Life Extension versus Quality-of-Life Enhancement—Posner

The Medicare program subsidizes medical care for the elderly so heavily as to create serious concern about the fiscal soundness of the federal government. And, as longevity rises, the size of the subsidy rises, and the rise in cost is compounded by the increasing cost of medical technology. Among possible measures that would reduce the rate at which the cost of Medicare is increasing would be means-testing and—the focus of this piece—shifting the balance of subsidized R&D so that more is spent on increasing the quality of life of elderly people and less on extending their (our) lives. 

We need to recognize that the public subsidy of medical care for the elderly is not limited to the Medicare program (and Medicaid as well, which provides medigap insurance—insurance against the part of the cost of medical care not covered by Medicare—to millions of Medicare participants who can’t afford private medigap insurance), but includes much of the public expenditure on medical R&D, since the elderly are by far the principal beneficiaries of continued advances in medical knowledge and treatments. Although federal expenditures on medical R&D are small relative to Medicare, they have a multiplier effect: every year of life added by advances in medical technology increases the size of the elderly population and hence the cost of the Medicare program. 

Thus, life-extending medical research can aggravate the nation’s fiscal problems directly (as a major spending program in a political culture that abhors tax increases) and indirectly by increasing the Medicare (and elderly Medicaid) population. Could there be an offset? In National Bureau of Economic Research working papers in 2007 and 2010, Becker and coauthors point out that even elderly, frail people value life extension. The question is how much they value it, and how much we want to subsidize it. A 2006 article by Kevin Murphy and Robert Topel in the Journal of Political Economy entitled “The Value of Health and Longevity” estimates enormous gains to real national income from extending life, but they base their estimates on “value of life” estimates that are inappropriate for this purpose. 

What is misleadingly called “value of life” in the economic literature is not that at all; it is a way of estimating optimal expenditures on precaution. Suppose that by observing the behavior of persons engaged in activities or occupations that involve a somewhat elevated level of risk, say a 1 in 10,000 probability of a fatal accident per year, we learn that the average person facing such a risk demands compensation in some form (such as a wage premium) of a shade more than $500 a year, and therefore an expenditure of $500 on a measure that would prevent one such accident would be cost justified. All the analysis tells us is that the value that a person places on avoiding a 1 in 10,000 fatal accident is $500, so if the accident can be prevented for less there is a social gain. But this tells us nothing about the utility that a 25-year-old would derive from knowing that his life expectancy had risen from 80 to 81 or that an 80-year-old would derive from learning that his life expectancy had risen from 83 to 84. Hence it’s impossible to determine the optimal level of expenditures on medical care that principally adds years at advanced ages, as distinct from reducing mortality among people who are not yet elderly. 

A complication remarked in the Becker paper (as earlier in my book Aging and Old Age) is the nonlinearity of “value of life.” The fact that a person would accept a 1 in 10,000 annual probability of death in exchange for $500 doesn’t imply that he would accept a 100 percent probability in exchange for $5 million on the theory that he values his life at $5 million and is therefore indifferent between the life and the cash. Dead he would derive no utility from the cash unless he had an unusually generous bequest motive, and rarely would that be strong enough to make him indifferent between life and death. If he has no bequest motive, he will spend all his money on extending his life even for a very short time (unless the additional life has negative utility to him because he expects it to involve great suffering), and let us say that he has $10 million and so will spend it all for a few additional months of life. That does not mean that his value of life is greater than that of a much younger person who “values” his life at only $5 million. 

And thanks to Medicare even elderly persons who have a very strong bequest motive have no incentive to economize on medical treatment (at least if they also have medigap insurance). The opportunity cost of medical treatment is zero to them. 

So we can’t have a clear idea of the welfare gains from extending the life of elderly people. But we can say with reasonable confidence that the welfare of the elderly, and of altruistic members of their families, could be enhanced, without a significant increase in the longevity of the elderly, by redirecting medical research toward diseases or conditions that impair quality of life without necessarily shortening it, or at least without shortening it commensurately. Dementia (which comes in many forms, but Alzheimer’s appears to be by far the most common) is the foremost example. It does shorten life somewhat, but on the other hand, as it is largely a function of age, its prevalence is increased by increases in longevity; and dementia is not only psychologically very hard both on the demented and on their families, but also very costly in the amount of care that demented persons require. Blindness, deafness, loss of mobility, and Parkinson’s Disease and related degenerative nerve diseases (life shortening, but often the effect on lifespan is less than the effect on quality of life) are other examples of diseases where investing in medical research might yield substantial increases in elderly utility without significantly increasing longevity. Stroke is an example of a medical condition that both reduces longevity and has often dramatic negative effects on quality of life. 

Yet the National Institutes of Health expect this year to spend only $18 million on dementia research, $154 million on Parkinson’s research, and $337 milliion on stroke research, compared to more than $8 billion on cancer, heart disease, and diabetes research, even though the diabetes “epidemic,” while real, is due largely to obesity and bad diet. (Eye disease, however, seems generously funded at $817 million.) Of course the gravity of a disease is not the only factor determining the optimal level of research expenditures; another of at least equal importance is the likelihood that the research will be productive. Optimal allocation of NIH money also requires consideration of the allocation of private research money across diseases. But the enormous expenditures on cancer research have not been very productive, and very promising research programs in dementia (notably research on an Alzheimer’s vaccine) are greatly underfunded both publicly and privately. In my view this is a regrettable imbalance.

Comments

[Erik]

One important aspect of life-expectancy and quality of life increases discussed by Murphy and Topel is that they are complimentary goods for each other and themselves. Subsidies that yield life-extending treatment increase the value of qualitative advances, such as treatments for Alzheimer's. Of difference between longevity advances and qualitative advances is that the former allows people to live to enjoy both.

As more people are living long enough to require treatment to increase quality of life, demand for such procedures should drive actors to step in and provide those services. It'd be interesting to know why such qualitative advances are underfunded.

[Jack]

Ha! difficult subject and one that makes the whole subject of health care so difficult. Here in Alaska water is so plentiful we don't bother metering it...... the "water bill" is just for the pipes. But what price a glass of water in the desert to a dying person? All he has, of course, and perhaps the promise of more later. But things change don't they? I once answered a radio call and steamed to save a boat and crew anchored in increasing surf with a broken engine, put my boat and crew in danger with a foot of water under the keel, and with a company helicopter's help, got a line on 'em, hauled them out through crashing surf and towed against the tide for an hour of fishing time. and Ha! later, in town, received profuse thanks.......... and the first round of drinks. Kinda the reason hotels charge in advance.

How is Posner measuring the "added risk" being worth $500/year? Is there "perfect knowledge?" Are those of a mining town offered a clear choice between the risky job of mining, with often long term health risks, OR a cushy spot in the air conditioned company store?

I think he touches on young (probably men) thinking they're invincible and taking the risks of fast cars, mountaineering and extreme sports for no economic gain.

Another view and possible experiment? Before "Iraq" young folk often cited, employment, a chance to travel (away from Smallburg) and educational benefits as reasons to join the military. I don't know, but suspect recruiting is more difficult with back to back tours of tough and dangerous venues. But! perhaps more are drawn because of some combo of patriotism, risk and being part of a major historical event. Great theme for a PhD thesis?

Posner concludes:
"Yet the National Institutes of Health expect this year to spend only $18 million on dementia research, $154 million on Parkinson’s research, and $337 milliion on stroke research, compared to more than $8 billion on cancer, heart disease, and diabetes research, even though the diabetes “epidemic,” while real, is due largely to obesity and bad diet. (Eye disease, however, seems generously funded at $817 million.) Of course the gravity of a disease is not the only factor determining the optimal level of research expenditures; another of at least equal importance is the likelihood that the research will be productive."

I'm in complete agreement there! Spending just $18 million (an amount that would provide assisted living care for only 180 patients, is as criminally short-sighted as the Reagan admin spending only $300,000 in the early years of the AIDs epidemic when our very blood supply was being tainted. That's a miserly six cents per capita! How many Billions is it for the "extra engine" for our next couple of thousand war planes?

Tough though with the best of intentions to allocate NIH research money. For example, just in Alzheimer's, suppose there is a choice of spending big on a long shot "cure" or major improvement vs a much smaller amount for a more predictable but minor improvement?

In less than twenty years the peak of the "baby boom" will be of 50%?? Alzheimer and dementia age. It would seem that with these economic stakes alone, that very long shot research projects totaling in the tens of millions would be well justified; then add in some more for perhaps avoiding the human suffering of the entire family.

Wait, 18 million seemed so low I had to take a look. Still minuscule --- half a billion is a buck and a half for each American.

The NIH spends about $469 million on Alzheimer's research, says a new report from the Alzheimer's Foundation of America that criticizes overall aging research as "a minuscule and declining investment."

About 5.4 million Americans now have Alzheimer's disease, and studies suggest health and nursing home expenditures for it cost more than $170 billion a year, much of it paid by Medicare and Medicaid.

NIH's Collins told a Senate appropriations subcommittee that there's a "very frightening cost curve." In 2050, when more than 13 million Americans are projected to have Alzheimer's, the bill is expected to reach a staggering $1 trillion. But he said that cost could be halved merely by finding a way to delay people getting Alzheimer's by five years.

http://www.google.com/hostednews/ap/article/ALeqM5jhjj_yptY3QNMgmR3mBU8vlmUs6g?docId=13051c0ca1be4e17ab73f0fd0aa0dacc

[crusher]

learnt so much from you.great ideas.

[Jim]

Just a few points:

1. In the 60s when the debate was going on, the promedicare folks said that to not do it was inhumane. The antimedicare folks said that it would break the bank. The pro people won (probably for votes) but the anti people were right. Of course there was no provision for rationing because that would have weakened the political argument. Hence the slippery slope.

2. Nursing homes will not let their residents die in the facility for fear of being investigated, penalized and/or sued by the ever ready to pounce trial bar. Hospitals will stabilize the patients and send them back to the nursing home to await the next ambulance trip back again.

3. Families are conflicted ie "shouln't we live forever?"

4. Advance directives and surrogate decision makers have not reduced expenditures in the last year of life (80 B for Medicare alone)

5. Either we will have soft rationing (how much food to put in the lifeboat) or hard rationing (how much food does each person in the lifeboat get) but we will have rationing unless everyone in the country is employed in the health care industry. A recent study showed the New York state leads the nation in job creation snd that the vast majority of those jobs are in health care and education. You can bet that will lead to increases in costs in those fields.

[NEH]

Sounds like a Marketing problem to me. This ailment results in "Death", while this ailment results in "disability". Which is going to get the funding? "Death" of course, it's just so much more of a problem and so final. Spend the money, solve the big problem.

Yet, when one raises the the "Quality of Life" issue into the allocations debate, "Disability", takes on new importance. From this perspective, there is a misallocation problem. As has been pointed out, increasing "Quality of Life" may hold greater benefits for a greater number as opposed to increasing Longevity.

As Ben Franklin quipped, "There are only two sure things in Life - Taxes and Death". What's the value in living long via advanced/costly medical intervention when one has been laid low by the likes of Alzheimers, Stroke or physical/mental degeneration?

[Jack]

NEH - your mention of disability reminds me of the role of, what I've been calling "structural unemployment" plays in the lives and financial aspects of oldsters.

For example, I had a grand-aunt (she really was quite grand!) who was a postmistress for decades in a small island community. When she was about 70 the post office found out, and retired her under their 65 and out policy. The job went out for "contract bid" and with the support of townspeople, she won the bid and went on being postmistress into her early 90's despite walking only with aid of a walker.

I don't think she had costly end of life intervention, but having contributed 30 years longer than our society "deal" if she had high medical costs they'd have been considerably offset by her working years.

Today, probably VERY few of SS entitlement age show up as under or un-employed though many would likely prefer some lower paced or part time employment (and extra income) over being generally frozen out of the labor force.

Here, I'm not making a case for older SS entitlement age as many simply can not go on, especially in the tougher physical tasks of many who, coincidentally, are among the most "left behind" in the rising tide of income growth.

A couple more thoughts on end of life expense:

Some of it is irrational. But! some numbers? If we do spend 50% of lifetime H/C dollars in the last few years, and our H/C costs half again that of other advanced nations, and is skewed even more by the high costs of specialists and surgeons, much of our excess costs must be right there. When someone is in a hospital for a week or so for a $300,000 bill......... is that rational either? But if it is quite profitable biz......... does it not offset some of the ER and other "impossible to collect" bills?

And, do we not learn from some of these extreme procedures? That which was costly, experimental, and in only the best hospitals a decade ago being a less costly norm broadly available today and yet cheaper and easier in the future?

The really huge elephant in the room is that of Alzheimer's. I worked out the numbers nearly a decade ago and they'll break Medicare, Medicaid, and about any sort of H/C system we can design.

The priority given to finding even a delaying treatment ought to be on a national security level. If by some miraculous luck it was a pill we'd save billions if it cost 10's of thousands a year and earned Big Pharma billions, Ha! hopefully for more research and less advertising!

[Andrew]

I wonder how research funding in these (and other categories) stacks up when government and non-government funding sources are considered? I suspect the total for dementia research, for example, is quite a bit more than $18M. It seems to me there is something questionable in the citing of only the NIH statistics to make a point here.

[coachusa outlet]

following are some listings to internet websites which we link to as we feel they really are definitely worth visiting

[Xavier L. Simon aka Xavier]

Jack, the example of your grand-aunt is a wonderful example of the advantages of community responsibility over that of a central government making rules for 300+ million people regardless of how good is its science.

[Jack]

Xavier -- Thanks, and I left out one line of my thought relating to the problem of possibly, "structural unemployment", which is simply that of a tighter labor market providing opps for those older folks (or younger for that matter) wanting to contribute, and benefit from continued employment.

In the last couple of years I know of several in their early or mid-60's who had not planned to begin drawing SS, but who've been forced into the choice. A couple of these, who had private insurance (paid for in their own small biz) and another who had company paid insurance, reluctantly, moved to Medicare.

As many know from personal experience in higher paid, (what's left of "middle management" even those in their 50's are vulnerable and if laid off will spend more than a year, or perhaps much longer, getting another job, and that's typically one paying a lot less.

In a stronger economy, many veteran craftsmen, for example in the moribund construction industry, could be working shorter work weeks or as foremen and passing on their skills to the younger folk. If our overzealous "cuthabudget" sidelines our construction crews for a decade (when they should be tackling our crumbling infrastructure) when the economy does ultimately rebound, we'll again have that typical post-recession productivity drag of having to train newbies from scratch. Perhaps steadiness instead of panic? and knee-jerk over-reaction?

[YSL Shoes]

sadgsdg

[Tablouri]

Well said. Excellent article

[Supra Shoes]

think about something

[ore beneficiation machine]

your mind and thoughts are so deep and i admire it.

[an observer]

It seems like this report from Joplin is informative:

Greenbriar Nursing Home resident Dorothy Hartman is among those missing.

Pamela McBroom, 49, who lives near the nursing home, said one of her daughters used to work there, developed a soft spot for Hartman and introduced them. Hartman, who had Alzheimer's disease, was frail "but very positive and full of life," she said.

McBroom said she and her 16-year-old daughter were hiding in a closet when the tornado tore their walls and roof away.

Her walls gone, McBroom could see the mayhem at Greenbriar.
"I could see people flying out of the nursing home by my house," McBroom said. "I could hear them screaming. Just screaming. It was horrible."

The people at the end of life desire our love, respect, and support.

Posner falsely argues, that care for the elderly raises "serious concern about the fiscal soundness of the federal government."

What does he propose---that we send around carts, as in India, with chanters yelling, "Throw out your dead." Posner is part of the problem, having nothing to do with the solution.

His essay touches only part of the issue--we are talking about the 800 lb "elephant" that will rend apart our entire society unless we start finding effective answers.

We need a wide scale approach---we need more young people (immigration), we need economic growth and jobs, we need a far more intelligent distribution of research $$$, we need to face the very hard choices of how to handle the inevitable last 4 - 6 months, but instead Posner implicitly coos over Sarah "Death Panel" Palin. The list is endless

[an observer]

Jack, a super intelligent discussion of our fiscal crisis from Robert H. Dugger, a Democrat whom you should know about

http://www.hanoverinvest.com/pdf/HIGComment110302.pdf

Money quote:

What we specifically warned a year ago is now evident -- we are in a budget struggle of historic importance. The seriousness of the struggle is clear in the size of the gap between budget-advantaged
and disadvantaged Americans and persistent economic weakness. Closing the gap requires rewriting decades old civil commitments in ways that will affect every business and household in the US.
Whether the conflict will evolve slowly and take a decade or more to be completed as the 1950s and 1960s Civil Rights struggle did, or expand aggressively and end in four years, as the 1860s Civil War did, is unclear. What is clear is that it will end with a consensus about fiscal justice that extends many decades into the future. The main legislative instruments we have for expressing such a consensus are Budget Resolutions and Reconciliation Acts. How soon budget legislation can be developed that brings the current conflict to
an end depends on how quickly a unifying national priority can be identified.

[TANSTAAFL]

Posner doesn't explain why he thinks "the enormous expenditures on cancer research have not been very productive," and the point is questionable. Victims of many types of cancer today live a good deal longer on average than cancer victims of 50 years ago, when state of the art cancer treatment involved the patient's raw exposure to a chunk of cobalt-60, burning flesh and threatening a panoply of other ills caused by indiscriminate radiation exposure.

[Jack]

"Closing the gap requires rewriting decades old civil commitments in ways that will affect every business and household in the US."

Thanks, Observer. And Ha! one being that of paying for most of what government services we consume as they suggest; the ethical thing to do. Rare for the last 30 years! But, as President Clinton sagely advised the other day, we'll have to do it gradually. The economy can't stand the shock of massive budget cutting and layoffs, and while it likely could stand, even an across the board, tax increase the politic is hardly there for even the tokenish rolling back of the never-affordable Bush tax cuts.

The math is elementary school simple, but as we've seen in the last few days each of those often unjustified, market distorting "tax expenditures" has powerful constituents. We couldn't even take back a tiny Milk Bone from the oil companies so stuffed with profits it's an embarrassment to them and must be a REAL burden to hide.

Military spending? It's typically one of the least "bang for the buck" in terms of spurring the economy, and any excessive spending is wasteful by comparison to making repairs to our roads, bridges et al that would have a fifty or more year lifespan. Virtually nothing the military buys will have any use in 50 years.

In the recent jockeying even the services were willing to give up programs and hardware, but a Congress bent on pork ladling forced some of them anyway.

National security? Any one doing a household budget or company budget knows that while choices may have to be made, pulling 10% out of nearly any budget is possible. $70 billion out of $700 billion? Would our "enemies???" ambush us at the pass if we showed the discipline of trimming some pork? They well know from WWII that we can ramp up quickly when the need arises, but "ramp up??" when we nearly outspend the rest of the nations combined?

In the mess we're in, I think it's the rather confusing "spend more but wisely and raise more revenues where it's least likely to slow our return to full employment and increasing GDP.

So in the biggest bang for the buck race, does giving oilcos awash in windfall profits $2 billion/year better than spending the same amount on labor intensive infrastructure repairs? or similarly labor intensive energy conservation programs that might re-employ 25,000 construction workers idled by the decimation of these housing and commercial construction industry?

$2 billion could add $2,000 in sales incentives for one million Volts or similar energy conserving vehicles, and there's about one man week in assembly and at least as much more in sales and distribution. Just as an example, as I doubt the market could absorb them quite that fast -- though here I'm seeing a LOT of new, shiny little conventional mileage maker rigs.

[parental control software]

As far as i am concerned, Living too long is not a good thing.

[tory burch]

love the news!love the news!love the news!love the news!love the news!

[Michael Brophy]

very promising research programs in dementia (notably research on an Alzheimer’s vaccine)

Roger Rosenberg is funded at UT Southwestern for this. Elan pharmaceuticals had a candidate vaccine. I think one out of 682 people vaccinated had an encephalopathy attributed to the vaccine and that trial was stopped. So there are several, at least, groups doing this. If you are aiming at one target, it might be like throwing the Persian army against the Spartans at a narrow point. You could triple the Persian Army without it making any difference. Money spent on vaccines in general or vaccine methodologies or, if possible, explaining the etiology of the encephalopathic reaction might be useful.

[Jack]

Michael: Thanks.. and given the national security-like level of threat posed by half of the boomer generation breaking the bank if Alz is not cured or at least delayed, it would seem a shotgun sort of moving ahead on many fronts even while knowing, that like far more dollars spent on cancer research, most will be dead-ends, a few might be productive. And, logically, exploring dead-ends is not "wasted-effort" as something may be learned, if not, it's a dead end that need not be explored again unless new info made the "dead-end" more promising.

Perspective? In war analogy; we spent a trillion in Iraq with costs of 10's of thousands of wounded vets yet to come for, at best, fuzzy, poorly ID'd gains to anyone.

"We" have just approved the $700 billion military budget, some percentage of which is pure pork favored by various Senators and Reps in positions of power that the services themselves have recommended being scrapped. Gates says we're still prepared to fight major enemies on two fronts. But it looks like our "enemies" are small, militarily weak nations prone to insurrections and civil wars that may spawn terrorist attacks against the US or our allies and protectorates.

Just ONE PERCENT of this bloated budget would provide $7 billion which might be used in many other more productive efforts including Alz and other medical research that could move us up in med tech and provide profitable medical opportunities.

Smaller? One of the infamous "Bridges to Nowhere" of a billion in cost did not die with the well deserved stake through its heart and is still being "studied" by a half dozen Knik Bridge Authority board sitters who've set their salaries at $150,000 plus in order to be "competitive with other bridge authorities". The thing truly does go to nowhere and doesn't even save time going to Anchorage bedroom town of Wasilla of Palin "fame".

We appear to be more foolish than "broke".

[Gordon]

The comparative underfunding of dementia research is shocking. Thank you for the wise insight. This is the type of health care discussion that is sorely needed.

as for me, i hope to always believe that i want to die young, as old as possible....

[Xavier L. Simon aka Xavier]

Jack, the problem with you, and I say this respectfully, I've praised you quite a number of times, your problem is that with the shotgun approach, which I too advocate strongly, the failures are labeled by you as foolish. And that is when you are being generous. More often you ridicule failure. Thus the comment by Michael Brophy (05/27/2011 at 12:12 PM) was strictly about Alzheimer’s and the benefits of the shotgun approach, yet you chose to use it as an excuse to knock a few of your favorite targets yet again; indeed, I can’t recall a single entry by you in which you don’t knock someone.

Pray tell how that advances the conversation. With people throwing missiles like that who wants to be on the failure side of any experiment; or, as in the case of a lot of pork you criticize (sans actual abuses), and effort to help constituents by providing the very jobs you are such a strong advocate for (thus, for instance, one of the prime examples of unwanted DOD pork is the C-130 and yet last I checked the Lockheed facility producing it is unionized. And don’t get me wrong, I don’t advocate this kind of pork. I am just pointing out your inconsistencies).

[Jack]

Xavier? I wonder if you're responding to some other poster? Or, mebbe a rereading is in order?

"And, logically, exploring dead-ends is not "wasted-effort" as something may be learned, if not, it's a dead end that need not be explored again unless new info made the "dead-end" more promising."

Also, what is the relevance of pork being produced by a unionized group of working folk as compared to non-union? I see no "inconsistency" as IF Pork, I'd certainly rather collective bargaining bring the fruits down to those doing the work, instead of adding to the long term trend of consolidation wealth in the hands of the few........ and fewer.