Increase in Healthcare Spending Has Better Health Outcomes

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Among most causes with the highest healthcare spending and highest burden, an increase in spending per case was associated with an increase in disability-adjusted life-years averted per case.

The incline of healthcare spending in the US between 1996 and 2016 led to better health outcomes, however healthcare spending effectiveness varied across the top 34 causes with high spending or high burden, according to a Health Affairs study.

Healthcare spending effectiveness is explained as the ratio of an increase in spending per case of illness or injury to an increase in disability-adjusted life-years (DALYs) averted per case. In other words, spending effectiveness is the spending per unit of health gained.

Data was used from the Disease Expenditure Project and the 2017 Global Burden of Disease Study to estimate spending effectiveness in healthcare. They investigated spending and DALYs—the sum of years lost due to premature mortality and years lived with disability—for 139 causes.

The investigation focused on the 34 causes with the maximum spending and maximum DALYs in 2016, adding up to 73 percent of total spending and 76 percent of total DALYs.

Between 1996 and 2016, healthcare spending for all causes increased by $1.4 trillion or 121.5 percent. The change in spending per case accounted for a 78.8 percent increase, population growth was the cause for a 28 percent increase, and population aging attributed to a 17.3 percent increase, while less cases per person led to a 2.6 percent decrease.

Total DALYs for all causes also grew by 17.3 million or 21.2 percent during this timeframe. Population growth attributed to a 19.8 percent increase and population aging led to a 12.2 percent increase, while fewer DALYs per case accounted for a 10 percent decline and fewer cases per person contributed to a 0.8 percent decline.

When reviewing the 34 causes with the highest spending and burdens, the change in spending per cause were mostly larger than changes in DALYs per case, researchers found.

However, spending changes and DALY changes varied across causes. To use an example, the mean change in spending per case ranged from a 27.3 percent reduction for breast cancer to a 255.9 percent incline for anxiety disorders. Likewise, the mean percentage change in DALYs per case ranged from a 45.3 percent reduction for diabetes to a 110.3 percent incline for drug use disorders.

For all causes, the median spending effectiveness ratio was $114,339 per DALY averted. In review of the 34 causes, an increase in spending per case was linked with an increase in DALYs averted per case for 22 causes. This demonstrates that higher spending helped improve health outcomes for the 34 causes.

The median spending effectiveness ratio was below $100,000 for 11 of the 22 causes per DALY averted and higher by $500,000 per DALY averted for eight causes.

It showed that Breast cancer was the only cause that saw a reduction in spending per case along with an increase in DALYs averted. The other 11 causes increased spending per case and decreased DALYs averted, implying that healthcare spending was not effective for these causes.

Alzheimer’s disease and other dementias; drug use disorders; chronic kidney disease; and endocrine, metabolic, blood, and immune disorders did not improve according to researchers

In determining healthcare spending effectiveness, researchers assigned a dollar value to DALYs averted to calculate an outcome-adjusted healthcare price index.

If you apply $100,000 as the dollar value per DALY averted, the ratio of 2016 spending to outcome-adjusted 1996 spending for all causes was 1.04, indicating an incline in prices by 4 percent more than the gross domestic product (GDP) price index. The ratio was 0.87 when they used $150,000 as the dollar value per DALY averted, which showed a 13 percent decrease in relative prices.

For the 34 causes, the $100,000 dollar value example led to outcome-adjusted prices increasing slower than the GDP for 12 causes and faster for 17 causes. The $150,000 dollar value led to price inclines that were slower for the GDP for 13 causes and faster for 16 causes.

The study found that spending effectiveness differs by cause, indicating that estimates for specific diseases cannot be applied to healthcare services as a whole.

Improving future spending effectiveness estimates, authors of the study suggested that more research that uses a health-adjusted life expectancy framework and explores spending effectiveness across different time periods along with including changes in the severity of illness over time.

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Increase in Healthcare Spending Has Better Health Outcomes
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Increase in Healthcare Spending Has Better Health Outcomes
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Healthcare spending effectiveness is explained as the ratio of an increase in spending per case of illness or injury to an increase in disability-adjusted life-years (DALYs) averted per case. In other words, spending effectiveness is the spending per unit of health gained.
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