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50+: Live Better, Longer

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The New Economics of Health for Baby Boomers

Rising Health Care Costs Are Only Part of the Problems Older Americans Face

Rising Health Care Costs: A Good Thing? continued...

As a result of those expensive, but effective treatments, the proportion of people who die within three months of a heart attack has fallen by three-fourths since the 1950s.

"The single biggest thing that has happened over time in terms of mortality is that cardiovascular deaths have fallen by about two-thirds since 1950. [This was] right at a time when people were saying 'this is the biggest killer and we can't do anything about it' and it turns out we can do quite a bit," says Cutler.

Although increased health care spending has bought us better health and longer life, he says wasteful health care spending is one of the biggest issues now and will continue in the future.

The challenge is figuring out how to get the best value out of the money spent on health care. A possible solution, Cutler says, is to link health care payment to performance and pay health care providers more for doing a better job.

"Why do we spend more? Because we get more stuff," says Cutler. "When you pay for doing stuff, you get a lot of stuff. But if you pay for effectiveness, you pay for less stuff."

Regional Differences in Health Care Value

Researchers say where you retire may also determine how much of your retirement fund goes towards health care spending. But spending more doesn't necessarily mean you'll get more bang for your buck.

"Medical expenditures are higher in Miami than in any other major American city, yet its residents don't live any longer or healthier than other Americans," says Jonathan Skinner, PhD, professor of economics at Dartmouth College in Hanover, N.H.

In fact, he says research shows that there's a negative association between how much a state spends on health care and the quality of health care its residents receive.

"Places that spend more money get lower quality care than those that spend less," says Skinner.

Skinner says living in an area that spends more money on health care also doesn't necessarily increase the chances of getting a high-tech treatment. Research shows that Medicare patients in Miami are less likely to get hip or knee replacements or heart surgery than in Minneapolis, which spends about half as much per capita on Medicare expenses as Miami.

Instead of high-tech and high-cost treatments, he says the factors associated with better value in regional health care spending appear to be greater use of low-cost effective treatments, such as use of aspirin and beta-blockers in the treatment of heart disease.

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