Estimating the Value of Investment: Medicare & Overall U.S. Health Care Services Academy Health 2004 San Diego Bryan R. Luce, PhD, MEDTAP Frank Sloan,
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Estimating the Value of Estimating the Value of Investment: Medicare & Investment: Medicare & Overall U.S. Health Care Overall U.S. Health Care
ServicesServices
Academy Health 2004 San Diego
Bryan R. Luce, PhD, MEDTAP Frank Sloan, PhD, Duke UniversityJosephine Mauskopf, PhD, RTIClark Paramore, MSPH, MEDTAP
U.S. HC Expenditures/Capita (2000 $)
$2,207
$3,541
$4,461
1980 1990 2000Source: Health United States 2002, Consumer Price Index (All Items)
The Value of this Investment is Seldom Part of the Debate
CBO Issues Warning on Rising Health Care Costs
Senate Republicans in Albany Eye Big Medicaid Cuts
Medicare Revamp Fails to Cure Angst Over Costs
Study Objective
Estimate the economic value of investment in health care over the past 20-30 years
Study Sponsors (“The Value Group”)
Advanced Med Tech Assoc (AdvaMed) American College of Cardiology (ACC) American Hospital Association (AHA) Federation of American Hospitals HealthCare Leadership Council National Pharmaceutical Council Pharm Research Mfts Assoc (PhRMA)
3 Approaches to Triangulate ROI*Approach 1: Overall Health Care,1980-2000Approaches 2 & 3: AMI, Type 2 Diabetes, Stroke, Breast Cancer
Approach 2. Medicare (1985-2000) Approach 3. Major Innovations (1975-
2000)
* Value of Statistical Life year assumed to be $100K (Cutler 1997; Cutler McClellan et al, 2001, Viscusi 1993, Bloomquist 2001, Nordhaus 2002, Ubel et al 2003)
Why these four conditions?
Common (31.5 M) High M/M rates Nearly all at risk for
one of these diseases
Medical breakthroughs have improved outcomes
Costs are high Value of investment
not documented
17
2.2
4.7
7.6
HeartAttack
Type 2Diabetes
Stroke BreastCancer
U.S. Population Affected by Conditions Studied, in millions, 2003
Source: American Heart Association; www.diabetes.org; www.cdc.gov/nchs
Approach 1: ROI Overall Health Care, 1980-2000
Compared changes in U.S. population morb/mort with…
Changes in total health care expenditures Monitorized only mortality gains Computed value of population health gains per
additional dollar invested (using 2000 vs 1980 rates)*
Sources include: Health U.S., 2002; National Vital Statistics 2002; Manton et al 2001; Houtenville 2001; Lubitz et al 2001; MEPS Surveys1996, 1999; US Census 2000; Nordhaus 2002
*Assumption: benefits and harms of non-health care even out (e.g. smoking, obesity, illegal drugs, environmental)
Approach 2: ROI Medicare, 1985-2000
Linked NLTC survey data with… Medicare claims for AMI, Diabetes, Stoke, Breast
Cancer Outcome Measures: 5 year survival, ADL limitations,
cognitive functioning, nursing home residence Monitorized both mortality & disability changes ROI: Dollar value of 5 year health benefits (less
beneficiary Rx & nursing home costs) compared to 5 year Medicare payments (1985-90 vs 1995-2000)
Sources include: NLTC Surveys; Medicare Claims; Cutler 1997; Viscusi 1993; Mrozek 2003
Approach 3: ROI Major Innovations 1975-2000 (4 diseases)
For each disease: Compiled 25 year timeline of “major
innovations” Compiled all CEA literature for each innovation Calculated ROI for each innovation
Sources include: PubMed, Bloomquist 2001, Cutler & McClellan 2001, Nordhaus 2002, Viscusi 2003, Tengs 1995, 2003, Neumann et al 2000, Selected clinical experts
FINDINGS
Overall Value of Investment: 1980-2000
Per capita expenses up $2,254, but: Overall death rate down 16% Life expectancy from birth up by 3.2 years Disability rates decreased 25% (65+)* 56% fewer hospital days
Overall ROI: $2.40 to $3.00 per dollar invested
*Value of these improvements not quantified.
Findings: Four Common Diseases
Heart attack Type 2 Diabetes Stroke Breast Cancer
Heart Attack
Heart Attack:Improvement in Outcomes
Mortality cut nearly in half
Death within 30 days cut from 1 in 4 to 1 in 8
Hospital stays: was 3-4 weeks; now 5-7 days
345.2
186.9
1980 2000
Death Rate Due to Heart Attack(Age-adjusted, per 100,000)
Source: www.cdc.gov/nchs
Medicare ROI: Heart Attack Patients
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Value of improved outcomes:
--minus--
Increase in treatment costs*:
(Medicare plus out-of-pocket)
Net benefit in dollars:
$28,632
$26,093
$2,539ROI: $1.10 per dollar invested
AMI: ROI of Major Innovations vs Standard Treatment
Beta-blockers Mobile coronary care
units Statin therapy Angiography Rt-PA Angioplasty w/stenting Other
$1.42
At Least As Much As
$38.44
Source: Published literature
Type 2 Diabetes
Costs and Outcomes for Medicare Type 2 Diabetes Patients
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Value of improved outcomes:
(7% gain in life expectancy) --minus--
Increase in treatment
costs*:(Medicare plus out-of-
pocket)
Net benefit in dollars:
$16,930
$11,337
$5,593ROI: $1.49 per dollar invested
Type 2 Diabetes: Value of Specific Medical Breakthroughs
Tight control of glucose, BP & cholesterol
Statins Ace inhibitors Screening and
treatment of diabetic retinopathy
Other
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$3.00
At Least As Much As
$36.00
Source: Published literature
Stroke
Stroke:Improvement in Outcomes
Mortality cut by 37 percent
Stroke-related disability after 3 months reduced by up to 30 percent with rt-PA
96.2
60.8
1980 2000
Death Rate Due to Stroke(Age-adjusted, per 100,000)
Source: www.cdc.gov/nchs
Costs and Outcomes for Medicare Stroke Patients
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Value of improved outcomes:
(10% gain in life expectancy)
--minus--
Increase in treatment costs*:
(Medicare plus out-of-pocket)
Net benefit in dollars:
$24,903
$16,035
$8,868ROI: $1.55 per dollar invested
Stroke: Value of Specific Medical Breakthroughs
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$2.00
$6.00
At Least As Much As
Source: Published literature
Clopidogrel Ticlopidine rt-PA* Carotid
endarterectomy*
*Yields a savings in treatment costs
Breast Cancer
Breast Cancer:Improvement in Outcomes
Mortality cut by 21 percent
5-year overall survival rates increased from 77% to 87%
Risk of metastatic disease declined from 40% to 15%
32.3
25.4
1980 2000
Death Rate Due to Breast Cancer(Age-adjusted, per 100,000)
Costs and Outcomes for Medicare Breast Cancer Patients
*Five-year costs 1985-1989 versus 1995-1999, Medicare plus out-of-pocketSource: Analysis of Medicare Part A and Part B and National Long-Term Care Survey data (1982-2000)
Value of improved outcomes:
(8% gain in life expectancy) --minus--
Increase in treatment
costs*:(Medicare plus out-of-
pocket)
Net benefit in dollars:
$22,341
$4,676
$17,665
ROI: $4.80 per dollar invested
Breast Cancer: Value of Specific Medical Breakthroughs
Letrozole Breast-conserving
surgery Biennial mammography Adjuvant chemotherapy Stereotactic core biopsy
Breakthroughs vs. Current Standard Treatment
Range in Value per Dollar Invested
$3.27
At Least As Much As
$36.81
Source: Published literature
Conclusion: ROI US Health Care appears positive in terms of….
Overall HC Spending Medicare Spending and Major
innovations for Heart attack, Diabetes, Stoke, Breast Cancer…..
If we can agree that a year of life is worth $100,000
Selected Discussion Issues
Value of Statistical Year of Life: $100,000? ROI Overall HC
Non HC balance out (smoking, obesity/diet, illegal drug use, violence, environmental)?
No productivity No disability
ROI Medicare: Includes disability but not productivity
ROI Interventions: Does not include productivity
ROI seems positive: Could we do better?
Implications
Public policy discussions about health care costs should (and can) be accompanied by estimates of value returned.
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