Longevity Costlier Than Obesity or Smoking

Preventing obesity and smoking can save lives, but it doesn't save money for health systems, researchers reported yesterday.

It costs more to care for healthy people who live years longer, according to a Dutch study that counters the common perception that preventing obesity would save governments millions of dollars.

Van Baal and colleagues created a model to simulate lifetime health costs for three groups of 1,000 people: the "healthy-living" group (thin and nonsmoking), obese people, and smokers. The model relied on "cost of illness" data and disease prevalence in the Netherlands in 2003.

The researchers found that from age 20 to 56, obese people racked up the highest health costs. But because both the smokers and the obese died sooner than the healthy group, it cost less to treat them in the long run.

On average, healthy people lived 84 years. Smokers lived 77 years, and obese people lived 80 years. Smokers and obese people tended to have more heart disease.

Ultimately, the thin and healthy group cost the most - $417,000, from age 20 on. The cost of care for obese people was $371,000, and for smokers, $326,000.

To reduce health care costs, the solutions seems simple: pass the Twinkies and cigarettes.

Reading this article made me wonder, what assumptions did the reseracher use, and how did they impact the conclusion? Fortunately, because this research was published in the open source journal PLoS, I was able to find out (PLoS, I PLoVe you).

Having looked at studies like this before, I knew that the discount rate that they chose would be crucial to the conclusion. So, what did they use?

To reflect the concept of time preference, meaning that an amount of money spent or saved in the future is worth less than the same amount today, net present values were calculated using discount rates of 3% and 4%.

Not clear for the present values of health care shown above whether it was the 3% or 4% rate.

Only for discount rates above 4.7% would costless obesity prevention be cost saving. For smoking prevention to be cost saving, the discount rate for costs should be at least 5.7%

I interpret this to mean that at a 5.7% discount rate, the net present value of health care costs at age 20 of a smoker and a healthy person are identical (and 4.7% for obese people). If you are paying for your own health care costs and you can invest your money at a greater than 5.7% rate of return (which is quite possible for a long term investor) then your health care costs would actually be lower if you didn't smoke or become obese.

If the government is paying for obesity or smoking prevention, I am not quite sure what the best interest rate would be to use for this analysis. If people quit smoking and there were lower medical care costs right away, who would get that money and what would they do with it? On the margin, would that money be invested at a greater than 5.7% rate of return? I don't know, but it seems possible. If it was then the conclusion of this study would no longer hold.

Even if health care costs go up, because it is extending lives it is probably still worthwhile spending. The question becomes how much it costs to extend an additional life year, and if there are more cost effective ways of doing that than anti-smoking or obesity reduction campaigns.

Another issue, as noted over at FuturePundit, is that this analysis also does not take into account productivity. You are likely to be able to work many more years and in a more productive way if you are healthy. While health care costs might go up, they are likely to be more than offset by increases in income taken home due to that increased productivity and the ability to work more years.

This analysis also doesn't take into account that 20 years from now new medical technologies will be available and costs are likely to be higher for them.

Another interesting thing that I found in the journal article was this chart that shows expected health care costs by age. While not really surprising, I hadn't realized how much more an average person spends on health care when they get old. A 40 year old spends on average 2,000, while a 65 year old spends double that at 4,000 and a 75 year old spends double that at 8,000. Like old cars, old people are expensive to maintain.

While in the US we debate over whether we want to move towards socialized medicine, the reality is that we already have socialized medicine for those over 65 in the form of Medicare and this will account for more and more of health care spending as our population ages.

via Philadelphia Inquirer