Does Preventive Care Save Money? Who Cares!

Moneybox
A blog about business and economics.
Dec. 6 2011 11:45 AM

Prevention Dollars Are Well-Spent

USA Today has an interesting piece on new Affordable Care Act benefits for Medicare patients kicking in. The most salient of these is probably closing the "donught hole" in eligibility for prescription drug coverage, but the more analytically interesting piece is that "about half of those with traditional Medicare, have gone in for a free annual physical or other screening exam since the rules changed this year because of the health care law." They go on to quote two right-of-center skeptics about the merits of this idea who offer takes that I think illustrate the problem with a lot of cost-centered discourse around health care policy:

Preventive benefits aren't free, because taxpayers are paying for them, says Michael Cannon, health policy studies director for the Cato Institute, a libertarian think tank. "There is no such thing as a free lunch," he said.

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Robert Moffit, a senior fellow at the Heritage Foundation, a conservative think tank, said the services may help catch diseases early. But it's too early to tell if the overall savings in Medicare will justify the costs of the preventive care. "This should prove to be a worthwhile experiment."

A lot of health care debates end up going off-track in precisely this way. First liberals, becauce they're soft-hearted and want to help people, propose doing something helpful. Then they decide they want to sound hard-headed and practical so they talk about how helping people will "save money." Then along come Cannon and Moffitt to observe that this isn't necessarily the case. And it's true, assessing the life-cycle cost impact of health interventions is very difficult. Sick people cost more money than healthy people, so you might think good health saves money. But it doesn't necessarily work that way. Dying of a heart attack at 57 can be much cheaper than healthy living and a decade of long-term care after your 90th birthday.

The right way to think about this is to start with the soft-hearted premise that we want to help people, and then add on the hard-headed point that we should try to help people in cost-effective ways. At that point, you reach the conclusion that making preventive health care free to the patient is a very cost-effective way of spending money. You get a lot of benefit, in terms of good health, for relatively low financial cost. Three cheers! By contrast, while the US approach to health care has traditionally been stingy in many ways, it's long been extremely generous in terms of end of life care that isn't very cost effective. If you're concerned about Medicare spending, it makes much more sense to scrutinize that piece of it than to worry about preventative treatments.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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