The return on investment in health care: from 1980 to 2000

Abstract

Objective: To estimate the return on US investment (ROI) in overall health as well as four specific conditions.

Methods: The study utilized three distinct approaches to "triangulate" the evidence as related to ROI in health care: 1) an estimation of the average ROI in additional health-care service expenditures in the United States for the year 2000 compared with the year 1980, based on US summaries of health expenditures and health outcomes; 2) an estimate of the ROI in Medicare services for the period from 1985 to 2000 for treatment of heart attack, stroke, type 2 diabetes, and breast cancer, based on National Long-term Care Survey data and Medicare claims; and 3) an estimate of the ROI for selected major treatment innovations for the same four conditions during the period from 1975 to 2000.

Results: We calculated that each additional dollar spent on overall health-care services produced health gains valued at Dollars 1.55 to Dollars 1.94 under our base case assumptions. The return on health gains associated with treatment for heart attack, stroke, type 2 diabetes, and breast cancer were Dollars 1.10, Dollars 1.49, Dollars 1.55, and Dollars 4.80, respectively, for every additional dollar spent by Medicare. The ROI for specific treatment innovations ranged from both savings in treatment costs and gains in health to gains in health valued at Dollars 1.12 to Dollars 38.00 for every additional dollar spent.

Conclusion: The value of improved health in the US population in 2000 compared with 1980 significantly outweighs the additional health-care expenditures in 2000 compared with 1980.