Preventive medecine: can prevention be judged like any other investment?


        PREVENTIVE MEDECINE: CAN PREVENTION BE JUDGED LIKE ANY OTHER INVESTMENT?

Most economists, when asked to express a view on the value of prevention, understandably try to analyze the whole process as if it were an investment. People need and want a certain level of health, after all, not medical and nursing care. This is one useful way to look at preventive services-by spending a penny today we might be able to save a pound (spent on cure) tomorrow. Either because of this future saving or because it raises the individual's level of health today prevention at first appears to be an attractive investment.
If we really want to know what prevention costs we need to know what ill health costs so that we can see if in financial terms it is worth practicing prevention. But working out what illness costs is not easy. The direct costs of ill health are relatively easy to quantify because they are the costs of delivering a medical care system and this can be worked out. In 1984 the National Health Service cost Great Britain16 billion pounds. But just looking at direct medical costs is not enough. Indirect economic costs include loss of productivity because of days off work, or premature death. These have to be added to the overall figure and more than double it. In the US the total cost of illness as judged in this way comes to about 20 per cent of the Gross National Product. One recent estimate suggests that about half of all these costs are for conditions that could be prevented. So money spent on prevention could reduce the costs both of the delivery of health care and of the number of days lost and working lives cut short.
None of these calculations take into account the suffering of the individual (on which it is impossible to put a price) or the cost to the individual of the loss of work, or other illnesses that occur in his or her family as a result of the original (costed) illness. These things are very difficult, if not impossible, to quantify but are none the less real for that. All of this means that any pure cost-benefit analysis undervalues the real cost of illnesses to society.
Another problem in trying to put a cost on prevention is the difficulty of evaluating a human life in monetary terms. From the economic point of view the value of a person is that contribution he or she makes to the Gross National Product. This clearly falls short because it says nothing of the person's value to society in other ways and indeed says nothing about his or her value to him or herself. Judging people's worth by their wages automatically undervalues the unemployed, women and racial minority groups-who on average earn less. If wages were the sole measure of economic value in such cost-benefit analyses then these groups would be allocated very few medical services. Also, non-wage-earning jobs such as being a mother and housewife would not be included at all and special allowances would have to be made.
Another problem in using cost-benefit analysis is that the relationship between benefits and costs is highly dependent on the discount rate. A discount rate is used in calculating costs and benefits to reflect the fact that the value of future benefits is worth less than a similar quantity of benefits today. In other words a pound today is worth more than a pound tomorrow. The choice of discount rate therefore profoundly affects the value given to benefits and costs. The higher the discount rate the less important the benefits that will accrue far into the future become in the cost-benefit calculation. If the discount rate is high, benefits to future generations will be devalued in relation to the more immediate returns provided by other programmes.
Another problem with cost-benefit analysis is that very often in health care the demands for services vary enormously from one group to another. Quite often those who most benefit from a preventive programme are not those who bear the costs. This is especially true in the US where insurance companies pay such a large proportion of medical costs. Unfortunately, a sickness-orientated system such as this encourages people to wait until they are ill (when they know that the claim will be paid) rather than seek to prevent the condition in the first place (for which the insurance companies will not pay). Private medical insurance also tends to encourage the use of health screening systems which in turn produce a number of false-positive results and lead to the consumption of even more medical services quite unnecessarily.

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GENERAL HEALTH
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