Everyone knows that health care costs a fortune. Every year health-care costs continue to rise and the important question remains—how much bang are we getting for our buck?

In a new study that will appear in the New England Journal of Medicine, researchers at Harvard University and the University of Michigan have found that despite rising costs, the country’s health-care system has been cost effective and worthwhile. The study analyzed the average life expectancy and spending per capita from 1960 to 2000 in four different age groups by weighing two variables: increases in medical costs and overall health

The study found that 50% of the increases in life expectancy came from improvements in health care after taking into account non-medical factors. But we should be careful what we wish for. While the health-care system is producing results, it is also contributing to the increasing cost of caring for the country’s elderly population.  Since 1960, life expectancy has grown seven years from 69.90 to 76.87— adding a total of $19,900 per person each year. And for those over 65 years longevity has increased 3.5 years and added $84,700 per year.

What it Means: Health care is paying off, despite rising costs. However, researchers warn that when life expectancy reaches its threshold, healthcare costs may continue to increase without producing such valuable returns.

From the Archive:
Oct. 14, 2002: Business, Heal Thyself
Jun 20, 2005: The e-Health Revolution