People in the US are not only living longer than in the past, they are also healthier at older ages. Over the past two decades, disability among the elderly has declined dramatically – the share of the elderly population reporting difficulty with activities of daily living (ADLs) fell from 25% in 1984 to 20% 1999, a decline of one-fifth.
Although these facts are well-established, their causes and consequences are less clear. Is the reduction in disability due to improved medical care, or is it the result of individual behavioral changes or environmental modifications that allow the elderly to better function by themselves? What are the long-run health and financial impacts of declining disability rates?
These questions are taken up by authors David Cutler, Mary Beth Landrum, and Kate Stewart in “Intensive Medical Care and Cardiovascular Disease Disability Reductions” (NBER Working Paper 12184). The authors focus on a single health condition in order to be able to better analyse health shocks and their consequences. It is natural to focus on cardiovascular disease, which is both the most common cause of death in the US and the condition with the highest total medical expenditures. The data for the analysis comes from the National Long-Term Care Survey, a survey of people aged 65 and over that includes linked Medicare claims data.
The authors begin by assessing the role of cardiovascular disease in the recent reduction in disability rates. They find that the probability of being disabled as a result of cardiovascular disease fell by about one percentage point from 1989 to 1999, accounting for 14% to 22% of the total decline in disability during the period.
Next, the authors explore why the cardiovascular disability rate fell. The share of the population disabled by cardiovascular disease depends on the probability of experiencing an event such as a heart attack, the probability of surviving such an event, and the probability that a survivor will be disabled. A decrease in any of these probabilities will lower the disability rate in the population. Examining the changes in these probabilities over time, the authors find that the probability of an event has remained relatively constant over time and the survival rate has increased, while the disability rate of survivors has dropped sharply. The latter effect thus explains the overall drop in cardiovascular disability rates.
Why are today’s survivors of cardiovascular events healthier than their predecessors? One explanation is advances in medical treatment, including drugs such as beta-blockers and aceinhibitors that reduce the workload on the heart and surgical interventions such as angioplasty.
To estimate the role of medical care in reducing cardiovascular disability, the authors estimate models in which the individual’s health status following a cardiovascular event – dead, alive and disabled, or alive and non-disabled – is a function of the average treatment rate in the geographic area in which he lives. This strategy takes advantage of variation in medical treatment within areas over time. Importantly, the authors do not use the actual treatment received by the patient in their model, as this likely depends on the physician’s perception of the patient’s underlying health, which will be correlated with the patient’s outcome.
The authors find that the increased use of effective treatments contributed to the decline in disability and death among cardiovascular disease patients between 1984 and 1999. The results are strongest for ischemic heart disease, where increases in medical treatment can explain over half of the decline in disability and two-thirds of the decline in mortality. Expansion in medical treatment also led to reduced disability and death from stroke, heart failure and arrhythmia, and other circulatory diseases.
How do the benefits of reduced disability compare to the costs of expanded medical treatment? The authors estimate that the increase in quality adjusted life expectancy associated with not being disabled is 3.7 years. Using the standard assumption that a year of life in good health is worth $100,000 and discounting future values, the authors estimate the value of disability prevention to be $316,000.
On the cost side, they find that the average cost of treatment for patients experiencing a cardiovascular event is about $8,000 higher when they receive relevant procedures than when they do not. However, Medicare spending is lower for non-disabled than for disabled beneficiaries, suggesting that higher treatment costs today may be offset by lower future medical spending.
An important question left for future research is whether these results generalise to other medical conditions. But as the authors conclude, “by virtually any measure, medical technology after acute cardiovascular episodes is worth the cost.”
Source: Cutler, D.M., Landrum, M.B. & Stewart, K.A. (2006) Intensive Medical Care and Cardiovascular Disease Disability Reductions. NBER Working Paper 12184. The National Bureau of Economic Research. Available from World Wide Web: <http://www.nber.org/papers/w12184> [Accessed: 12 June, 2013].
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