May 2012, Vol 1, No 1

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Cancer Care Grand Rounds


A persistent health-care myth is that the U.S. system is uniquely wasteful versus the European countries that spend far less per patient as a result of tight government control. Only the establishment experts who spread this myth will be surprised, but new research shows American patients are often getting more value – better outcomes and longer lives – in return for those extra dollars.

More remarkable still, the news arrives via the policy journal Health Affairs, in a symposium on the cost and quality of U.S. cancer care. This is like the Vatican saying go ahead, worship the graven images and false idols.

Tomas Philipson of the University of Chicago and colleagues compare U.S. oncology spending over the period from 1983 to 1999 (the last year for which data are available) with that in 10 European Union countries. Costs were lower overall overseas and grew by 16%, while they grew by 49% in the U.S. Yet U.S. cancer mortality rates are lower, despite higher cancer rates, and “We found that the value of survival gains greatly outweighed the costs, which suggests that the costs of cancer care were indeed ‘worth it,’” Mr. Philipson et al. write.

Throughout the entire period, U.S. cancer survival gains were larger, reaching 11.1 years over 1995 to 1999 against 9.3 years in the EU. The researchers then compared the U.S. and EU gains using conservative, commonly accepted measures for the value of a statistical life, less the cost of the care. The U.S. comes out ahead by $598 billion. In other words, though the U.S. spends more, patients and society benefit far more.

Over 1995-1999, each $100 increase in per capita cancer spending – approximately $20,000 per cancer patient – was associated with another 2.3 years of life for the average patient. The authors are also careful to show that these results reflect real patient outcomes. Another myth is that U.S. survival rates are an artifact of the time of diagnosis, a “lead-time bias” that comes from more screening and earlier cancer detection, but without any improvement in life expectancy. Mr. Philipson’s method controls for such bias.

The U.S. system is relatively more expensive because diagnosis and treatment are much more intensive, and doctors tend to leverage the latest therapies and drugs against one of the world’s leading killers. While U.S. health care could obviously be far more efficient, most of its dysfunctions are the result of government’s perverse incentives.

The sophisticates who pine for the allegedly more enlightened forms of European rationing and price controls – for more perverse incentives – would do well to peruse the Health Affairs symposium. Mr. Philipson’s paper suggests those are good ways to stop anticancer progress in its tracks, or reverse it altogether.


Reprinted with permission of The Wall Street Journal © 2012. Dow Jones & Company. All rights reserved.

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