Date: July 1st, 2011
We make decisions using economics every day. Deciding whether or not to spend money on something we usually find ourselves weighing the benefits against the costs. Should I buy an iPhone so I can check my e-mail on the train, or get the free phone and check when I get home? Should I buy the more expensive house that’s closer to work, or the one in a more affordable neighborhood with a longer commute? Should I hire someone to paint my house, or take the time to do it myself?
Since most of us have limited money, we can’t buy everything we want so we constantly have to make decisions on the value we’re getting for the money we’re spending. Health economists help individuals, doctors, insurers, and others make these types of decisions on health care. They study how the health care system functions and give guidance on things like how best to distribute limited resources, what services are most needed, and the value of medical advances.
A critical tool for health economists—cost-effectiveness analysis compares the benefits and the costs of health care options. In a system that can’t afford to pay for all available services and treatments, health economists provide information on not just how well a treatment works, but how well it works considering how much it costs—the value for the money. The benefits are usually measured in things like the number of lives saved, the missed workdays avoided, the improvements in quality of life, the medical appointments and the hospitalizations that aren’t needed, and the years that are added to a person’s life.
Unfortunately, the accepted methods of making these comparisons and these calculations usually fail to take into account the fact that Americans are aging more actively than ever before. While many Americans age 65 and older are no longer in the “traditional” workforce where they take home a constant paycheck, more and more often they are volunteering and getting involved in their communities, starting less conventional careers, and continuing to provide significant support for their families. They may not be doing what they were doing when they were 40, but they’re certainly continuing to contribute to their families, to society, and to the economy.
Valuing Life After 65
As our population ages and chronic diseases become more common, the U.S. is facing enormous and never-before-seen stresses to its health care system and economy. The Alliance for Aging Research believes that efforts to control these rising costs should focus on research and innovation and not just on cost-cutting. The Alliance’s widely-accepted resource The Silver Book: Chronic Disease and Medical Innovation in an Aging Nation—highlights important health economic data that showcases the value of innovation.
The Alliance also realizes how important it is for economic tools that value innovation to capture the non-traditional ways that seniors are contributing to society so that their “retirement” years aren’t undervalued. A life with independence—relatively free of illness and disability—is obviously valuable to the individual and their family. Current economic tools should also measure the real value of this healthy and independent person to society.
The MetLife Foundation Silver Scholar Award is administered by the Alliance and honors the important work of economists, demographers, and related researchers whose scholarship helps to better value healthy life after 65 and the medical innovations that help people live longer in good health. Silver Scholars receive a cash prize in recognition of their research and to support the writing of a paper on their work.
The First Silver Scholars
This year’s award was given jointly to Drs. Dana Goldman and David Cutler. Dr. Goldman of the University of Southern California is a nationally-recognized health economist who frequently speaks on health care issues, advises the Congressional Budget Office (CBO), and serves on the editorial boards of prominent journals. Dr. Cutler of Harvard University has held important positions at the National Institutes of Health and the National Academy of Sciences, was senior health care advisor to Obama’s Presidential campaign, and has written influential books on healthcare.
Current estimates predict that spending on Medicare will rise from 2.6% of gross domestic product (GDP) today, to 9.2% in 2050. These numbers will be even higher if Americans continue to live longer but do so in poor health. They may be significantly lower if medical advances can help these seniors stay healthy and productive longer. As part of the Silver Scholar award, Goldman and Cutler will write an article on the slowing of aging and how it can be good not just for individual health, but also for government spending on health.
Their paper will build off of a health care tool previously developed by Goldman and his colleagues that supports the idea that preventing disease and disability, even in older adults, can lead to substantial social and economic value. It also supports the important idea that medical interventions that could slow aging would also reduce the risk of multiple major causes of death and disease at once—unlike breakthroughs that focus on one disease at a time.
Drs. Goldman and Cutler were chosen from a pool of highly-accomplished scholars whose work makes significant strides in better valuing healthy life after 65. Their anticipated paper will be made available at a public event early next year.
While this is the first year for The MetLife Foundation Silver Scholar Award, the Alliance hopes to continue the program to increase and nurture scholarly pursuit of insights at this important juncture of aging, health care, and economics. To learn more about the award, visit the Alliance’s website.