Background: The increased use of medical therapies has led to increased medical costs. To provide insight into the value of this increased spending, we compared gains in life expectancy with the increased costs of care from 1960 through 2000.
Methods: We estimated life expectancy in 1960, 1970, 1980, 1990, and 2000 for four age groups. To control for the influence of nonmedical factors on survival, we assumed in our base-case analysis that 50 percent of the gains were due to medical care. We compared the adjusted increases in life expectancy with the lifetime cost of medical care in the same years.
Results: From 1960 through 2000, the life expectancy for newborns increased by 6.97 years, lifetime medical spending adjusted for inflation increased by approximately 69,000,andthecostperyearoflifegainedwas19,900. The cost increased from 7,400peryearoflifegainedinthe1970sto36,300 in the 1990s. The average cost per year of life gained in 1960β2000 was approximately 31,600at15yearsofage,53,700 at 45 years of age, and 84,700at65yearsofage.At65yearsofage,costsrosemorerapidlythandidlifeexpectancy:thecostperyearoflifegainedwas121,000 between 1980 and 1990 and $145,000 between 1990 and 2000.
Conclusions: On average, the increases in medical spending since 1960 have provided reasonable value. However, the spending increases in medical care for the elderly since 1980 are associated with a high cost per year of life gained. The national focus on the rise in medical spending should be balanced by attention to the health benefits of this increased spending.Economic