The principle of values: Health costs are worth it

Economic commentators continue to surprise me in the way they portray the U.S. health care system. They voice great alarm at the growth in health care expenditures, pointing out the fact that health care outlays amount to 16% of gross domestic product.

Health care is a $2 trillion slice of a $13 trillion GDP pie, and critics wring their hands. Another $2 trillion slice is investment in capital goods and equipment. Pundits cheer when that number increases and wring their hands when it declines. Why not cheer when our investment in human capital expands?

Why the double standard? What has misled conventional wisdom? There are probably a number of reasons. But perhaps the public misjudges health care in part because we have been reluctant to counter talk about rising costs by pointing out rising value received.

The value principle has plenty of evidence in its favor.

A recent study by Harvard University health economist David Cutler, PhD, and his associates found that from 1960 through 2000, life expectancy increased 6.97 years, and the cost per year of life gained was $19,900.

Their conclusion: "On average, the increases in medical spending since 1960 have provided reasonable value."

Even allowing for professional understatement, the claim refutes those who cry "wolf" as each round of statistics reports increases in outlays for health care. Seven years more of life is an incredible return on investment. Seven more years to enjoy life, family, hobbies, travel and benefits of a free society. Seven more years to be a productive member of society increasing the economic wealth of our country.

In parallel with the increase in outlays for health care has been an enormous increase in individual income. Average income per person was $2,283 in 1960 and $30,205 in 2000. Gross domestic product was $526.6 billion in 1960, and Americans spent $26.7 billion on health care -- 5% of GDP.

Common sense tells us Americans spent more on basic necessities but now, with more money, they choose to spend it on health care. Thomas Carlyle pointed out in the mid-19th century, "He who has health has hope." Americans have invested more and more in their own hope for the future.

This should be cause for celebration, not consternation. As physicians, our work bears rich fruit.

Two University of Chicago economists, Kevin Murphy, PhD, and Robert Topel, PhD, several years ago found that the value Americans place on an expanded lifetime was $2.8 trillion a year from 1970 to 1990. They also concluded, "The reduction in mortality from heart disease alone has increased the value of life by $1.5 trillion per year." And that was at a time when, as Americans, we were spending considerably less than $1.5 trillion per year on health care.

Many point out places where waste occurs, where competition would sharpen the focus on patient care rather than corporate profit and other areas for improvement.

I acknowledge that. But that should not blur our focus on the value of what we do.

I take great pride in the accomplishments of our fellow physicians. And I hope that each of us will begin educating our patients, and the public at large, on the value of those accomplishments.

Fortunately, the numbers are the evidence we need to support a value principle of medicine. As we work together to reform the U.S. health care system, to put things back on track, the value principle will continue to be important to us all.