health care will save money in some cases and cost money in others.

    It’s a devil-in-the-details issue (like most).

    A more important point, however, is alluded to above.

    If humans are the ultimate resource, the loss of productivity, creativity, and the like is vastly under-estimated if you simply look at gross health-care costs. That fat smoker might use less health care dollars, but the loss of that fat smoker is a loss of our most valuable resource. “The Human Element” touted in some corporations PR.

    In other words, it seems a disingenuous argument, particularly coming from Ron Bailey who writes about the value of humans whenever he is discussing issues like over-population hype, etc…

  37. Neu Mejican, as Bailey pointed out above, when the for preventative care is that it will give cost savings in “Health Care” column. It does not matter what the secondary savings effects are. If the savings don’t show up under health care then Obama cannot argue as if it does.

  38. i love what you saifd in the post it is so right

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