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Folks are living longer, but not for free. A recent study examines whether it’s worth the cost.

Like many others, my folks have gotten a lot older, a lot faster than we had anticipated. Recently, my stepfather had what we thought was a stroke, but which instead (thankfully) turned out to be a reaction to one of his meds. Unfortunately, he had another fall while in the hospital, and broke his shoulder.

He’s now in rehab, and we hope that he’ll only have to be there for a short time.

In any event, none of the treatment he has thus far received is free, although most of it is covered by Medicare and his Medigap policy.

So how is this relevant to a column on insurance? Well, it turns out that (no surprises here) we’re not alone in having to deal with these issues, and the cost of such treatment is the subject of a recent study by the University of Michigan and Harvard.

They studied health care spending from 1960 to 2000, and concluded that, all things considered, health care in America has been cost-effective. One area of concern, though, was the skyrocketing costs of care for seasoned citizens.

The researchers looked at per-capita spending and life expectancy in 1960, 1970, 1980, 1990, and 2000 for four age groups, looking at parallel increases in medical expenses and health improvement, and found that the increase in life expectancy since 1960 (about 7 years) had cost about $20,000 per additional year of life. So, for less than $150 “big ones,” we could extend life expectancy by about 10%.

Even factoring in lifestyle and diet improvements, the folks at Michigan and Harvard claim that about half of that increase is directly attributable to improvements in health care.

When actuaries price life insurance, they use something called “mortality tables.” Briefly, these are spreadsheets that help to predict the life expectancy and death rates for various groups of people. Because people are living longer (in general, YMMV), life insurance tends to cost less. Just because we’re living longer, though, doesn’t necessarily mean that we’re living –healthier.--  And indeed, the study’s authors compared the $20,000 price-tag against the value of a year of life (based on those mortality tables and medical decision-makers) and determined that the increase in medical costs were  a good value. They said, in part:

"The increased spending has, on average, been worth it."

Now how can you argue with that?

Be well.

Henry Stern, LUTCF is an independent insurance agent in Dayton, OH. A licensed Continuing Education instructor for Ohio and Kentucky, he has well over 20 years of experience in “the biz.”  He blogs every day (or so it seems) at InsureBlog.

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from InsureBlog on Sat, 09/16/2006 - 9:20pm

In this week's column, now available at The Medical Blog Network, we look at how increased life expectancy also means increased costs. A new study by researchers at Harvard and the Universityof Michigan shed some interesting light on the subject.

Comments (5)

Submitted by Steve Beller PhD on Sun, 09/17/2006 - 7:15am.

Here's an interesting discussion about the topic Cutler used as propaganda--is that how he likes it? 

While it's no surprise more spending increases life expectancy, isn't it probable that greater efficiency and effectiveness in our healthcare system -- i.e., knowing the most cost-effective treatment and prevention interventions for all patients and consistently deliverying such valid evidence-based care in the most cost-effective way with minimal errors and omissions -- would also increase life expectancy (probably even longer) AND do it without the extreme cost increases that are crippling our country?

Steve Beller, PhD

Submitted by hgstern on Mon, 09/18/2006 - 7:43pm.

Thank you, Steve, I appreciate the feedback. 

I do have some thoughts about your suggestions, but am still snowed under (as you can imagine, there is a lot more to what's going on with the folks than what's in the post). I will try to find some time to answer more fully, but it may be a while.

I guess my initial reaction will have to do, at least for the nonce:

What you propose is a noble and perhaps desirable goal; I would be interested in any suggestions you might have regarding how to attain it.

(Hey, it's a start!)

Submitted by Steve Beller PhD on Tue, 09/19/2006 - 5:01am.


You ask how our healthcare system can be transformed into one that uses valid, reliable evidence-based knowledge to deliver the most cost-effective treatment and prevention interventions for all patients in the most cost-effective way with minimal errors and omissions.

Well, we lay out a strategy and 19 associated tactics on our WellnessWiki.

I also suggest reading this post on another blog: Patient-Centred, Patient-Controlled Health Care: How the System Should Work.

Steve Beller, PhD

Submitted by hgstern on Fri, 09/22/2006 - 6:42pm.

I apologize for being so tardy responding. I really haven't had time the past week to do much research, and although I plan to read the wiki, I probably won't get to it for a little while (not that's it's unimportant, just have a lot on my plate right now).

Thanks for your patience!


Submitted by Steve Beller PhD on Sat, 09/23/2006 - 6:53am.

I'm reading the Porter and Teisberg book, "Redefining Health Care", which confirms many of things discussed on the wiki from the point of view of moving from a zero-sum system (in which some lose when other win) to a win-win positive-sum system. It describes how to improve care quality and efficiency by changing the nature of healthcare competition through value-based strategies based on measuring using comprehensive data focued on results -- the outcomes and costs of condition-specific interventions over each "care cycle" (i.e., across all providers involved in preventing and treating each patient's health problem or risk).

It's well worth reading!

Steve Beller, PhD

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