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What is the Value of Linking Health Care Expenditures and Life Expectancy?

Posted by Simone Isadora Flynn, PhD, NPA Project Manager-Leveraging Social Media November 19, 2014 at 12:56 PM

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NPA Values Challenge: “What is clearly not useful is a comparison of life expectancy and health care expenditures as if these 2 variables are always positively related to each other. Across developed countries or across US states, they are not.”

In “Critiquing US Health Care,” Victor Fuchs explores what place – if any – the correlation between health care expenditures and life expectancy should have in discussions of U.S. healthcare spending.

Does our healthcare spending need to strongly correlate with the longevity of our population? Are we spending too much on the care we are getting? Bottom line…are we spending money on health or wasting money on illness? These questions are at the heart of the culture of stewardship proposal included in NPA’s new policy brief, Value and Values in Health Care. Should this proposed culture of stewardship – in which physicians and other providers steward our finite resources and these principles are built into curricula and board certification – be based on life expectancy metrics?

Read Fuchs’ article below and tell us what you think. Your responses to NPA blog posts help us refine our communications about important issues and influence the choice of initiatives we undertake.

Critics of US health care usually begin by noting that this country spends a much greater share of its gross domestic product (GDP) on health care than any other country but lags in life expectancy at birth. This critique implicitly (and sometimes explicitly) assumes that there should be a positive correlation between health care expenditures and life expectancy. Such an assumption is fully justified for low-income countries with minimal health care; additional care and financial resources usually have substantial favorable effects on life expectancy.

In theory, this positive relationship should continue at all levels of income, albeit with possible diminishing returns. In practice, however, many nonmedical determinants of health can vary across developed countries, possibly confounding a simple 1-to-1 relationship between health care expenditures and life expectancy. As an empirical matter, the assumption of a positive correlation is not supported by comparisons across developed countries or within the United States across states.

For the full article, click here.

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One Response to “What is the Value of Linking Health Care Expenditures and Life Expectancy?”

  1. Diana Huang says:

    An interesting perspective, good to keep in mind when looking at this oft-cited graph. Health care costs are the result of many different decisions made. For example, systems can choose to spend more money on healthcare providers vs professionals who work on social services and care coordination. Within healthcare providers, you can choose to pay for more physicians, or more of other health professionals. I think this ties into the current discussion about whether or not there is truly a physician shortage, or just a combination of a poor specialist/generalist ratio and underutilization of non-physician health providers.

    The sole value of health care expenditures doesn’t tell you about the specific choices made. Still, I think the graph shows pretty clearly that the U.S. could stand to learn from other countries when it is such a huge outlier!

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