Variations_09 - Geographic Variations in Medical Care PAM 4350 February 5 2009 Cutler's Conclusion Benefits of Medical Advances > Costs

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Geographic Variations in Medical Care PAM 4350 February 5, 2009
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Cutler’s Conclusion: Benefits of Medical Advances > Costs Cardiovascular disease 4:1 Low-birth-weight infants 5:1 Depression 6:1 All medical care combined >1:1 Benefit-to-Cost Ratio Medical care costs a lot, but it’s worth it: most people would prefer today’s medical care at today’s prices to yesterday’s medical care at yesterday’s prices.
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Age-Adjusted Cancer Mortality, 1933-2004 Deaths per 100,000 Source: Cutler, 2008. Cancer Mortality Has Finally Started to Fall Earlier screening and detection and more effective chemo drugs
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1) Who should decide whether a new medical technology is available in a country: - the government? - consumers, by picking different health insurance plans (i.e., the market)? 2) Who should determine the price that a new medical technology will sell for: - the government? - the market? Some Policy Questions
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Many Countries Use a Cost Effectiveness Threshold to Determine Which Medical Technologies to Allow In Example: a Cost Per QALY Threshold $16,000 - $10,000 (5 – 4) X 0.10 = $60,000 per QALY Cost per patient Current cost w/ proposed drug per patient Expected Expected Probability QALYs QALYs drug will if drug without work works the drug Cost effectiveness ratio
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Percent of Type I Diabetics Using an Insulin Pump Source: NHS Insulin Pumps Services March 2007
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Medical Technology in the United States In the U.S., all medical treatments that improve health are approved for use, regardless of price. U.S. government sets prices that physicians and hospitals receive for treating Medicare & Medicaid patients, but doesn’t directly set the price of technologies. Prices for most medical technologies are determined by “market forces.”
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Consumer Sovereignty Versus Government Decisions Will the government or consumers be better able to evaluate the value of medical technology? Will citizens who place a very high value on a technology tolerate their government’s decision not to approve it? Can citizens still influence government decisions in a nationalized health care system?
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Summary of 2/3 Topic Although medical spending has increased substantially over the past 50 years, many people believe that the value of the health benefits created by improved treatment exceed the increased costs in most conditions studied.
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This note was uploaded on 04/25/2009 for the course PAM 4350 taught by Professor Nicholson during the Spring '08 term at Cornell University (Engineering School).

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Variations_09 - Geographic Variations in Medical Care PAM 4350 February 5 2009 Cutler's Conclusion Benefits of Medical Advances > Costs

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