Wednesday, December 16, 2009

It's always a good idea to look at the data

Before making a sweeping statement, no matter how commonsensical the statement may seem to you.

"Preventive medicine saves money" seems to be something virtually everyone believes. All mainstream politicians and political commentators certainly do. In fact, they all treat this statement as if it were simply self-evident, not as something that would need empirical verification. How can it be possible for preventive medicine to increase costs of healthcare?

Easy. Imagine you run a health insurance company and you cover a large population of people all of which are susceptible to a certain genetic disease. In a single patient, the disease is extremely expensive to treat if detected in its late stages, but fairly cheap to deal with when detected early. You can either pay to screen your customers and pay for their early treatment, or not screen them and just pay for late-stage treatment of whoever ends up getting sick. Holding costs constant, it is clearly possible that the latter choice costs less money, provided the contraction rate of the disease is low enough.

A 2008 metastudy from The New England Journal of Medicine claims that, on aggregate, preventive medicine does in fact increase the costs of healthcare.

Two things need to be remembered. First, preventive care increases aggregate costs; this means that most preventive measures increase costs, but not that all of them do. Some preventive measures do actually save money. More importantly, I was only considering the question of whether or not prevention saves money. Saying that something increases costs is different that saying it's a bad deal; even though prevention adds to the healthcare bill, it may still be cost-effective (if it improves the overall quality of life by an amount that offsets additional costs).

(HT: Healthcare Economist).

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