Health care spending results in improved health outcomes, report says

A new report in Health Affairs outlines a rare example of good news on health care spending — it finds that the increase in spending between 1996 and 2016 resulted in improved health outcomes.

The report notes that there are different ways to measure the effectiveness of health care spending. In this case, the researchers look at spending per change in disability-adjusted life-year (DALY).

“DALYs are the sum of years of life lost due to premature mortality, as well as years lived with disability among people living with a given cause,” the researchers write. “Intuitively, DALYs are a measure of burden, and therefore the goal of health systems is to avert DALYs.”

The researchers add that the use of DALYs as a measurement allows them to match spending with outcomes. “To the best of our knowledge, this is the first comprehensive effort to estimate spending per unit of health gained in the US — which we call ‘spending effectiveness.’ We also identify how researchers could improve such estimates in the future,” they say.

Better outcomes for more expensive conditions

The data showed that in the 10-year-period, health care spending for all causes increased by $1.4 trillion, or 121.5%. Interestingly, the data showed that in more-expensive causes, the rate of spending increase was less than in overall cases.

“Across all 139 causes, the ratio of 2016 spending to outcome-adjusted 1996 spending was 1.04 when we used $100,000 as the dollar value per DALY averted and 0.87 when we used $150,000. Given that all spending was converted to 2016 US dollars using the GDP price index, these results mean that health care prices increased 4 % more than the GDP index when we used $100,000 as the dollar value per DALY averted, and relative prices fell by 13% when we used $150,000.”

The spending effectiveness could vary widely, depending on the conditions being treated, the report adds. But again, for more expensive conditions, the cost effectiveness increases.

“A significant portion of the growth in health care spending over time has purchased health improvements, which should change the way in which the increase in spending is interpreted,” the report says.

Areas for further study

The researchers say their methodology was an improvement over past efforts, especially when it came to representing all age groups. But they also call for further study in three areas. For example, there may be ways of fine-tuning the life-expectancy values in the analysis, the report adds. In addition, the researchers call for more research on the severity of illnesses over time. Finally, they say, future research should look at spending effectiveness over different time periods.

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The report also notes there are disease areas where increased spending does not seem to be improving outcomes.

“The results for four causes suggest that health care spending is not improving health outcomes: Alzheimer’s disease and other dementias; drug use disorders; chronic kidney disease; and endocrine, metabolic, blood, and immune disorders,” the study says. “These merit further investigation. For example, the increase in DALYs per case for drug use disorders may be associated with the opioid epidemic, where evidence shows that opioids prescribed for chronic pain were misused by 21–29% of patients.”